6 Reasons You Should NOT Get Your Real Estate License

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Well, yes, you did read that right!

Search for it online, and out of a ten, nine sites will tell you all about the benefits of getting your real estate license. Before you set your sight on getting one, here is a piece of advice: Having a real estate license isn’t as necessary as many people think it to be. In fact, look at the market and you’ll find thousands of successful real estate investors who don’t have a license.

What’s more, most of the sites that tell you to get a license will add how time consuming the process is and how it isn’t important to get one. Some (like me) will even go further and list the downsides of getting a real estate license. So, if you haven’t yet applied for a license or are wondering whether it’s really that important, here are a few reasons you can look the other way.

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6 Reasons You Should NOT Get Your Real Estate License

Reason #1: You can’t buy a property from any brokerage.

When you have a real estate license, you cannot simply go and do the real estate deals yourself. You need to earn your license with a broker. This means that you would be required to work under a brokerage firm or a broker till you get a brokerage license. While the guidelines tend to differ in different states, most places will have similar guidelines for buying a property. This means that while your non-licensed status could actually allow you to buy the property from any brokerage, with a license, things are not as simple and straight forward as they might appear. You can no longer buy a property without informing your broker about it.

Related: Should I Get My Real Estate License? An Investor’s Examination of Benefits & Costs

On top of that, every brokerage office will have its own set of rules that you’ll have to abide by. So while some require certain hours of training, others will ask for a certain amount of hours to be spent calling people, holding open houses, or things like that. You may be put to work under one person for most of the time, or you may just have to report to the organizational head. Here too brokers will charge real estate agents a certain fee, which again depends upon the kind of organization they are and on the kind of setup they have. Finally, while licensed real estate agents can earn commissions, these don’t come their way directly. They often go to the broker first, who then decides how to split them and share with the agent.

multiunit-evaluation

Reason #2: You’ll face many issues with disclosure.

Once you have a license, you’re put on a pedestal and considered a ‘better being’. While this might sound good, the position comes with plenty of responsibilities. First, you’ll need to disclose to your buyers/sellers that you are a licensed agent, meaning that you can’t simply take advantage if a situation offers one. Many real estate agents who have a license have found out to their dismay that this higher status and a need for disclosure can negatively impact their business and personal portfolio growth. If you don’t want to be a real estate investor but just a realtor with 9-5 job of selling homes, than these disclosures shouldn’t affect you and the “better being” will just boost your ego.

Reason #3: Getting a license isn’t as easy as it sounds.

Getting a license isn’t just about calling the state licensing commission, where they’ll simply add you to a list. The process is lengthy and time consuming. In fact, if we break it down, you would need to put in about a 100 hours of coursework and plenty of studying before you take the exam, which only qualifies you for a license. And when you’re there, the exam isn’t exactly easy, and not many get through the first time.

Following this process are other steps, which include an FBI background check and other tests to check how legit you are. Once you are pre-licensed, the brokerage may ask you to take up additional courses, too. Through the process and beyond, you’d be required to abide by the strict rules that the regulators will impose on you. Only when the brokerage firm and the government work together with your paperwork will you get a license, which can be used under the sponsorship of the broker.

Reason #4: Real estate licenses involve an expensive process.

Not only time, the process involves a lot of money too as you have to join courses first to prepare for the exam, pay the fee and then join various organizations because you have a license. Also, once you do get a license, you will be required to work under a broker, a commitment that will take up more of your time and money. In addition, coursework with the brokerage can get pretty expensive. Additional costs also include the fees for maintaining the license, memberships to boards, MLS fees and subscriptions, ongoing training, E/O insurance, IDX subscriptions, fees towards local real estate agent boards, and also state boards.

While many will tell you that the money spent is worth it because you build your network of agents, that’s just an excuse. Networks like this can also be built at other occasions that don’t necessarily charge money. Once you are in this line of work, you automatically mingle with certain people. The best return on investment I’ve ever had is buying folks a $3 coffee and networking.

Related: 4 Advantages of Keeping a Real Estate License as an Investor

Reason #5: There’s an overload of paperwork.

Finally, you may love it or hate it, but you can’t ignore it! The paperwork. Once you have your license, the paperwork is bound to increase like you wouldn’t believe. Ask licensed real estate agents, and they’ll tell you how two days in the week just go to getting the paperwork done. I know that it is “necessary” to have it all in place, but it can get rather frustrating. This is because, as a licensed real estate agent, you’ll be responsible for writing your own offers and submitting forms to lawyers, brokers, agents — and don’t forget the paperwork with the MLS.

If you think that putting in a ton of hours doing paperwork is not your cup of tea at all, then you can get other people to do it, but this again comes with a cost. And then again, you may not be entirely pleased with the results because they aren’t under your complete control.

investment-savvy-realtor

Reason #6: The MLS access isn’t all it’s cracked up to be.

Many licensed real estate experts also rave about MLS access being one of the distinct advantages of getting a license. However, it’s wise to remember that simply having a real estate license isn’t enough. You also need to be a member of the local board and pay their fees and be part of a brokerage just to gain access. Also, though the database holds a substantial amount of information, you can always get it through real estate search engines too, minus the fee.

