3 Reasons Why You Should Forgo Your Real Estate License

by | BiggerPockets.com

Today I’m bringing you a vlog that a lot of you are probably going to absolutely hate me for. But, here it is: the top three reasons why you should never get your real estate license.

The Job Problem

The first reason, and probably one of the most important, is that real estate should not be a job. Now, it’s really unfortunate that I’ve been hearing that real estate agents are starting to get a stigma, or bad reputation. People consider them to be like second-hand car salesmen. People are saying this because some real estate agents really don’t care about the seller’s interests. All they are after is a quick sale and commission so they can move on to the next victim or next sale; because ultimately, they make more money by doing volume. So $10,000 more or less on a sale does not make a big difference to the bottom line on their 5–6% listing-fee commission.

Related: Investors: Should You Get Your Real Estate License ?

Now, one thing that I mentioned is that if you get a real estate license, you pretty much have a job. Your job will consist of selling other people’s properties. That will be all you do. You’ll prospect for someone who wants to list their house. You’ll list their house. Then you’ll work with buyers and lenders to sell their house—and then you’ll make a commission for selling their house. You have to abide by someone else’s rules and regulations, be it the big bad wolf broker. The broker tells you how to go about business and the minimum listing commission fee that you can charge. You’re probably going to have to answer the phones whenever they ring. Then you’re probably also going to have to go to their office and spend a certain amount of time there in their meetings, in their training, in their education, whatever it may be. So, if you get your real estate license, you’re pretty much just getting a job. Plus you’ll have to deal with a negative stigma surrounding your profession, which is something I don’t think you want.

Trouble with the Law

The second thing is this: the laws and regulations absolutely stink. Granted, every state has its different laws and regulations. But in most states, when you have a real estate license, you are held to higher standard. Truth be told, a lot of realtors don’t care about that high standard. But still, as a real estate agent you can’t just freely submit properties on the MLS. You have to run them through your broker, and you have to disclose to the other listing agent that you are a real estate agent. All of these little things will affect your personal real estate investments. You will not be free to conduct business in the way that you want to conduct business. There will be restrictions to what you can and cannot do.

On the other hand if you do not have a real estate license, you can roam around freely doing pretty much whatever you want. Yes, you have to abide by the real estate laws, but you do not have to abide by the hierarchy. You do not have to abide by certain regulations imposed by a broker in your particular state. Basically, there are just way too many rules and regulations that will prevent you from buying your own portfolio, from buying, fixing, and flipping properties, wholesaling, negotiating freely, playing hard to get, playing hardball, and ignoring your phone strategically when you want to.

Related: 6 Reasons You Should NOT Get Your Real Estate License 

Still, you have to be professional. You have to provide a professional experience. You have to do the right thing. But it’s just a different world. I don’t have my real estate license, yet I own multiple companies. I have the right people in the right seats doing the things that I need them to do. And I even own a real estate brokerage, but I still don’t think it’s a good idea to get the license. That’s the second reason, guys.

It’s Costly

The third reason you should never get your real estate license is it is just too bloody expensive. Not just from a financial standpoint, but from a time standpoint too. Depending on the state, you’re going to have to spend four weeks to three months listening to someone preach about how you should be a good salesman rather than teaching you anything about real estate. You’re going to spend about three months, and probably around $1,500 to $2,000, to get your real estate license.

Once you get your license, you’ll have to join a broker. That broker is going to absolutely nickel and dime you to death with the commission splits. You’ll probably start off with a 50/50 split, along with hidden junk fees, a tech fee, an admin fee, a transaction fee, a desk fee, a fee for breathing, a fee for using their toilet paper, and a fee for cleaning your feet at their front door mat. I mean, it is absolutely ridiculous. And it’s not just that. Oh my, you’ll have to do more and more education courses. You’ll spend another $2,000 twice a year to go to these other jibber-jabber conferences, wasting time and money staying in hotels.

Guys, time is money. I want to be in my office hammering out phone calls, emails, buying and selling properties, meeting with my team, growing my real estate empire, not working for someone else and making them richer in a job.

