I’m new to REI and would feel much more comfortable doing it if I was a licensed agent. My question is, would this create any undesireable consequences when it came time to approach people on buying their property and then either flipping or wholesaling? I know some people don’t like to deal with agents. Would I have to disclose that I’m an agent even if I’m just representing myself? I’m in California.
D,
Buy the book, take the course, learn the stuff they teach realtors. Then do yourself a favor; do NOT take the license exam. If you are a realtor, you must disclose that you are a realtor. Why do it ?
Good luck,
Ray
Hi:
I’m an agent in Florida, and we do have to disclose that we are an agent in any transaction. Even if we are listing property for a relative, we will disclose that “agent is relative of seller”.
Another thought, as an agent, you must follow the “Do Not Call” rules. I don’t know how it affects individual investors, but agents cannot contact people on the “do not call registry” unless we have a bonafied customer who wants to make an appointment to see that particular house. If we do not follow rule, it’s a $10K penalty!
I think you could gain alot of knowledge just from researching the articles on this website and reading. Real estate school (at least in NE FL) does not get into how to exactly fill out contracts and what contingencies to include or how to fill out seller/buyer cost sheets. It covers agency ethics, agency/brokerage requirements, understanding deeds, etc. We all call it the seven-day intense course of everything we can get sued for while holding a RE license! The day-to-day training happens after you have your license and you join an agency. You then go through contract, marketing, etc. training.
Good luck!
As a licensed broker, I would take the advice of ray. Get the same education that the real estate professional is going to get. It can be invaluable. However, if you main purpose is to be an investor, do NOT take the test or get your license. If however you want to become an agent and NOT an investor, by all means take the test.
In my opinion (I know, everyone has one) having a license is a hinderance to investing. Why, because you have to disclose a lot and if you don’t disclose enough or properly it can come back to haunt you. If forbid something should end up in court, you are more likely to lose before you walk in the room just because you have a license. In my observations courts hate real estate agents. As an investor, you may have a chance to at least speak your side of the argument.
Thanks for insightful advice. My original plan was to first become an Real Estate agent and once I did a few sales and got comfortable, I’d move on to investing. But maybe that’s just waisting my time.
I also thought about becoming an agent, and took the Real Estate course here in Michigan. During the course, I found out that, should I hold a license, I could no longer sell houses on my own (the exception is the house you live in). I would have to list any houses I had through a licensed broker.
Needless to say, I abandoned the idea of becoming an agent very quickly…
Not sure about the rules in Michigan, but in CA you can’t sell a house that you don’t own without a license. You can own as many homes as your finances (or creditors) will allow you to. You can sell all of them even if you don’t reside in them. If you own it, you can sell it as a principal.
There are some catches though. You must disclose that you are licensed by the DRE if you sell your own home (principal or not). If you are acting as a principal IMO it does not matter if you are licensed or not. I supposed the DRE feels that you have an advantage over the consumer. The same disclosure is required when buying.
Another catch is if you are a licensed Agent vs. a Broker. As an agent, you must report to your broker any sales or purchase of a home you make on your own. If acting as a principal, the Broker does not get a piece of it, but you must disclose. Of course, you must buy or sell the home NOT as a representative of the Broker!
When you are licensed you are basically held to a “higher standard” and are expected to no longer make profit on a good deal. Instead you are “expected” to look out for the seller that you don’t represent and make sure you get the seller the best deal. If you profit “too much” as defined by the general public, DRE, or courts, then you are guilt of something when you are licensed. They will think of something to call it. When you are private investor it suddenly becomes a deal where two parties agreed and helped each other out.
That is my view of the world.
Higher standard ROFL. The National Association of Realtors are being sued by the Feds.
If you want to invest and aren’t allowed to make a profit, why would you want to be an agent or a broker? If you need mls access have your spouse get licensed.
Here’s the other thing. If you operate with the knowledge of an agent, how far does that get you as an investor? Do agents think outside the box?
That’s my view of the world.
Notice the quotes I used. There was a reason. IMO, you either operate at a higher standard or you don’t. The license doesn’t change that!
The general view of RE professionals is that they make too much money, they are all rich and always at the expense of the poor homeowner that just wants to sell/buy a house.
As far as investing to make a profit, you can do this with a license. However, as an agent you have to be twice as careful and vigilant. You have more requirements put upon you as an agent with regard to disclosures and other “duties” to all parties. If you make a mistake on these and end up in court for whatever reason, the license tends to work against you.
As a licensed RE agent, can you invest and make just as much profit as private (unlicensed) individual? Yes. As a licensed agent it just requires twice the paperwork.
A general comment on the “higher standard” that seems to be used no matter where I go. I used to work for an unnamed government department. We were held to a “higher standard” there as well. The intersting thing was that the standard changed with each new administration. Depending on the views/history of the federal administration chief certain topics were more strictly scrutinized than others. Come election time, those same issues could quickly and easily exchange priority.
OK. I must be misreading you now. Did you mean twice the profit and half the paperwork?
Mike,
As a license REI here you are required to make many more disclosures than as a non-licensed. Having a license means you have more paperwork to do with the same amount of profit.
Reread your quote - it reads two different ways
I’m an agent and I recently talked to my broker about buying and selling my own houses (flipping them). She said all I had to do was disclose that I’m an agent to the seller and on the sales agreement (not a big deal) and pay minimal broker fees on my half of the transaction (if I sell to a buyer using another agent).
Now so far I haven’t purchased, flipped, or did any creative financing…yet…so I’m not sure what the implications will be once I do. However, having the experience of talking to customers, writing up offers (for others), marketing listings, making sure all the "t"s are crossed and "i"s are dotted before closing, understanding all the closing costs and sitting in on closings to see what actually goes on, has been invaluable. Whew…what a run on sentence.
Also, having access to the MLS to do various types of searches as well as getting the word out to other agents in our office is a big help.
HOWEVER…
If I was only planning on being an investor, I may have decided not to get my license. But when I got my license, I didn’t think about investing. And collecting commissions is nice while I’m finding houses to flip.
When you are licensed you are basically held to a “higher standard” and are expected to no longer make profit on a good deal. Instead you are “expected” to look out for the seller that you don’t represent and make sure you get the seller the best deal. If you profit “too much” as defined by the general public, DRE, or courts, then you are guilt of something when you are licensed. They will think of something to call it.
In NC, that is called excessive profits, and if the NC RE commission so determines that you made excessive profits as a licensed RE agent, then you can be fined heavily and possibly even lose your license. BTW, it’s easy for the NCREC to find this info, besides it being public knowledge, because it is required that any agent buying or selling a property fully disclose that information to the the NCREC until closing. If not, that too is subject to heavy fines/punishment.
Raj