Secondly, many of the deals that you find on the MLS tend to be way too expensive. Add to that a list of many expired historical listings, and you get a picture of what it is really like. Thirdly, while legally-speaking MLS access goes only to those who have a license, it is easily misused. So in cases where your spouse has a license, you get access too, despite you not having a license. I think you get my point.

Getting a license does have its benefits. Once you’ve crossed the hurdle of time and money, have started loving the loads of paperwork you’re expected to do, the sun does come to shine on real estate license holders. You have access to the MLS database — which does hold some good listings — and you get to form strong relationships with other agents. You even can take commissions on deals. Most importantly, you enjoy the status of being a “licensed real estate agent,” which not many have. You’ve actually worked hard for it!

However, do remember that having a license doesn’t qualify you as a real estate professional for the IRS. It is your work, the quality and the number of hours, that help you gain that status. Also, when you do look at the successful real estate investors out there in the market, you’ll find an interesting trend: Most of them aren’t licensed. The reason behind their success is their single-minded focus on the work they do well, and that’s investing in real estate.

Before you decide on heading out for a license, I’d suggest that you think through the pros and cons. Ask yourself whether you’re planning on a long-term commitment to the line of real estate. Weigh the benefits of getting a license, and put them against the downsides of getting one. And while you’re doing all this, think about what it is that you actually want from real estate. Is it financial freedom or a sales job?

I’m looking forward to your comments below and a ton of heat from all of you real estate agents out there.

Let me know your opinion with a comment!

About Author

Engelo Rumora

Engelo Rumora “The Real Estate Dingo" is a successful property investor, motivational speaker and serial entrepreneur that quit school at the age of 14 and played professional soccer at 18. He is also a soon to be published author along with becoming a TV personality in his very own real estate house flipping show. To find out more go to engelorumora.com . Engelo Rumora has been involved in over 400 real estate deals and founded five businesses in Ohio. The most successful is Ohio Cashflow, a company that specializes in providing turnkey properties in several Ohio markets. The newest venture is List’n Sell Realty, a real estate brokerage based in Toledo, Ohio and soon to be known as the #1 discount broker in the country.

81 Comments

  1. Mike McKinzie

    Funny, I just took my California’s Real Estate Salesperson exam on Thursday, April 7th, and passed it with ease. Of course, I was a licensed California Real Estate Broker from 1985 until 1997 and a Colorado Licensed Broker from 1998 to 2002. After two years, they require you take the test again. Of course, there are the reasons you listed to NOT get it, so for a counter argument, let me list six reasons TO get it:]
    1. Once you are licensed, you will have access to a lot more Real Estate Data, not just the MLS. When people know you are licensed, they tell you information they know. My first purchase was never on the MLS, but I bought with 100% seller carry back, so I had no money in the deal.
    2. If you are licensed, you can ask for, and usually get, a Referral Fee when you buy Turn Key/Out of Area Property.
    3. It is much easier to network with other Licensed Agents if you are licensed.
    4. While there is more legal liability, that comes with more legal KNOWLEDGE, which is very helpful.
    5. If you have local property, you can be the listing agent. Currently, my personal residence is worth around $600,000. By being licensed I save at least 1/2 of 6%, or $18,000.00 by being licensed.
    6. By being licensed, you can use your commission as part of the down payment when you buy. Read Rich Weese’s book, From Janitor to Millionaire using Real Estate, and he talks of dozens of deals he bought, using his commission as part of the down payment, MILLION DOLLAR deals!

    As an added bonus, you will gain access to OTHER INVESTORS more easily if you are licensed. And you might be able to pick some of them up as clients.

    NO, not everyone should get a license, but like the “Ben Franklin” Close technique, draw your T-Chart and write the Pros on one side and the cons on the other, and then weigh them out.

    • Michael Babcock

      Thank you. I couldn’t have said it better. Whenever I hear someone advise an investor to not get a license, it’s typically by someonewho never had a license.
      I’m a broker and we have an investor brokerage, not to be confused with an “investor friendly” brokerage. A completely different animal. All our agents are investors and most of our clients are investors.
      I’ve had my license for 11 years and about 96% of the wholesalers I deal with have a license.
      I agree with you, not every investor should be licensed. It might not be necessary, and weighing out the pros and cons would be a much better approach than taking advice from an article obviously slanted…..
      Cheers,
      Michael Babcock, broker
      Golden Homes Realty, LLC
      St. Louis, MO

      • Engelo Rumora

        Same here Michael,

        Every comment under this blog is made by those with licenses so they off-course angle having a license in their favor.

        Personally, I see myself running a ton of businesses in the future and getting qualified for every single one of those businesses is not feasible.

        Have a great day.