We’re republishing this article to help out our newer readers.

I know this is a controversial one, and I’m looking forward to the heat. Bring it on below! I’ll take it, and I’ll give it back.

About Author

Engelo Rumora

Engelo Rumora, the Real Estate Dingo and your favorite Australian, quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He is currently in the process of launching an ICO that will “Decentralize The Real Estate Industry.” He’s also known for giving houses away to people in need and his crazy videos on YouTube. His life’s mission is to be remembered as someone who gave it his all and gave it all away.

38 Comments

  1. Shaun R.

    I suppose any of these could be true, but I’ve not found them to be true in my case.

    It doesn’t have to be a job. I didn’t get my license to be a real estate agent. I’ll work with people to buy or sell a house, but that’s not why I got my license and I’m not out prospecting for clients. I got my license for my own investing purposes.

    Sure, there are the laws and regulations, but I don’t have to run my offers through my broker like you mentioned. I’m free to throw as many offers as I want out there.

    And I didn’t find it that costly. You’re right that it was about $1500 to get all in. I did an online class in about two weeks (around my full time job) and found it fairly easy. And my broker offers a 90/10 split with no fees at all. She is also all for me using my license to help with my investing.

    Maybe I’m just lucky, but I wouldn’t want to be trying to get this business going without my license. It has been amazing in that I’m easily able to get comps for any property that I’m looking at. I wouldn’t have nearly as much of an idea on market value in my area without the MLS. I also get access to more info on listings than I would without my license. I like that I’m able to see all of the associated documents on the property and the sales history of a property.

    I hear what you’re saying, but I’d absolutely recommend everyone that wants to buy and sell their own houses to find a good, investor friendly broker and get at it.

  2. James W.

    good points.

    though i think if the brokerage allows something like a 90/10 split, i’d be happy to have a license.

    also things like excessive fees for so many things, conferences, hotel stays etc as mentioned – these are a problem. i dont know if these are really required.

    also – i think the real value of license for me could be on the buy side. i could represent myself as buyers agent and get the commission.

    selling takes time, open houses, multiple showings, i could not sell on my own with a license, i would hire a realtor to sell.

    • Engelo Rumora

      Thanks for your comment James,

      As I mentioned in my comments above.

      There is nothing wrong with getting a license and there are many 100% commission brokers that offer low fee structures that are perfectly suited for both folks wanting to be real estate agents but also for folks that are looking to invest in real estate.

      Have a great day

  3. karen rittenhouse

    Being a real estate investor and being a real estate broker are two entirely different career choices and you certainly don’t need either to accomplish the other.

    Don’t have a license and have never needed a license because all the transactions I’m involved with are my own.

  4. Ahmad Eltawely on

    Getting my real estate license really boosted by business. It allowed me to go full-time into flipping and established a path for me to build my own team of agent/investors. I would have to disagree with most of the details/restrictions said about being an agent. Of course that’s a possible scenario but only if one made a series of poor decisions. Plenty of brokers are low maintenance, low fees, and stay out of their agents’ way. The additional income opportunities, access to inventory, and listing commission savings have translated to 150-200k in profits in my first year and a half as an agent. I’ve been an investor for 4 years and an agent for 1.5 yrs.

    I’m able to see a property and draft an offer within minutes of it being on the market.

  5. ED Marchand

    Not Everything ‘people’ write is the truth, some is, but most is NOT! A RE license is a tool, and if you are a smart investor, you learn to use this tool, you must study and learn the laws that are applicable to both side of this equation, with and without a license!
    Knowledge and tools are a must in any profession, are you able to use all the tools at your disposal? Do you have any tools? Comments are easily given without research or knowledge, therefore I again repeat, “Not Everything ‘people’ write is the truth”!

  6. Jeff Copeland

    Clearly you haven’t adquately researched this topic. You’re making assumptions that are incorrect, based solely on your limited experience without a real estate license.

