How does having a salesperson license interfere with marketing?

27 Replies

Hi all. I'm new to investing, and definitely new to marketing, so I'd consider this a rookie question. I'm reading J Scott's book on flipping and am in the chapter about marketing. I plan on getting my salesperson license, so everything I read, for me, is in context of having a real estate salesperson license.

So my question is: Generally speaking, how might having a license interfere with marketing campaigns? I may get this answer when I'm taking classes, but I'm thinking in context of having to belong to a brokerage once I have my license. If I want to do my own marketing - say direct mail, or even set up a lead-catching website - am I obligated (ethically or legally) to list my brokerage with those marketing materials? What about on business cards? Am I even able to do my own thing, or does everything have to go through my brokerage? Can I set up a LLC? Ideally, if I must belong to a brokerage (and from what I gather, I must), I'd like to just use the brokerage for education. Otherwise, I feel like I'd want it out of the way.

Thoughts on these questions and my general goal? I'd be happy to clarify anything. Thanks!

I know I'm in the minority around here, but I do not recommend investors get a real estate license if they are only buying and selling their own properties. Once you have a license you fall under the jurisdiction of your real estate commission. You are also obligated to follow the NAR code of ethics.

Advertising is state-specific so you would have to check Maryland law. Here in Texas you must include the name of the brokerage on all advertisements. That includes flyers, business cards, postcards, letters, etc. Advertising violations are the the most reported complaints to TREC.

Most brokerages will encourage you to do your own marketing, but you'll be expected to follow the rules. And by "do your own marketing," I'm referring to marketing to potential sellers and buyers, not looking for properties for you to flip. Many brokerages will not allow you to do transactions for yourself. They will require you to use another agent in the office. Keller-Williams has such a rule, at least here in Texas.

One of the issues that comes up regarding direct mail is the poaching of another agent's client.  If you do a blast to an entire neighborhood, you should be fine. But if you target specific properties, you could be accused of poaching if your letter goes to someone who already has an agency relationship.

If you form an LLC with the intention of conducting real estate business, the LLC will need a brokers license. That will require a licensed broker to sign on as the LLC's designated broker. And your personal license will be sponsored by your LLC. You won't need a different broker because your own company will be your sponsoring broker. That would probably be the best way to go for the purposes you described.

Personally, I don't see the point of getting a license if you're only buying and selling your own properties. The reasons I hear are to gain access to MLS and the myth that you will save commissions. Well your broker is not going to let you drop the commission and the split. They expect to be paid. But if your own LLC is your broker, then you can set your own rules.

Having said all that, my comment is based in my knowledge of real estate law in Texas. Maryland may be different and I would talk with people who are familiar with Maryland rules before making a decision.

Good luck!

it depends on the brokerage and broker

I was unhappy with one broker with reason stated above.

but I moved to another, and I can be investor and Realtor. as long as I bring continuous business, we all happy ;)  

I think my license has helped me in leaps an bounds. access to market and MLS. access to marketing. exposure to deals I wouldn't have done on my own. networking.

But having said that, I was suffocating in my ex-company. they wanted to "turn me into a Realtor", " tied my hand bc they were uncomfortable with Investor risks and issues". 

I was so miserable and investor didn't want to deal with my company but want me as agent.  I can't do this or that (I was newer agent too, so had to have stuff signed off by "boss") 

Originally posted by @Matt Powell :
... Am I even able to do my own thing, or does everything have to go through my brokerage? Can I set up a LLC? Ideally, if I must belong to a brokerage (and from what I gather, I must), I'd like to just use the brokerage for education. Otherwise, I feel like I'd want it out of the way...

The broker or brokerage firm that employs you as a realtor, 'may' feel that your investment activities could interfere with that of the brokerage. 

Originally posted by @Fred Heller :

I know I'm in the minority around here, but I do not recommend investors get a real estate license if they are only buying and selling their own properties. Once you have a license you fall under the jurisdiction of your real estate commission. You are also obligated to follow the NAR code of ethics.

Advertising is state-specific so you would have to check Maryland law. Here in Texas you must include the name of the brokerage on all advertisements. That includes flyers, business cards, postcards, letters, etc. Advertising violations are the the most reported complaints to TREC.

Most brokerages will encourage you to do your own marketing, but you'll be expected to follow the rules. And by "do your own marketing," I'm referring to marketing to potential sellers and buyers, not looking for properties for you to flip. Many brokerages will not allow you to do transactions for yourself. They will require you to use another agent in the office. Keller-Williams has such a rule, at least here in Texas.