    • Tanja Davidson

      Thanks for the article and the follow up comments. I got my license in NC by attending classes for only 5 weekends. 9 to 5 every sat & sun for 5 weeks. The last weekend was spent doing a study/review and then the test. Two weeks after that I took the state exam. Thought it was easier than the class was. Then I went ahead and took the three post-license classes to be a full broker not just a ‘rookie’. Each of those was two weekends each. I have yet to affiliate with a broker because my full time job is getting in the way. I plan to retire within the next year or two and will affiliate then. My pre-license instructor did his best to scare off anyone who wanted to do just REI but then at the end he listed reasons it would be helpful. I’m glad I have mine and will be able to use it when i finally affiliate. I hope to work with mostly investors while I earn the money to do my own deals.

      I learned so much by taking the classes and still feel that anyone new should take the pre-license class even if they don’t plan to take the test for getting their license. There is just so much good information to learn to not do it and it was a suggestion on this blog to take the class which was the reason I signed up. Once in the class I figured ‘why not go ahead and go all the way?’ so I did.

  2. Sharon Jones

    From what I read on numerous real estate forums, most of the pros are “now” saying you should obtain your real estate license to do creative real estate deals such as wholesaling, lease options, and subject 2, etc, to stay out of trouble with the real estate commission board and lawsuits; They basically insist strongly that you obtain a license!

    I know you should do the pros and cons when considering obtaining a real estate license as a real estate investor doing creative deals.

    My reason for not obtaining a license was from talking to a former real estate agent who was brutally honest with me in what all entails in getting a license. She laid it all out on the line for me. As you and she mentioned,, there are a lot of obscene fees involved in maintaining a license; For this reason alone, that’s why I was deterred from obtaining a license.

    I rather still do deals and work closely with a real estate agent on my team and an attorney to make sure I complied when doing deals and stay out of trouble or litigation.

    • Engelo Rumora

      Thanks Sharon,

      You can still abide by all of the laws and regulations without having a license.

      We as a company hire an in-house broker and have been working with numerous realtors for years now. Their role and status is much respected and appreciated.

      The blog was meant to be on the controversial side to get folks commenting and I knew it would generate heat.

      Hopefully the comments will stay civil without too many “Ego-Hero’s” posting crap haha

      Thanks and much success.

  3. I agree with Mike above and I have a few more thoughts.

    I find this article to be wildly inaccurate. I am a managing broker in Illinois. We need a little more education ( which is never a bad thing) and took a slightly more difficult test than regular agents take. I can work entirely for myself. I don’t need my own office. I don’t run anything past a managing broker or need permission. I need recertification every two years and it takes a few days. I always learn a little something new from the courses or meet other realtors at the classes. Yes, the test is poorly worded and it can be tricky. It is not like passing the Bar exam, or the CPA exam. A little bit of preparation is all you need.

    The cost of education and the MLS dues is more than covered by my side of the commission from one HUD deal or bank owned foreclosure ( I buy a few of these each year).

    Not having access to the MLS is like investing in stocks without having access to a computer or even a newspaper. I am a landlord and sometimes flipper. I am full time. I can see what houses in my towns are listed for and closed for. I can see what rents are asked and received. I can see pictures of newly sold houses and newly rented houses and compare them with my offerings. The 15 minutes a day I spend perusing the MLS are the most valuable time I spend all day. Zillow and the other search engines are getting better, but they are not in real time. You cannot get the same amount of data without a lot more work. You cannot see seller concessions such as points paid which are a vital part of the purchase price. Even if the data existed ( and it does in some counties) , you would spend much more time finding out the same facts than just one screen on the MLS.

    What paperwork are you referring to? I buy a few houses a year. I sell a few houses a year. The MLS has an autofill feature with each contract. It takes about 10 minutes to complete a real estate contract as a Realtor. Most of the paperwork is with my bank and local villages filling out garbage forms. I would still have to to that even without my license.

    Most motivated sellers don’t care if I am licensed or not. They want their problem to go away. Most renters like the fact that I am a realtor, because they many have been burned by slimy landlords or landlords that lost the property to foreclosure or other reasons. Being licensed gives me a little more credibility.

    If you are living in a world where you are trying to trick people into giving you their house because you are posing as an ignorant bum, keep on buying seminars from the real estate gurus. If you are living in a world of being responsible and professional, then having a license will only help you, not hurt you.

  4. Laura Sulak

    I plan on obtaining my real estate license for my own investments, for the inside technical knowledge, for MLS access, to pick up a few commissions and to eventually start a property management company.

    Both sides of this discussion can present a good argument for their position, though.

    I’m curious to hear more. What have been others’ experiences with this issue?

  5. Jerry Kisasonak

    Poorly thought out advice. Please ignore this article and get your license.

    I personally know many real estate investor rockstars who are either agents or brokers. It doesn’t cost much to get your license (actually it will SAVE you money), you’ll learn a lot (value education), MLS data is great (from the horses mouth), disclosures are not at all a problem (people actually like to know you’re a pro), you don’t need to get your broker’s permission to buy something (at least not with Keller Williams!), and yes there IS paperwork (welcome to the real estate world!). Stop wining about how cumbersome it’s going to be and man-up and be a true pro.

