Hey guys. What’s with all the confusion about whether I should get my real estate license or not? Ron Legrand says no. Articles on this site say yes. Other investors say maybe. Would it be a hindrance or an advantage in my real estate investing? What are the pros and cons of being licensed in terms of investing? Thanks guys.
I HAVE THE SAME DILEMA…ANY SUGGESTIONS?
ATLNEWBIE
Goosen,
Just an opinion and how I’m approaching it. I just finished a RE class and will be taking my state test in the next week or so. I wanted a “textbook education” of the business before I started investing. I wanted to be comfortable with terminology, financing options, forms of ownership, etc. I’ve read that some people think you’re more liable to prospective clients/buyers if you have a license, but it seems like if someone wants to sue you over a deal they’re going to whether or not you have a license. A bad analogy—If a licensed mechanic fixes my brakes and they fail as I’m taken out by a semi barreling through an intersection, I’m going to sue if I’m alive to do so. If an unlicensed mechanic fixes my brakes, same result, I’m suing. One man’s view from here in Chicago.
Naperbill
Basically there’s not enough information to answer the question. It’s like asking “Should I buy a luxury car or not?”. It all depends on the situation and what you intend to do with it.
Personally I think it’s a decent introductory education into the business. Massachusetts only requires 24 hours of classroom training which I think is one of the lowest in the country so it wasn’t a great struggle to take the class. They basically covered the law regarding real estate, not too much of the day to day things that an agent would encounter, those are on the job training items. It’s probably better in practically any other state.
To get a license or not, all depends on the individual and there investment goals as well… I am getting ready to get my license which in Florida is a 63hr course and I will take in in 7days. My purpose of the license is I still do alot of preconstruction and have many friends involved in preconstruction and condo converisions in Florida and I can get paid 2-5% commission on each deal. all the major builders pay commissions to the agent that bring them clients so why no cash in on it with my friends and myself.
Now you have to remember when you become licenses you will have to adhere to different codes of ethics and always reveal to the seller/buyer you are a licenses real estate agent (though its actually a sales associate in Fl). This can sometimes create conflicts with the sale. Many sellers trying to sell FSBO do not want to deal with agentsand can make it hard to close the deal at times.
Good things are, you can use the commission earned on your purchases as a downpayment, access to MLS, REO’s from banks, pulling comps much easier, etc.
Remember less than 5% of all real estate agents know anything about investing. They handle basic first time homebuyers and people trading up or down. They have no idea how investing works and many are afraid to put in lowball offers for you.
So will being a agent give me more info on being a better investor, NOT really in my opinion. Will it give you access to more information to close deals and some downpayment money…DEFINITALY
my 2cents’
From the previous posts, you can see that it depends (is that a maybe?)
What are your goals in REI and how do you plan on accomplishing them?
As to naperbill’s comment about liability: Simply put, if you get your RE license, you have just increase your liability. Yes, if your brakes fail and you crash, you’ll sue whether or not the person was licensed to fix the brakes. However, the courts will hold the licensed mechanic to a much higher standard of performance than the unlicensed. Same holds true for the RE agent. This is true even if the RE agent has been out of school for a week and the unlicensed RE investor has been doing this for 20 years.
The laws for RE agents vary from state to state, so it would be wise to know your law concerning them and investing, and dealing with the public BEFORE getting the license.
In many states, a RE agent, by default, works for the seller in any transaction where they are the only agent involved. If you are trying to convince a seller to sell to you at a discount, that’s going to be pretty hard to do when you are supposed to be getting him the best price for the property. Also, there is no “turning off” the RE agent license. You are a RE agent ALL THE TIME. You can’t say, “I’m acting as the buyer, not a RE agent.”
If you are only going to be buying REO foreclosures that’s listed, and selling them through the MLS as well, then having your license may be more helpful. However, you are going to have to find a company that will hire you knowing that you’re only going to be buying and selling your own stuff.
And bottomline, it’s next to impossible to be good at being an RE agent and a RE investor. You’re going to have to pick which you want to do. If it’s investing, then why bother with the license?
Raj
Yeah, not to mention that it severely cuts into their bottom line!
Most definitely get your license! I have been an investor for over a year now, so I’m still somewhat new. I have had my license for a little while now. It really can do you no harm in having it, only help you. You have access to comps, current market stats, an incredible network, a chance to recieve some money back from commissions, and it’s a chance to have more people know you. If you find a good broker you can do sales or anything on the side and still keep your current job. You have access to deals before they go one the mls. All of these things could be done without a license, but it is more difficult to acheive these things.
If you are a rehabber, in my opinion a license should be something that you should have. At open houses the majority of the time your not trying to find a specific buyer for that house, but your finding alternate buyers and sellers that are their to meet you, and kinda see the house. You would meet tons of new business at the rehab property you’re looking to sell, and have listings and buyers for other properties.
I would highly recommend getting your license. Just understand that there are huge differences in mindset between investors and realtors. If you can keep your investor mindset while being a realtor, you can make a ton of money. ;D
I have on question: how do you have access to deals before they go one the mls? I have a realtor friend who has granted me access to the MLS, so how can I truly utilize this?
In order to know of deals before they hit MLS, you need to know the realtor that has the listing. As each agent only has a small number of the local listings, it’s hard to know of listings before they hit MLS. How were you thinking you were going to utilize it? Good listings still disappear quickly so you need to be pretty aware of your local market to determine if they’re priced right or not.
I think you should have a license if you are active in a field where most others are required to have a license. It certainly can add some credibility depending on the situation from time to time.
If you hold a real estate sales license in Arizona, you will need to have it placed with a Broker until you have been licensed long enough to qualify to become your own Broker. This adds a new layer to the situation and finding a Broker willing to let you “hang” your license with them while you do the investing thing might be tricky. You will probably incur monthly fees from the brokerage…depends on their attitude since they are responsible for your transactions while you are under their “brokerage”.
Yeah, I just signed up last night for a real estate course.
What real estate investing courses are you planning on taking. There are so many out there. Have you heard what are the most effective courses?
Most of the RE courses taught at the schools in my state (AZ) are geared toward residential agents. Periodically there will be the class on Lien Sales, Note Trading, etc… not too many on how to dig out those diamonds in the rough and other “investor” oriented topics.
Slightly off topic – I just joined the Arizona Real Estate Investors Association (AZ. R.E.I.A.) I am sure there are others in your area. They hosted a weekend conference here in Phoenix that was loaded with good information. Similar to a corporate tradeshow…based on your level of experience you could follow a “track” which was a series of meetings/lectures focused on where you were in investing experience. Plus a tradeshow event where wholesalers and vendors showed their products.