One of the issues that comes up regarding direct mail is the poaching of another agent's client.  If you do a blast to an entire neighborhood, you should be fine. But if you target specific properties, you could be accused of poaching if your letter goes to someone who already has an agency relationship.

If you form an LLC with the intention of conducting real estate business, the LLC will need a brokers license. That will require a licensed broker to sign on as the LLC's designated broker. And your personal license will be sponsored by your LLC. You won't need a different broker because your own company will be your sponsoring broker. That would probably be the best way to go for the purposes you described.

Personally, I don't see the point of getting a license if you're only buying and selling your own properties. The reasons I hear are to gain access to MLS and the myth that you will save commissions. Well your broker is not going to let you drop the commission and the split. They expect to be paid. But if your own LLC is your broker, then you can set your own rules.

Having said all that, my comment is based in my knowledge of real estate law in Texas. Maryland may be different and I would talk with people who are familiar with Maryland rules before making a decision.

Good luck!

Thanks Fred, for your detailed reply. I get the impression from you that belonging to a broker can hamper your goals, but that it also depends largely on the broker you choose. A brokerage like KW is about selling property, not employing investors looking to make money that way (as opposed to traditional representation of buyers/sellers). So they may not be the right fit for my goals. But aren't there investor-friendly brokerages out there that would play nice with me?

Also sounds like there might be some laws I simply will not be able to get around. You mentioned I can't form an LLC without a broker's license. Is that a Texas law where you are, or something more general?

Originally posted by @Jennifer Lee :

it depends on the brokerage and broker

I was unhappy with one broker with reason stated above.

but I moved to another, and I can be investor and Realtor. as long as I bring continuous business, we all happy ;)

Thanks Jennifer. Can you elaborate a little on what your brokerage allows you to do now? Can you focus only on investments for yourself, or are they asking that also do traditional representation of buyers and/or sellers? Can you do your own marketing without listing their name everywhere? Could you form an LLC if you wanted?

Thanks!

@Matt Powell All brokerages are about selling property. That doesn't mean you can't find one who will work with you if you beat the bushes. There are many investors on BP who are licensed and hang their license with a broker. But they're going to expect to make money off your activities. They'll also be concerned about the liability you bring. If you commit a violation, even inadvertently, your broker is on the hook. 

As far as the LLC, you don't need a real estate license to form an LLC. But if you're going to conduct real estate business under the LLC, then the LLC will need a broker's license. At least that's the law in Texas. It may be different in your state.

Some of what I read above is not accurate.

In Texas, cash investors who are also licensed do NOT have to include a brokers name on their marketing materials offering to purchase properties for cash.  That only applies to a few places, like Ohio.  An offer to buy for cash is not an offer of brokerage or agency/representation.

We use disclaimers on all our marketing materials that meet state rules and basically say "this is not an offer to list your house, if you are currently represented by a broker, please disregard this offer.

In addition, if a licensed investor in TX forms an LLC for the purpose of purchasing, rehabbing, and selling houses they buy for cash, they do NOT have to be a broker.

Real estate agents often think that anything to do with real estate falls under state or NAR rules or jurisdiction. That's not true.

In regard to the original post, I don't know the rules in Maryland. but the main issue if you are licensed is you need to use the appropriate disclosures on your ("I buy houses") marketing materials, which may or may not include a reference to your broker.  If you are licensed and decide to buy and sell real estate, let your broker know, by all means.  It's a benefit to your broker, because 30-40% of the houses you find via your "I Buy Houses" marketing will result in LISTINGS.

Originally posted by @Dev Horn :

Some of what I read above is not accurate.

In Texas, cash investors who are also licensed do NOT have to include a brokers name on their marketing materials offering to purchase properties for cash.  That only applies to a few places, like Ohio.  An offer to buy for cash is not an offer of brokerage or agency/representation.

We use disclaimers on all our marketing materials that meet state rules and basically say "this is not an offer to list your house, if you are currently represented by a broker, please disregard this offer.

In addition, if a licensed investor in TX forms an LLC for the purpose of purchasing, rehabbing, and selling houses they buy for cash, they do NOT have to be a broker.

Real estate agents often think that anything to do with real estate falls under state or NAR rules or jurisdiction. That's not true.