    • Engelo Rumora

      Thanks Jerry,

      I could say the same for your comment.

      Poorly thought out advice. Please ignore this comment and don’t get your license.

      It as nothing to do with your success in real estate.

      I’m living proof of this with over 350 deals under my belt and running a successful multi-million dollar real estate investment company that is abiding by all of the laws and regulations without anyone holding a license.

      I also know of the biggest rockstars the country or Bigger Pockets hasn’t see as they wish to be low key and none of them have their real estate license.

      Much success with your endeavors.

      • Jerry Kisasonak

        Engelo: I would agree that you can be successful with or without a license. Fair enough.

        To my other points, I was simply replying to your points based on my experience with getting and holding a license. My experience was much different than you described. So, I just shared my thoughts about it. Your points may not have been poorly thought out – so I retract that comment – but they didn’t mesh with what my experience has been.

        • Engelo Rumora

          Now worries at all mate,

          Every blog I write is always angled toward being slightly controversial to get people’s emotions high so they start commenting 😉

          It works well and more folks get engaged hehe

          I have thick skin and can handle heat thrown my way.

          Thanks again and have a great day.

    • Angela A.

      Your comment is flat out rude and unprofessional. You can disagree but not have to low-level mud-sling.

      I have an agent friend in CO who states his first two houses he sells for KW he will not be able to collect a commission on as a new agent and still has to pay $9,000 a year.

      I do not think getting extra accreditation is ever a bad thing, but perhaps after you have some experience in REI or you actually want to be an agent. You can find all of the data that is listed in the MLS, just a more leg work; some investors do not even deal with the MLS anyway.

      But no need for remarking the way you have here…who is the professional?

  6. Jasmine W.

    So what a coincidence I just took a break of studying for my real estate exam that I need to pass in the class before taking the state exam and i see this article!!! If i fail (which i hope not) then maybe i will come back to this article to make me feel better about it.

  7. Good discussion. I was a real estate investor for 8 years and decided to get my license and I have been happy with the decision. It is certainly legal to be an investor, flipper, rehabber, landlord, etc without a license. The licensing process is a little bit of a pain, but not really that big of a deal. If you are best friends with a realtor or married to a realtor, then you clearly don’t need your own license unless you just want it.

    I am somewhat of a control freak and really value the information in the MLS.

    Bottom line, and I think we all agree: you can be a success either way. A license does not hurt and may help. Best Wishes Everybody!

  8. Owen D.

    I believe the biggest benefit would be to view properties and write offers just as soon as I feel like it, instead of waiting for an agent’s schedule to coordinate with mine.

    I’ve lost out on smokin’ deals before while waiting for an agent to be available.

        • Yellow letters are a method of contacting hopefully motivated sellers in a non-threatening manner letting them know you purchase houses in their neighborhood. Ron LeGrand made it famous. You can buy his books for 20 bucks on Amazon. They found that simple hand written letters, self addressed on yellow paper generate the most response from sellers. A lot of work and the key is FOLLOW UP. People that have a disciplined direct mail program swear by it.

  9. Scott Schultz

    Getting the license is not the expensive part, its joining the local, state, and NAR, and MLS access, the costs add up, but 1-2 deals a year for others will pay for that easily, the time for pre-license can be a lot, and CE requirements, not to mention what it would cost to have your license with a broker. and being held to a higher standard as a Real Estate Professional. That being said, i would not change a thing, as I am a Broker for the past 10 years, and the education i got from listing for banks, and working with other investors has been priceless education.

  10. Jerome Kaidor

    I was thinking about doing this – getting an RE license – for many years. It was on the backburner. Then they changed the law in California. Used to be, you could get a Broker’s license here by just taking the test, IF
    you had a bachelor’s degree – in anything.

    Then they changed it so that the degree has to be in RE. A four year degree in RE is WAY more effort than I care to put in. And without that degree in RE, you have to work for somebody as a house salesman for a year. No thanks.

    I’ve made my piece with not knowing everything and not doing everything. My taxes are done by a tax accountant. My payroll is done by a payroll service. Handymen swing my hammers, paralegals and lawyers do my evictions.

    Even with all that, I’ve managed to grow my empire to 80 units, and have kept myself in kibbles for the past 13 years without working a W2 job.

    • Mike mckinzie on

      Jerome, I need to study the law a little more, but I think it states that you have to “work” under a broker for two years, but it doesn’t say you have to be a salesman. You might be able to find a Broker who will let you hang your license under her/him and still just do your own thing. Maybe pay a small annual fee to them. Just a thought.

    • Engelo Rumora

      Well done on your success.

      I love the Richard Branson approach of having smarter people in place doing the things that you can’t do or don’t want to do.

      That’s how he was able to amass hundreds of companies.

      Have a great day.

