So my wife and I are getting educated on our options to do a flat out flip, a live in flip, or possibly a cash flow live in. I was thinking most agents make 3%+ on closing or showing the house. What are the perks of being the real estate agent for your own flips. Is there any one who started flipping then decide to get educated/certified to become a real estate agent?
@Tim Key There are a ton of folks on BP who have become agents, after beginning their investment journey. There's likely close to a 50/50 split of those who will say Do It vs. those who will say Don't Do It. (For full disclosure, before I continue, I'm in the process of getting my license, simply because I want native MLS access.)
A couple of things to remember...
Depending on your state, you may have special disclosure requirements and other restrictions, if you are a realtor. Just check it out, before you decide.
While you could save the 3% commission for the sales agent, you're still paying the buyer's agent's commission. Also, remember you will have marketing expenses to list and market the property that would normally be handled by the realtor. And, speaking of marketing, the realtor & their brokerage are generally much better at that than you are and have contacts with all the other brokerages. If you're not totally confident in your ability to market & sell the property quickly...well, you need to consider that, because holding costs can quickly eat into any deal.
the commissions gain really add up on higher priced properties
Biggest advantages think are MLS access, property access on your schedule and negotiating your own deal...commission savings and payout on front end are a bonus
I am newly licensed in CO. I got my license for several reasons, not the least of which is to be my own buyer's agent when I buy houses to either flip or rent. There are many costs associated with having a license that you need to be aware of before you get your license.
State License Test $150
License $75/3 years
Commission Splits $500 (I have seen this go as high as 50% of your commission straight to your employing broker.)
MLS Access $475/yr
FBI background check $35
Desk Fees $52/mo
Realtor Association Dues $555 (plus $100 initiation fee)
And this is only what I can think of off the top of my head. There are also continuing education classes that you must take - some of them can be free, but the mandatory classes are not.
This is to say nothing of the time commitment necessary to become an agent. CO requires 168 hours of study, but once I finished up those 168, I spent an additional 60-80 just reviewing the course material to take the state test.
If you are going to be doing this full time, then perhaps becoming an agent would benefit you. If you are going to dabble, you will be paying out far more than you bring in or save through paying seller's commissions.
My state requires new agents to work under experience agents for 2 years before striking out on their own.
Good luck with whatever you decide!
@Mindy Jensen Wow great insight! Sounds like a lot of work and might be a step or two down the road from where we're at now. Thanks for your post!
You are welcome. I think on the surface it looks like a great idea, but you should know the actual costs. Good luck!
One of the advantages of selling the property on your own, you can utilize the money to advertise your property; you need the funds available to market the property while with utilizing a Realator they get paid at the closing table and there are no out of pocket expenses. When you sell your own property you need to handle all of the documents as well as being knowledgable about obtaining mortgages for the buyer. The realtor usually handles this function for you. When you sell you own property you get almost instant feed back, with a Realtor you may or may not get specific feed back. When you sell yourself you have some latitude with the selling price when using a Realtor you need to build in the Commission Cost. In some instances you can have the best of both worlds list it with an agent and reserve the right to sell it on your own. The main thing is to flip your house as quickly as possible. When your selling your own property you are truly focused on one property, the Realtor has many on their plate and your property needs to be priced right against all other houses the "buyers" agent has in their inventory of properties. No easy answer; we utilize both and have found them to be mutually beneficial. Sorry for the ramble, but I don't think there is a "one size fits all" approach. One very important aspect is your ability to "show" the property and fit the showings into your time frame. Many realtors bring an enormous amount of trainng into the marketing and "selling" of the property. They don't all use "the asking price" price approach to sales. Food for thought.
John Moore, John Moore Homes | 570 620‑8080 | http://www.johnmoorehomesllc.com
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