In regard to the original post, I don't know the rules in Maryland. but the main issue if you are licensed is you need to use the appropriate disclosures on your ("I buy houses") marketing materials, which may or may not include a reference to your broker.  If you are licensed and decide to buy and sell real estate, let your broker know, by all means.  It's a benefit to your broker, because 30-40% of the houses you find via your "I Buy Houses" marketing will result in LISTINGS.

Thanks Dev. Good info. Where's a good, official place to start researching Maryland's rules and regulations about all this? Any ideas?

Originally posted by @Matt Powell :
Originally posted by @Jennifer Lee:

it depends on the brokerage and broker

I was unhappy with one broker with reason stated above.

but I moved to another, and I can be investor and Realtor. as long as I bring continuous business, we all happy ;)

Thanks Jennifer. Can you elaborate a little on what your brokerage allows you to do now? Can you focus only on investments for yourself, or are they asking that also do traditional representation of buyers and/or sellers? Can you do your own marketing without listing their name everywhere? Could you form an LLC if you wanted?

Thanks!

 without naming names of firms.

Can you elaborate a little on what your brokerage allows you to do now?

Former Brokerage is like working with corporate america. they basically want me to be working for them as realtor. If I mentioned "subject to", "wholesale", REO, "short sale" they get all wound up. Instead of helping, I get the lecture, "what are you doing? it aint good for business?" do you really want to associate yourself with "such people?"

I like to equate it to parent and child. My former firms wants all their kids to be Doctors regardless their real drive. can't be that artist or music teacher. 

My Current Brokerage is investor friendly and so is my boss. I was upfront with what my plans were "INVESTOR first, REALTOR second."  

I like to equate it to parent and child, My current firms FOSTERS each kids.  You want to be artist, ok. you want to be doctor, ok..... here is the road map.

I can't elaborate what they allow me to do, I just haven't hit a road block with them.  CAN I DO this, SURE! Can I do that? everything is REAL ESTATE is NEGOTIABLE!! I like to be negotiable.

I don't like Minimum commissions is....... minimum listing period is..... 

transaction license? sure why not!, where as before it was HECK NO!!! company policy.

--------------------------------

Can you focus only on investments for yourself, or are they asking that also do traditional representation of buyers and/or sellers?

Let just say, when I was with my former company, my facebook was Jenn Lee of ----Real Estate Company! I don't post any of my investment stuff.....

The day I moved, my facebook business page is renamedJenn Lee of -----LLC (my investment company). I post all my activities and guess WHAT happened! My business exploded!!!

old clients look me up and was shocked at my activities... I had no idea jenn!!! when you said, you invested on a multi unit, I didn't know,,,,,,,,,. I had no idea.

Where as before I was focusing as REALTOR, now I do my own thing and help others, investor and retail buyers, along the way!!!  

 Can you do your own marketing without listing their name everywhere? Could you form an LLC if you wanted?

I do FSBO stuff, and I when I list my own stuff I give my company a cut!

when ppl call I say, BTW I am realtor..... on FSBO

on MLS, I say BTW I am also seller.... (no problems at all)

I form LLC all the time. My current boss/broker knows what I am doing, she is on my Facebook! and as long as I keep bringing business, and do things ethically and morally she doesn't see a problem

AGAIN it all depends on your firm and person RUNNING the office!

FYI, I went were all other investor in my area with license go.  Some just do own stuff, don't even bother with being a realtor for others.

Originally posted by @Jennifer Lee :

FYI, I went were all other investor in my area with license go.  Some just do own stuff, don't even bother with bring a realtor for others.

Thanks Jennifer. Good to hear that finding the right broker gave you the flexibility you wanted to do things on your own. I suppose my next step, then, is to do some searching around Maryland for investor-friendly brokerages. I'll most likely post a question here on BP asking investors in my area to chime in with suggestions.

Dev Horn if you set up an LLC for buy and hold properties do you have to include your broker on LLC?

@Matt Powell

  I thought being realtor is all woo-ahh big hurdle.

all it is, is PAPERWORK!!!

license don't make an investor! it's like anything else, a tool!

and residential and commercial is "similar" from investing stand point. Just keep learning!

Knowledge is Power, just need will and drive

If I can do it, you can too

Originally posted by @Matt Powell :
Originally posted by @Dev Horn:

Some of what I read above is not accurate.