  11. Mike mckinzie on

    The one thing NOT mentioned here is that each state has different rules for requiring a license. California is extremely STRICT. Here, you cannot show a rental unless you are licensed, the only exception being if you are the owner or you are a resident manager. If you are a host/hostess for a builder, you cannot quote prices or show models unless you are licensed. If you are a lender , you cannot take a Loan Application unless you have a license and an MLO endorsement. If you want to Broker Notes, you must be licensed. And as a Trivia question, California was the FIRST state in the US to require a license to deal in Real Estate. And they have been on the cutting edge of license requirements ever since. I am not saying whether I agree or disagree with it, I am only saying that I Have to follow the rules. There is even rumor of Title Reps and Escrow Reps being required to be licensed. Therefore, in California, better safe than sorry if you want to invest in Real Estate. While technically there is no need, it is tough to invest when you are behind bars.

  12. James Wise

    Additional paperwork: Such a small piece of the pie that this point is irrelevant.

    Disclosing to others your licensee status: Non issue, has never affected any of the deals I have done. If anything the other side is pleased to know that they are dealing with someone who knows what they are doing.

    High costs of maintaining a license: If you are serious enough about being a person who earns money transacting in real estate deals the commissions will make up for this cost with one or two deals per year. Everything after that is pure profit. The question is how many deals are you planning on doing in a given year?

    Is a license worth the hassle for the arm chair investor? No, probably not. However it is an invaluable tool for the person looking to make transacting in real estate their full time job.

  13. Danny Halverson

    I disagree. I have my Texas license and previously held a license in California. Although it entails a lot of work and expense to remain a professional, the advantages far outweigh the hassle. I have been investing for 30 years and have done buy and hold, flips, and wholesaling. All very profitable. The biggest challenge with this business is the competition; there are too many people doing it. That said, I can’t tell you the number of times I have been able to trump my competition just by showing a potential seller I am licensed. Also, if you buy HUD homes, the 3% commission they pay licensed agents on the buy sided, allows you to blindly bid at 3% over the initial offer price and win many of the bids. It’s a legal advantage you won’t get without being licensed.

    • Engelo Rumora

      Thanks Danny,

      There is very little competition with yellow letters and in my opinion money speak every language.

      We close on deals within 10 days and that gets every sellers taste buds going with room for negotiation.

      Much success.

  14. Darrell Lee

    As a licensed Real Estate Agent I’ll have to agree with Engelo. But… For completely selfish reasons. I love working with my investors who refuse to get licensed. There knowledge, experience and clear defined outlines of what they are looking for make my job as an Agent much MUCH easier. I certainly enjoy the commissions and to be honest I much prefer to work with investors as with them its focused on the numbers of the deal and less about the emotional connection to the home.

    • Engelo Rumora

      Thanks Darrell,

      I have no interest in getting a license anytime soon but have some amazing folks around me with with licenses, degree’s and all the other necessary pieces of paper hanging on their walls.

      I only have a ton of goals hanging on my walls hehe

      Have a great day.

  15. Jacob Pereira

    I’d actually like to hear more about reason #2. How can disclosure negatively affect deals? Is there some kind of legal complexity involved?

    You write that disclosure means that you can’t simply “take advantage” of a situation; if that means you can’t be unethical once you have one, then this seems to me to be bad advice. If there are legitimate legal problems with certain types of deals due to your license then this is very good advice.

    • Engelo Rumora

      Thanks Jacob,

      If someone brings me a deal that I want to buy for my personal portfolio and if I was licensed I wouldn’t be allowed to give them a $500 referral fee. The list of such examples goes on.

      Also, I just recently realized that its against the law to give anyone a financial referral fee, licensed or unlicensed. It has to be classified a gift lol

      The law and regulations here in Ohio are very strict.

      Much success.

  16. A E Ferguson on

    Interesting topic, I have had my license since 911… reason being I needed to diversify adding another feather in my cap and my love of RE… However, when my 20 something son had the chance to take the pre-license class he came out with good information and made the decision…one license in the family is enough… We will compliment each other in our real estate investing.. I have decided to get my broker’s license…One reason is networking, other reason flexibility and not having to give a % of my future commission / time to a brokerage.
    There’s a ton of ways to skin a cat… you just have to take time and decide what’s right for you.

  17. Charles Morgan

    I have not gotten my license because I am still working a J.O.B. full-time, for another 8 months or so. After that I will certainly reconsider my options. In spite of that I have purchased 8 homes and will be looking for number 9!

  18. Sean Cole

    Most of that article reads as trolling for negative comments.

    I started wholesaling in 2012 and got licensed in early 2014. For doing literally the same exact work I was doing before, I doubled my pay. Know how long it takes me to generate a full offer package with POF, EMD check, agency disclosures (and even the FNMA addendum if I want)? Under 5 seconds. Know how much of my commission dollars I keep? 100% less a $275 monthly fee to the broker. I’ll trade $3,000 a year (let’s call it $5k with other fees) to yield well north of 6 figures in real estate commissions alone.

    Again, it’s pretty clear that the entire post was designed to troll, so well done in that respect. Mostly, though, you’ve given really terrible advice to a lot of people. There’s absolutely nothing preventing a licensed agent from sending yellow letters.

