Investor · Middlesex, NJ · Member since 2020 · 45 posts · 21 votes
Hello All,
I am looking to jumpstart a (NJ) RE business (flipping/buy & holds) and was wondering whether I would benefit more from obtaining my RE license or finding a good agent? My main concern is that if I'm flipping a couple of houses a year, I will potentially be spending a lot of my profits on agent commissions. Where if I act as my own agent I could find and list my own properties and save on that end. Can anyone please help me weigh out the pros and cons?
What are the fees associated with maintaining a (NJ) RE license once you have it?
Okay. Being a Realtor isn't for for everybody and I don't think I ever said it would be easy. I agree its not that easy. Trying to get those 1-2 sales to break even on your fees can be difficult, especially when you are doing it part time. With anything, doing business with friends and family is risky. Yes, wholesaling is an entirely separate activity which is why I believe is generally doesn't fall under licensure in some to most to all States (okay I'm not really sure).
I actually am an investor who recently got his real estate license. I believe it is beneficial because it has opened a new world of networking to me. My broker has access to multiple high quality business professionals for my personal investment activities (Lenders/contractors/title companies, etc.) In addition you can help other investors find properties which can further expand your network and have the potential for private money once they trust you which of course grows your business. You can work for a brokerage that gives no support and pay minimal fees if you choose or go with someone a little more established. From what I have seen so far and after consulting many agents who have been in the business for decades it never hurts and opens new doors. It is all about perspective and how creative you want to get to grow your investment business. And worst case you can always just put it inactive if you find it is not a good fit.
@Dennis Soto I would say Yes. I just finished up getting mine, here in Utah. I now feel that a $5-700 education no matter if you use it for the traditional sense or just the knowledge is very beneficial. You do probably need to get a broker. But it’s not hard to find a broker to sign on with that will give you the freedom you desire. Good luck!
That is so very true @Garry Hoffmann. Even if I don't actually get the license, it would give me a better understanding of what realtors do. Having the knowledge could assist me in recognizing a good realtor when I meet one as well as solidify a good working relationship.
Even discounted brokerage requires certain amount of office fees. Lockbox, association and error & omission insurance. That is often $2+K and arrangement with brokerage office fee use $1.5K as rock bottom cost basis. Total cost is $3.5+K a year. Getting the license allowing you understand real estate laws. If you are into flipping business experienced investors when are not getting their money worth will surely sue you for poor workmanship, unpermitted , mis-presentation exceptions. Your error insurance will not cover it because you present yourself. If you find a buyer that is tri-agency definitely make your life miserable. I know realtors lost license that way. As a realtor you want someone you know to represent you at a negotiated reduced fee is highly recommended.
Just be aware that the licensing course doesn't actually teach you how to be a real estate agent, actually. It mainly lots of regulatory "stuff." Going over what is an easement, right of way, chattels vs fixtures, Discrimination laws, etc. Its not a like a trade school that teaches you a trade. So, taking the licensing course won't necessarily "...give me a better understanding of what realtors do." It might teach you much more about real estate, in general, which is potentially valuable as an investor.
Actually being a salesperson, generating leads, how to show a property, how to write up a contract, how to do a comp, how to do an Open House, etc. are all things you "learn on the job." That's why finding the right broker/brokerage is key to get that training/mentorship. Just to give you an idea, take a look at the various Certifications and Designations you can earn through NAR, none of which is taught in a licensing course (least that I can even vaguely remember):
Thanks for the info @David M.. So if and when I decided to become a realtor, how do you recommend I go about finding/recognizing a good broker? Not so much a profitable one; although profits are important one that would provide training and mentorship could be more valuable in the long-term.
The typical "it all depends" is basically that your time invested on being a Real Estate Agent will be on Marketing, Showing houses, talking to clients, etc. All of this time would be invested into your Business as a Real Estate Agent, but you would be setting aside your flipping business, at least during the time of getting your name out there and getting people to work with you. Bottom line is that it'll take time to get your systems going and it is possible that you can have your License as Realtor and save lots of money on commissions, but the time invested on your brand could be invested on flipping properties like you're already doing and probably get a better return on the TIME invested.