In Texas, cash investors who are also licensed do NOT have to include a brokers name on their marketing materials offering to purchase properties for cash.  That only applies to a few places, like Ohio.  An offer to buy for cash is not an offer of brokerage or agency/representation.

We use disclaimers on all our marketing materials that meet state rules and basically say "this is not an offer to list your house, if you are currently represented by a broker, please disregard this offer.

In addition, if a licensed investor in TX forms an LLC for the purpose of purchasing, rehabbing, and selling houses they buy for cash, they do NOT have to be a broker.

Real estate agents often think that anything to do with real estate falls under state or NAR rules or jurisdiction. That's not true.

In regard to the original post, I don't know the rules in Maryland. but the main issue if you are licensed is you need to use the appropriate disclosures on your ("I buy houses") marketing materials, which may or may not include a reference to your broker.  If you are licensed and decide to buy and sell real estate, let your broker know, by all means.  It's a benefit to your broker, because 30-40% of the houses you find via your "I Buy Houses" marketing will result in LISTINGS.

Thanks Dev. Good info. Where's a good, official place to start researching Maryland's rules and regulations about all this? Any ideas?

Check out MAR - http://www.mdrealtor.org/

Here is one of their PDFs on MD disclosures - not specific to REI and what you need to disclose on your REI marketing, but it gives you a good idea of what is included in their agency disclosure requirements - http://www.mdrealtor.org/Portals/0/docs/Legal/Agen...

If you are marketing to buy houses for your "Matt Buy Maryland Houses" business, you are NOT marketing to create an agency relationship with anyone.  So you don't need to execute the MD disclosure docs on one of these transaction.  You simply need to disclose that you are licensed so they cannot later claim that you withheld that information.

Hope that helps.

Originally posted by @Dev Horn :

Here is one of their PDFs on MD disclosures - not specific to REI and what you need to disclose on your REI marketing, but it gives you a good idea of what is included in their agency disclosure requirements - http://www.mdrealtor.org/Portals/0/docs/Legal/Agen...

Thanks. Another possible rookie question, but this isn't the first time I've been referred to Realtor documentation. As far as I know, NAR is an org. that I can join voluntarily. If I'm not an actual Realtor, but still have my license, none of this would apply to me, right?

I think I'll probably end up joining NAR, but I'm asking for the sake of learning. Is there nothing at a "Maryland Law" level that governs these things? You're from Texas, I know, but generally speaking...

Originally posted by @Dev Horn :
Originally posted by @Matt Powell:
Originally posted by @Dev Horn:

Some of what I read above is not accurate.

In Texas, cash investors who are also licensed do NOT have to include a brokers name on their marketing materials offering to purchase properties for cash.  



I would sure love to know where that information is located. I have never seen any exemption for cash buyers who are also real estate licensees.

From TREC:

A: All advertisements must comply with TRELA sect.1101.652(b)(23) and Rule 535.154. At minimum, subsection (c) of this rule requires an advertisement placed by a license holder must "clearly and conspicuously contain the name of the broker, either a business entity or an individual."

Originally posted by @Fred Heller :
Originally posted by @Dev Horn:

Some of what I read above is not accurate.

In Texas, cash investors who are also licensed do NOT have to include a brokers name on their marketing materials offering to purchase properties for cash.  

I would sure love to know where that information is located. I have never seen any exemption for cash buyers who are also real estate licensees.
From TREC:

A: All advertisements must comply with TRELA sect.1101.652(b)(23) and Rule 535.154. At minimum, subsection (c) of this rule requires an advertisement placed by a license holder must "clearly and conspicuously contain the name of the broker, either a business entity or an individual."

I believe with further research you will find that is in regard for advertisements which offer brokerage services (agency).

I'm just telling you, IN TEXAS, where I also live and work with DOZENS of professional investors who are licensed - they do NOT list their broker on ads for buying houses. or for free kittens, or for lemonade, or anything else that is NOT brokerage services.  Maybe you can prove them all wrong.  Honestly, I don't care.  I'm not a broker, not licensed, not a regulator, I don't care.  I'm just telling what people DO here in Texas.

And for the 50+ WeBuyHouses.com licensees (markets) for whom we do advertising across these United States, there are only a few of states with overly-stringent requirements for advertising - such as Ohio and to a lesser degree Florida and California.  As much as this seems to be a serious issue for you - and I respect that - I'm just telling you, no one I know lists their broker on non-brokerage ads (e.g. "I Buy Houses" type stuff) in Texas.  If you want to do it to be super careful, that's cool.  Go for it.