  19. Michael Woodward

    I was a real estate investor for about 13 years before I got my license (licensed for two years now) so I’ve been on both sides of the aisle. The title to your article caught my attention because it goes against the trend and general opinion of nearly all of the investors I’ve seen here on BP. I was expecting to read a thoughtful examination of the reasons not to get your license from someone that has their license and has developed an opinion that it’s a bad idea. What you’ve given us though is an incomplete and inaccurate perspective from outside of the field.

    Reason 1: “You can’t buy a property from any brokerage.” — Sure you can! I had real trouble following your point but in response to your statement…. you can buy anything you want from anyone…. even brokers. In fact, as a licensed agent, you can buy properties on government websites that you wouldn’t have access to without a license or getting another agent involved. What if bidding ends at midnight for a property you really want and you’re trying to time your bid for the last few minutes. Do you have an agent that’s available 24/7? I was never able to get that kind of availability and I lost deals because of it.

    Reason 2: “You’ll face many issues with disclosure.” — Can you list a couple? I agree with an earlier comment that said that it sounds like you want some wiggle room to be unethical. I’m a huge fan of free market capitalism and I also want and expect others deal ethically with me so sometimes a few rules are a good thing. From personal experience as a licensed agent, I can tell you that if you run your daily business in such a way that you would run into problems with disclosures than you are not acting ethically.

    Reason 3: “Getting a license isn’t as easy as it sounds.” — That depends on your expectations. Representing people who are about to make the largest purchase of their lives and commit to a mortgage that will last a large portion of their life is no small deal. Agents (and investors!!) need to understand the legal implications of what they’re doing. In short, they need to know what “ethical” looks like. The education you get in the process of taking the courses is an added benefit that will help turn you into a real estate expert. This is not an easy business to succeed in. This is probably the wrong career for anyone that thinks the education requirements are over the top.

    Reason 4: “Real estate licenses involve an expensive process.” — Are cars and houses expensive? Of course! Then why do we buy them? Because they’re worth more than we pay for them. This is no different. The network you mentioned is not an “excuse”….. it’s real. There are many other things that you get beyond the network that work toward your expertise and success.

    Reason 5: “There’s an overload of paperwork.” — You probably have a lawn but do you have to mow it? Nope. If you want to mow it yourself you can…… or…… you can pay someone else to do it. This is no different. There are only a few things that agents can’t delegate to an unlicensed person (like showing houses) but the bulk of the work…. including most of the paperwork can be done by anyone.

    Reason 6: “The MLS access isn’t all it’s cracked up to be.” — Oh contrar….. Your comment that all of the information available in the MLS is available on “real estate search engines…. minus the fee” (??) is simply not true. This is like comparing your local astronomy club to NASA. I’ve been using the MLS for all of my real estate data analysis for a long time now but I still haven’t fully utilized all of its abilities. I’m a Mechanical Engineer and I was blown away at the depth of their data and analysis tools.

    To your last statement of whether you want financial freedom or a sales job…. I got my license because it gives me a powerful tool to help my business succeed. There’s nothing about being licensed that looks like a “job”. I work where I want (home office)…. when I want (no mandatory office time) which allows me the ability to home school my two boy’s math and science classes every day….. priceless!

    I’m not trying to pick on you but I think you’re doing a real disservice to those that will follow your advice that’s not based on experience. This is not something that will be fully understood until you’ve walked in the shoes of a licensed agent.

    I’ll leave you with a challenge….. Get your license and hold it for at least one year. From the way you described your business, it sounds like the time and expense won’t be a big deal. After one year, write another article and let us know if your perspective has changed.

    • Jacob Pereira

      Wow, color me impressed! Responses (and posts) like this are exactly what BP needs. There is a ton of great information and actionable advice on here, but it is often hard to dig through the fluffy puff pieces, sales pitches, and outright uninformed opinions to get to the gold. You managed to give your honest opinion without sounding condescending, and offered an actionable way for OP to either validate or refute their original premise.

      • Engelo Rumora

        I’m loving the replies also,

        Keeps bumping my blog to the top and my name gets to linger around for longer lol 🙂

        I think that we only had licensed agents heatedly replying.

        I’ll see what other group I can tickle in my next blog.

        Have a great day.

    • Engelo Rumora

      Thanks for taking the time to compose a very detailed reply to my blog.

      I’m glad that slightly controversial (depends on how you take it) blogs like mine stir the pot and get emotions running.

      Well done on getting your license along with being a mechanical engineer.

      Your education is visible in you’re very detailed and well composed comment.

      See, I quit school at 14, have no real estate license, can hardly read and type but still somehow manage to get ahead 🙂

      No home schooling regime with our little bub but rather regular getaways to our 2nd home in the Bahamas with many life and entrepreneurship lessons….. priceless!

      Much success

  20. John Adams

    I own 8 condos in Atlanta, and am looking to buy more. My personal experience has been that when potential sellers see me as an “investor”, or “professional”, *some* of them tend to get anxious and consciously (or sub-consciously?) fear that they are going to get screwed because the buyer (me) is some sort of ruthless shark. In some cases, the seller is delighted to know that s/he is selling to a “pro” — but my experience is that many folks are afraid of getting screwed by a pro.