Uhmm... Networking/referrals... having a good BS meter... Using your interview/meeting with the Broker as an opportunity to interview him/her. Remember, from my point of view licensed agents are a dime a dozen. NJ has the most number of agents of any State in the US, and we aren't even that big, physically. Take a look at this thread:
The vast majority of brokerages are franchises, e.g. Coldwell Banker, Re/Max, KW, BHG, etc. So, one office can and will most likely be different from the office down the street. This includes their internal policies, the tools they provide, even the general culture/atmosphere. I've heard of a couple brokerages where it is pretty individualist / maybe cut throat. Luckily, mine is actually pretty supportive and team-like. Agents are willing to help each other out.
This also means that who is your broker may not mean a hell of a lot. I never really see or talk to my broker. He isn't managing me or giving me leads. My sponsoring agent happens to be the managing agent for the office (we have three offices). I'm not sure with other offices, usually an agent will recruit their friend into the business. So, now this agent is really the sponsor for the new agent. Its not much different than a normal office environment. So... do you know any agents (see above about networking) that want you come work for their brokerage and willing to take you under their wing to show you the ropes?
Don't forget, you can always change brokers/brokerages...
We hold our license, but mostly because it builds trust with our clients. If I was my own client I'd just make sure I was within the bounds of compliance, do FSBO or entry only, and have a good title company. Just make sure you know the law and the contracts and stuff well enough to be a great client to work with.
I would just find an agent that you like and can trust to keep a lookout for properties in your target area. You can negotiate a rate that works for both of you. Maintaining a license probably isn't worth the time, money, and hassle to buy and flip a couple properties a year. Your time and money would be better spent buying and flipping properties which is what it sounds like you really want to do. The license is a distraction from that if all you want is access to MLS and to make a little extra money on the deal.
A good agent will get you the price terms that you want that can make up for any difference you would probably make in commission on the properties.
It can be great as it allows you access to MLS and opening the door to deal and represent yourself on transactions. However everyone is correct as fees are attached with this. Being an agent bears a great responsibility.
@Jacob Lapp exp is 3 per year, 100% commish kept. It’s the perfect Brokerage for investors doing their own stuff and one off listings for friends and fam. I’d highly recommend
Hey Dennis! I'm in the same boat actually here in Hawaii! In my opinion, it is very beneficial to learn the lingo and become familiar with terms/strategies. Of course, the access to MLS itself is worth it!
Hi Dennis! I seem to have the less popular opinion on this matter. Ultimately, everything depends on cost and the opportunity cost of your time. There are all kinds of different brokerage models. Most are expensive & wouldn't make sense for your goals, but others are very affordable and charge as low as a few hundred dollars per transaction + the annual fees to maintain your license for your state (which I must add I have no idea what those are for NJ). As a fellow agent/investor, I find that being able to pay myself a commission and mitigate cash to close is one of the most valuable aspects of being an agent. Having immediate access to the MLS is key and I find that the more agents you know & who trust you to close will likely bring you deals. This could be priceless in what I expect is a competitive market.
NJ has the most number of agents of any State in the US, and we aren't even that big, physically.
NJ isn't even a horse in that race with around 40,000 agents (many in of those in referral status only). NY beats us with more than 50,000, Texas has close to 200,000 real estate agents, and with more than 360,000 real estate agents, Florida dwarfs every other state in the U.S.A.
Thanks for the correction. I guess I shouldn't listen too much to our State-level Realtor association president. That's where I got the info. Again, thanks.
@Dennis Soto I think there may be a better way for you to accomplish your goal. Here's why, theres a huge difference between being an effective, productive realtor and a licensee. The productive realtor is going to market your property effectively handle negotiations and make sure that your deal gets to the closing table, a licensee will just post your property on the MLS. If you're not going to really dive into practicing real estate I think you'd be better off spending the 75 Hours it takes in class time (plus the hours studying and the fees spent) to build relationships with productive realtors, sellers and contractors attorneys, shopping online marketplaces for deals etc once you start your flips you'll see exactly how much work it is to get one done here in NJ, you'll also see that many of the properties on the MLS are priced too high to make good flips or they sell at light speed.