More divided than Team Edward or Team Jacob for tweens comes the debate of Investors getting a license or not getting a license.
I personally have worked in the real estate world since 2003, the majority of which I did not have an RE license. I got my license several years ago, as many investors did, to be able to work more intimately on short sales.
So, coming from someone who is an investor, rehabber, and licensed agent, here’s my cumulative insight on whether getting a license is worth it.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
1) What’s Your Risk?
This is the biggest stopgap I see with many investors choosing the route of remaining a free agent. Once you have a license, you are held to a different standard. Contracts, advertising, and disclosure are just a few of the new requirements that are regimented according to local guidelines.
You may feel more comfortable remaining “just” a principle in an LLC, or even as an individual if you are working as a Buyer of property. If you are licensed and acting as a Buyer, it may not impede your business model if you are removed from the Seller and have representation.
The risk comes if you are going to involve yourself in representing the Seller or acting on their behalf, say in a short sale situation, and you have the intention to purchase the property.
There are fiduciary responsibilities and whens the lines get muddled, it is easy to target the practitioner. If you are acting in your own best interest and the Seller is doing the same, it makes for a lot clearer transaction.
Depending on what you are soliciting for, you may have to include logos, disclosures, and follow regulated guidelines set by governing standards.
This may in turn get your direct mail thrown away more easily. If the receiver thinks you are “just some realtor” trying to list their home, your efforts may be falling short.
However, as an unlicensed person, the “We Buy Houses” or other simple marketing can tend to have better reception from Sellers. It’s not impossible to advertise as a Buyer of properties if you have a license, but again, you may need to run it by your Broker to make sure your messaging is compliant.
3) Alternative Solutions
The biggest draw to having a license is access to the Multiple Listing Service. However, you may be lucky enough to find a generous Realtor that will allow administrative access through their portal.
Whether it’s a small fee, helping with marketing, or other administrative duties, being able to access MLS is crucial portion of your business you cannot go without. If that is the main reason you are obtaining licensing, it may not be worth it when you can simply connect with someone who does not use their MLS in high volume.
As far as listing homes, there are low fee brokerages that will charge a flat fee for putting your property in MLS. Similarly, there are agents that will represent you for a negotiated rate or price, depending on your needs.
Personally, having a license has only helped my business, but there are certainly days I miss the anonymity. It has not hindered any deals and there is always the option to team with other agents to act as a listing/buyers agent on any of my deals.
Much of where the licensing issue comes down to the question of how you are structuring your business. Whether the accreditation and licensing will help more than hurt is something you will need to weigh once your model is clear and your role is established.
What do you think? Did you get your license and regret it? Or have you chosen to stay unlicensed?
Photo: ADD Photography