    I’m reminded of how many people are afraid of getting a bad deal when they buy a car. People who are savvy at “deals” often enjoy the process of buying a car (and getting a good deal). Others dislike it. Interestingly, I would guess that pretty much *everyone* on this forum is of the former style — people who like doing a deal. But most of the time, I am approaching people who don’t thrive on dealing. They need to feel comfortable, and my being overly-educated/certified.trained/etc is a hindrance.

    Anyway, where I’m headed with this is that my perception is that if I were to get my RE license, I would look even more like a “pro”, and thus further alienate myself from prospective sellers.

    Many of my most attractive deals were ones where I used a buyer’s agent, who was able to work the deal and allow the seller to feel like they were “safe” and “comfortable” due to presence of the 3rd party.

    I have had a couple of sellers actually confirm my suspicions by telling me directly that they trusted the combination of my acting as an individual, “fronted” by an agent (they didn’t use these words, but that was the gist).

    All of this is, as noted, based on MY EXPERIENCE, so please don’t trouble yourself by flaming away to explain to me that my experience is somehow invalid, impossible, etc.

    A side note: I am not the “John Adams” who has had a real estate column in the local Atlanta paper (and radio) for some 25 years; people have incorrectly assumed that I was “that guy” and gotten turned off for *exactly* the reasons stated above. In short, people are afraid of getting taken advantage of. Obviously, I am quick to point out to people that I am not the guy with the radio show :-).

    • Engelo Rumora

      Thanks Adam,

      This is my line “Everything I say is always based on my perceptions, opinions and experiences.”

      It’s the most diplomatic statement there is hehe

      Someone will still find a way to stab at you tho.

      When we send yellow letters, most folks that call back ask “Are you a realtor?” “If you are, we don’t want to speak with you” lol – Not sure why there is a stigma surrounding realtors here.

      So based on that and when talking with sellers, my experience has been different.

      Thanks and much success

  21. Tyrone Green

    Engelo,

    Having built up an admirable sized real estate portfolio, I can understand how this topic is of such importance to you.

    Personally I decided to forego training my license for many of the reasons you stated above. I feel as though this is not a discussion of right or wrong, instead more likely a discussion about how much “freedom” one would like to have.

    As always, I look forward to your next bag of insights.

    Tyrone

    • Engelo Rumora

      Thanks for your comment Tyrone,

      Over the years I have very much learnt to not get caught up in the noise and what others have to say. Everyone will always have an opinion. I’m always happy to share mine.

      And as you say, it shouldn’t be about right or wrong but more so having a great discussion that benefits everyone 🙂

      Thanks again mate and much success 😉

  22. Shane Wood

    I’ve thoroughly enjoyed reading this article and all of the comments. Different strokes for different folks.

    My wife is currently studying for her RE exam. We have carefully weighed the pros and cons. She actually likes paperwork so we’ll be fine. We’re in the very beginning stages of real estate investing (the learning stage). We feel like the education is invaluable. Plus, every penny of her earnings will be invested . We will succeed. I’m excited about our future and I give much credit to all of the investors who contribute their experiences on Bigger Pockets. Thanks everyone.

    • Engelo Rumora

      Thanks Shane,

      Love this “Different strokes for different folks.” haha

      I always use “whatever floats your boat” hehe

      I wish you and your wife much success with your real estate endeavors.

      Keep the dream alive 😉

  23. Maggie Tasseron

    Hi Engelo: I’m confused by what you say about many properties on the MLS being too expensive, and also by what you say about gaining access to the MLS. I live in California and I’ve had (free) public access to our local MLS for many years; that was my main source of properties I’ve bought until Homes.com and Realtor.com came along. Now, when I do check the MLS, I find that the properties I’m interested in are listed on all three of these websites.

    I wonder if the rules differ from state to state?

    Thanks, Maggie T.

    • Engelo Rumora

      Thanks Maggie,

      The average and beginner investor in Ohio can’t freely access the MLS.

      To be honest, I haven’t checked the MLS in years lollol

      We find better deals off market via other strategies along with running comps via the county record site and Zillow.

      Thanks

      • Muhammad Ali

        Hey Engelo,

        I was curious about your experience with the accuracy of using Zillow and the County Records. From what I have heard, Zillow just takes info off the county record and in my experience the county record is not very accurate. My home for example is listed at 3 beds 1.5 bath, in actuality its a 4 bed.

        • Engelo Rumora

          Thanks Muhammad,

          To my understanding Zillow actually takes details from the MLS and not the county records.

          County records tend to be right most of the time and I have seen incorrect info only on a few occasions.

