Should I get my real estate license or shouldn’t I?
If you have been reading the Forums or the blog for any length of time, you know this question is often answered as either yes, you should obtain your license or no, you shouldn’t. Well, I will add my quick advice to this topic, and hopefully this will give newbie wholesalers a personal perspective on the subject. Here are a few reasons why I am a strong advocate for getting your license.
Before I begin I would like to inform my readers that it is possible to wholesale without getting your license, and I did this prior to getting my credentials. So I am not here to say that it is not possible; I just want to give you a perspective on the advantages of having a real estate license.
Here is the most important reason a newbie should receive their license: You will learn how to work your profession the correct way from the beginning. There’s nothing more difficult than to unlearn a learned behavior. This speaks to the importance of starting your career the right way.
Here are a few advantages of getting your license.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
3 Reasons Newbie Wholesalers Should Get a Real Estate License
1. Legal Guidance
What are some of the things that need to be learned, you may ask? Let’s start with how to write a contract CORRECTLY. It is really entertaining to see the mass-generated contracts that float around the investment community, used by newbies and uninformed seasoned investors. These contracts are not reviewed by an attorney, they do not have proper disclosures, and they have limited legal leverage in the court of law. Yes, this is a quick way to find yourself in front of a judge. Did you know acting in the capacity of a real estate agent without a license can result in a fine of $10,000 and a felony conviction (in Arizona at least)? Now, this is not the way to get started.
By becoming a licensed real estate agent, you will have the legal backing of Department of Real Estate when using the state authorized Contract to Purchase Real Estate. As long as you are operating in an ethical capacity, you will have your broker and the Department of Real Estate backing you.
The real estate industry can be very lucrative; however, it is easy to find yourself in litigation, especially if you are trying to wholesale properties that are listed on the MLS. I speak of this because one of the main tricks that gurus try and tell/teach newbies is to find an investor-friendly real estate agent and make tons of offers. You must remember there is a listing agent on the other end of the transaction who will cross every “T” and dot every “I” to get a deal done because this is their profession.
2. MLS Access
Deal flow is the most important aspect of wholesaling; if you do not have leads, you do not have a business. Having a license will give you exclusive access to the MLS and other real estate agents. I spoke earlier on the guru pitch to find a real estate agent to make offers. How long will a real estate agent make offers for you if you are not closing on anything? Your lead stream from the MLS will become very limited very fast. By having your license, you will be able to make as many offers as you want and work the MLS at your leisure. Another quick advantage is you can utilize the MLS to comp potential deals. I’m familiar with tools such as Redfin and Zillow to provide comps, but the most credible source of comps is through the MLS.
3. Networking & Credibility
Networking in the real estate industry is essential. What better way to build your brand and your creditability than to be affiliated with other professionals in the industry?
One of the challenges of networking is finding a broker who has a similar philosophy and mission as you. This will help you build your brand. By being affiliated with a brokerage, you will be able to network with other real estate agents who may be able to provide you with pocket listings. Many real estate agents operate strictly in the realm of traditional real estate and some may have a few rentals, but for the most part, wholesaling is not a exit strategy they consider, which will put you in a great position to find deals.
Finally, credibility is another tool that lends itself to you. It’s a pleasure to speak to a motivated seller and inform them that you’re an agent and that you have to abide by all state regulations. Normally once they hear this, they tend to let their guard down and are more relaxed. This also gives you another approach: If the seller is not willing to sell at your wholesale price, you can inform them that you will be pleased to work to get them top dollar for the property by listing their home.
If you want, you can continue to work independently and take the high risk of possible litigation and losing money. However, if you want to set yourself apart, these 3 basic but important reasons to pursue getting your real estate license should help you make make an informed decision.
Thinking about getting your license? Have any questions?
Let me know with a comment!