    My real estate license to be the single greatest competitive advantage I have over unlicensed competitors.

    And there’s a wide variety of business models for real estate brokerages out there. I have none of the “problems” you’ve listed as disadvantages…they simply don’t exist for me.

    I do not pay a commission split percentage to my broker. I pay a small flat fee per transaction that also has a modest annual cap. After I “cap” (usually by around May of each year), I keep 100% of my commission (whether it’s my deal or I’m representing someone else).

    So, right off the bat, I get a 3% (typically…the amount varies) discount/savings over an unlicensed competitor on any property that’s listed. In other words, on $200k property, that’s $194k to me before I’ve even spoken to the listing agent or seller. So explain to me again why you’re complaining about the cost of getting your real estate license?

    I also have access to all of the available data on any subject property and comparable sales at my fingertips from my computer or my smartphone via my MLS membership… and it’s far more accurate and detailed than anything that is publicly available. That alone is worth more than the price of admission.

    I don’t do any “floor duty”, and I have been into my broker’s office roughly twice in the last 3 years.

    Lastly, I have no problem being held to a higher standard when it comes to the law and the code of ethics prescribed by the National Association of Realtors.

    So in a nutshell, I experienced nothing but advantages over you… And I have none of the disadvantages you’ve outlined in your post.

    I’m not saying you don’t raise any interesting points or topics for discussion (and I realize the primary objective of your post is to garner lots of comments and discussion)… But I suggest you do a little more research before taking a position. There are a lot of new and inexperienced investor on BP that could be led astray by your advice.

    • Engelo Rumora

      Thanks for your detailed comment Jeff,

      I don’t do blogs for the purpose of writing a thesis and anyone that is after long winded “both sides of the story” type blogs, can simply not read/watch my content.

      I’m here to make people STOP and THINK before they act.

      If folks get easily swayed by something they read online from someone they have never met or spoken to in person.

      They have a bigger problem than “getting a license” or “not getting a license” in my opinion.

      I am also very confident that you wouldn’t have an advantage over a real estate investor without a license.

      And if you have a cap with your current broker, you’re probably paying to much as there are cheaper options out there.

      Much success

  7. Much of this article is just wrong.

    Yes, in my state you have to work under a managing broker for two years, after that, you can independent and there is no split. The yearly cost to maintain your license and be a MLS member is then less than the commission of one sale. I can look at as many properties as I want on my schedule, write as many offers as I want, list my own properties, and list my rentals. This adds a lot of flexibility, AND saves a lot of money. It also keeps me very engaged in the market and I earn some extra cash. Yes, it can become a job, but it is my job… my sole proprietorship. I can work with as many or as few clients as I want.

    The argument that a license means you are held to a higher standard… that is a good thing. It adds a layer of professionalism and accountability to your business. The line about having “more freedom” to do as you want is rubbish.

    • Additionally, how can he even write this article, while his video shows him with a “List ‘n Sell” sign in front of him? He owns a brokerage, yet is advising against becoming a broker? If this is how he truly feels, then it seems a bit hypocritical.

      Why do I feel that many of these articles lately are only meant to stir a reaction and generate comments?

    • Engelo Rumora

      Investing in real estate freely for 2 years can set you up nicely for the future (As long as you know what you’re doing lol)

      I wouldn’t want top be bogged down to another broker for 2 years before I am able to do my thing.

      2 years is a big commitment so folks that want to invest freely should really consider if becoming an agent is what they truly want to do.

      Thanks

  8. Alik Levin

    Engelo,
    What you are saying is two things about being a real estate agent:
    1. It’s hard work.
    2. It cost money to become one.
    What you are missing is #3 is the reward. In general, that’s the basic idea that the harder you work and the higher entry barrier the more potential rewards are, eh?
    Example, in the area where I operate (greater Seattle area) a single family snatched on the spot if it’s around $600K, higher priced one stay on the market for another day or two. If you are agent investor and buy or sell one house of your portfolio a year, that’s $18,000 more in your pocket. I think it’s worth it, eh?