          Thanks 😉

  24. To you out there who thinks getting a license in real estate have no idea of it limitations, first once you got it it nothing but maintaining it, second you will have to wok and do has they tell you under a broker who has full OK by the establishment to charge you what ever they feel like and you’d slaving for them, their goes all you dreams of big pay days with with will be far in between unless you spend in five figures advertising just to break even, third once licensed your investing potentials and any one associated, related can ‘t buy from your office for HUD, Fannie Mai, or bank own you’re representing, fourth I’ve invested without one and did multi millions owned properties and sold to get a license and been working now for 17 years for less than minimum wage and working my own hours for nothing in the 70 + hours no benefit and fifth it mostly a business skim with your broker getting your gov, blessing to screw you , just an other form of slavery where you have to pay and promote someone else s business work day, nights, weekend with no benefit what so ever and pay your due or they got you banded from making any deals or ever steal from you and you have no nothing but Taxes and SS to pay at tax time. Love it and subsidized this bitch for 17 years. Get your and good luck it licensee beware without the consumer protection aloud by law.

    • Engelo Rumora

      Thanks for your comment Tony,

      Just to add to your comment that I’ve spoken to so many realtors and they all say that they get very few leads from their broker and pretty much every lead is earned by their hard work.

      Yet, they still must splits a commission with the brokerage. Definitely not my ideal of being involved in real estate.

      Thanks and much success 😉

    • Much of your comment is correct, but you can represent yourself and buy HUD, bank owned, and any other type of REO. You have to DISCLOSE that you are a Realtor and representing yourself. I even get the commission also! HUD and the big banks are so stupid and so lazy it does not even occur to them that they don’t have to pay me a commission. Only ONCE has a seller ( actually the seller’s realtor) told me I can’t get the commission. She was of course correct and she ended up getting the entire commission. For HUD properties, they only care about the net price. If you give yourself a 0 commission, their net increases, making your offer better.

      I think your comments reflects working for someone else. Here in Illinois, I am a managing broker, which means I can work by myself, for myself. 100% of the commission is mine. I am in the business for investment purposes and agree with you that driving around buyers all day for a commission is no way to live.

  25. Scott Schultz

    While there are valid points in the article, I will say i dont complain when Auction.com sends me a comission when i buy a house, or Bid my own HUD Listings, or dont have to wait on an agent to view a Williams and Williams, or get a Coe for a HUBZU, Just accessing properties, and submitting my own offers and listing my own flips are increadably valuble to me, but if you buy a deal or 2 a year it may not be worth the hassle, but if your volume is higher it may be useful.

  26. I know this post is a little older but it contains some great perspectives. I have decided today, that I will let my license lapse in 2017. I have sold real estate full time and then part time….oops, I mean I was “dual career” as one scolding Realtor put it, and for the last 2 years I have been “inactive” but licensed.

    The reasons for allowing my license to expire are as follows;

    1. I have done the math and discovered that if I wanted to sell my own home and be the listing agent, It is more lucrative to hire an Agent at 4% than it is to pay the MLS, Local Association of Realtors fee and take the commission as income. This calculation was done assuming I only did one transaction in 2017-my own home.

    2. I still have a passion for real estate but am looking for a way to simplify my approach while finding a niche I enjoy. Enjoyment for me no longer includes giving up nights and weekends to do some of the required tasks associated with getting a property settlement.

    3. Tons of cheap talent already out there. There is no shortage of licensed Realtors who are willing to work hard for you. They are willing to share the information they have access too and what they do not know, their Broker likely does. Ditch the 3% buying side argument because even as a licensed agent, you will pay that when you sell. If you can have a property listed, marketed and negotiated to settlement for 1%, why pay the fees of a real estate license and take on the associated disclosure obligations.

    Final argument for me was I just do not enjoy listing homes or running around buyers. It is very difficult to pound reason into someone who is buying or selling on emotion. Of course you can cater to that emotion and puff the direction they have already chosen. Or you can specialize and work with investors who already know they can hire a pretty good Realtor at 4% who will bust their buns to get that property at the best price possible with hopes of selling it at the best price possible. They will relentlessly pursue this goal every evening and weekend while the investor reaps the benefits or suffers the loss-hence the thrill of the game continues.

  27. For me its like, “Yeah right, like I really need an ear tag from some organization to give me permission to sell something that I own”. Licensing is one of the biggest scams in America… Like a drivers license, wtf is that? A bar license, again wtf??? real estate license???? Next thing these scamps are gonna try to sell me a flippin license to breath…

  28. Can someone give names of some companies who will allow me to buy and sell properties as soon as I get my license? Are there such companies? I live in Colorado ? Ive heard that some require you to work with them for a couple of years before you can use your license and some want a monthly fee. I’m willing to do the latter, as long as I can use my license and the monthly amount is not too hefty. Your input would be greatly appreciated. Thx!

  29. Eyan Lakhani

    I am a heavy BP content consumer & a wholesaler in San Antonio. I truly feel the need of article like this that gives a different and contrary perception of being a realtor.
    However, I think there are a lot of opinions in this article that are YOUR opinions and may scare away some folks. You might wanna consider editing a few things. I’d be happy to point out my observations if you are considering my suggestion.
    Thanks though !

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