@Matt Powell

Joining NAR, and its state subs, is 'voluntary' and, at least in Texas, you can be licensed without it. However, one of the big advantage always brought up is being licensed gives you access to the MLS. The MLS is owned by NAR, or sub, and a non-member should not have access to it.

Although I agree that there may be occasions that having access to the MLS can be advantageous, do you really need a license for just that? Couldn't you find a realtor who is investor-friendly who will look up anything that fits your criteria? The more you move on their listing, which they get commissions for resale, the more they are happy to provide whatever you need.

Same with a broker, in my estimation. (not true in all cases as stated by the lovely @Jennifer Lee ). As long as you bring in business and run your own investment LLC, and keep yourself clean (you're broker won't like infractions and violations you cause, it's a liability) the broker shouldn't have a problem. Of course, finding that broker might be the needle in a haystack if you're trying to avoid "company policy" firms. In fact, if you resale your investments through another agent in the firm, why would anyone balk at that? How short sighted some of these agents and brokers can be, in my humble opinion. Not generalizing, just saying.

Originally posted by @John Hamilton :

Although I agree that there may be occasions that having access to the MLS can be advantageous, do you really need a license for just that? Couldn't you find a realtor who is investor-friendly who will look up anything that fits your criteria? The more you move on their listing, which they get commissions for resale, the more they are happy to provide whatever you need.

Same with a broker, in my estimation. (not true in all cases as stated by the lovely @Jennifer Lee ). As long as you bring in business and run your own investment LLC, and keep yourself clean (you're broker won't like infractions and violations you cause, it's a liability) the broker shouldn't have a problem. Of course, finding that broker might be the needle in a haystack if you're trying to avoid "company policy" firms. In fact, if you resale your investments through another agent in the firm, why would anyone balk at that? How short sighted some of these agents and brokers can be, in my humble opinion. Not generalizing, just saying.

This thread has really given me a lot more to think about, and I'll admit it's not as clear of a decision now to get my license as it was before. That said, I see advantages beyond MLS access by getting my license, namely education and other conveniences like automatic lockbox access. If it were only MLS, I might not worry about it (doesn't Zillow get you like 90% there anyway?).

I am getting my license for a couple of reasons, some here could disagree with my reasoning however.  One reason is to be able to do transactions like lease option and wholesaling without it being seen as brokering without a license.  I don't plan to do wholesaling but I wanted to have the ability to do anything with a lead that came my way.  

The other reason was to be able to lists houses.  I did some DM marketing and realized how much  money I was potentially passing up by having only one solution, sell me your house for pennies on the dollar.  I like the idea of having options and really doing what works best for the seller, I make money regardless.

I've signed on with a broker that is ok with me doing all of these things, other investors work for this broker.

@Lee That is awesome Lee. As long as the broker is ok wit your activities, you bring business to him, and you don't become a liability, everything should be good. 

On advertising and marketing, don't you have to use the broker license on every advertisement? Do you own your own LLC for your personal RE activities? Do you disclose your a realtor to all your leads?

i don't regret getting my license.

I'm also glad I started at my first firm. they train good agent. lots of hand holding 

 the current firm is sink or swim. so I'm glad I have good training to survive in the investor friendly firm.

it is trade off

Originally posted by @Lee S. :

I am getting my license for a couple of reasons, some here could disagree with my reasoning however.  One reason is to be able to do transactions like lease option and wholesaling without it being seen as brokering without a license.  I don't plan to do wholesaling but I wanted to have the ability to do anything with a lead that came my way.  

The other reason was to be able to lists houses.  I did some DM marketing and realized how much  money I was potentially passing up by having only one solution, sell me your house for pennies on the dollar.  I like the idea of having options and really doing what works best for the seller, I make money regardless.

I've signed on with a broker that is ok with me doing all of these things, other investors work for this broker.

 I'm curious what broker you went with. Are they local to California, or nationwide? You can PM me info if you're more comfortable.

I wish more people would listen to @Dev Horn

Disclose disclose disclose

Do a video

"Bob Smith told me he was a licensed agent and he's not acting as an agency but acting as a principal in this transaction. He is not acting as my fiduciary and he wants to buy this property as a private business person.

This is the truth 

So help me God"

Lol

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