  9. James W.

    Quite to the contrary, does anyone have a list of steps on what to do after getting a license, to be able to list and sell properties?

    Also to represent myself, is it advisable to form a LLC? Who represents and who is the buyer, between the LLC and me?

  10. Your absolutely right with your points. I went through the license training many years ago and determined the license was not worth it for the reasons you mentioned. After talking with the state license departments we discovered that the only thing we could not do was to pay or collect a commission. Don’t need it. We work strictly on profit. Thanks for the article.

  11. Chrissy Ertz

    I’m already most of the way thru my online classes. Which only cost me $600 by the way! I’m still going to keep going to get my license. As a newb school has taught me alot about the lingo. I’ve learned alot I would not otherwise. Worth every penny.

    • Engelo Rumora

      Thanks Chrissy and well done.

      Learn every aspect of real estate and not just want the “classroom” teaches you.

      Real life experience and “battle scars” is where the best experience is gained.

      I wish you much success with your real estate career

  12. My cpa says there are tax consequences to my teal estate businesses that change significantly once I become a realtor, including paying payroll and business taxes. I wish I could articulate it better but he didn’t think it was a good deal at all for the investor with a few properties. If I were to pursue full time then the equation might change. Enjoyed the article, and following discussion.

  13. Gene Cook

    Just a mostly wrong or misinformed article all around . Those flaws have been well articulated already.
    One point. The majority of “retail’ sales are done through an MLS. We can argue whether that makes sense in this age of information availability etc., but the case remains that it is the case.
    Most of my property acquisitions have not included a broker, but most sales have. As a flipper why would I not want to get the retail price on the selling side?. Given that why would I not want to keep more of that profit by doing the transaction myself?
    Never once has my being both the selling broker and a principal been a issue on the sale. In the past there was much more of stigma or perception that if broker is involved as a principal it was not “ethical”. Different perception now. Disclose and move on.
    Not saying every one needs to be a broker to be involved in real estate investing ( my business partner is not ) but the benefits are real and those willing to put in the time and effort will generally be rewarded. I get that Engelo is just trying to get attention for his business, but really, people do read these blogs and they should get a more balanced approach.

    • Engelo Rumora

      Thanks Gene and it seems many folks have agreed with the article lol

      That has also been articulated within their comments.

      There is absolutely ZERO reason why someone should be a broker if they want to succeed in real estate.

      Having that “ticket” doesn’t determine ones success

      You’re based in CA so the law favors folks with a license like yourself.

      It’s different for other states

      Thanks again and much success

  14. Terri Dyer

    This was an interesting insight. I have been thinking about getting my real estate license. Mostly so I can sell my own properties, have the inside scoop on laws, and have an early jump on good deals to buy. So these were some things I hadn’t thought about and will definitely have to consider if it is worth getting my license or not.

    • Engelo Rumora

      Thanks Terri,

      I agree with selling your own deals and paying less in commissions to other agents

      I don’t agree with finding better deals tho.

      I find amazing deals and don’t have a license.

      Some of the best real estate investors don’t have a license.

      At the end of the day it just comes down to what you really want to do and what your end goals are.

      Consider the pro’s and con’s of both before you make a decision

      Success comes from hard work and nothing else 🙂

      I wish you much success

  15. Al Rivera

    This is great information. I was considering to get my license but like Engelo said, it depends on the state regulations if you want to be an investor also. I am going to do some more research about the RE laws in my state and weigh the pros and cons of having a license.

  16. Billy San Roman

    Aloha everyone! I am just starting my real estate investing “career” and am in the self educate part of my journey getting my hands on every book I can and listening to the BP podcasts. I read this post after reading the counter post about why you SHOULD get your license. Before reading either I thought hat getting a license would be a great way to learn about the business. Mentioned in the post above once you get your license “you have to go work for a broker” and “you have a job”. Are these mandatory items once you get your licence? Can you not get the license and still then go about on your own as an investor? Newbie questions I am sure but I appreciate any insight into this matter!

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