Should I get A REAL ESTATE BROKERS LICENSE?

General Real Estate Investing
1

I am new to real estate investing. I am getting ready to relocate my family to Denver and start a new career in real estate investment. If I study for a few months and get a Colorado real estate brokers license I will have the following benifits:

  1. I can join the local board of realtors and have complete access to the MLS.

  2. When buying properties I can legally get paid a commission which gives me cash at closing.

  3. When selling properties I can list them in the MLS without paying a listing broker.

What are your thoughts, PRO OR CON about getting a brokers license as a real estate investor?

2

There is no con to having your license. It is not a necessity to have it, but it never hurts to have it.

3

You getting a Brokers license or Agents license? Do you qualify for the brokers exam? If it’s an agents license you may have to give up a little commish buying and selling. Still more pros than cons. Having access to mls is a big advantage and worth the high price to your local board.
-h

4

“Do you qualify for the brokers exam? If it’s an agents license you may have to give up a little commish buying and selling.”

I have a Broker’s license, however, I hang my license in another Broker’s office…thus I’m an ‘Associate Broker.’

Broker’s licenses are not required in the State in which I live…they are in some other states…though it’s a type of license which affords fewer benefits to the holder of that particular type of Broker’s license.

My Broker allows us two transactions a year without taking a fee split. Unless we’ve already made our split for the year…then we’re allowed unlimited transactions.

Getting your license will put you on the inside track in my opinion.

Just keep in mind; 19% of those who obtain their license renew it at the required two year renewal period. Of those 19% an estimated 20% make enough to feed a family.

Work hard & smart & enter into the industry with realistic expectations.

-Infowell

5

This may not be the case in Colorado, but here in Virginia, you must be an agent for at least two years before the state will allow you to take the broker’s license exam.

6

Just remember if your a broker or a sales associate(term used in Fl till you recieve broker status) then you must alway give disclosure to anyone your buying or selling to that your a broker if it involves your own properties.I believe it will generally be in writing not verbal.

7

I’ve had an active California Real Estate Brokers License for 15 years. When I contacted the Colorado Department of Real Estate they told me I would need to take some classes and pass the brokers exam in order to get a Colorado Brokers License.

Are there any other investors out there who use their real estate license to get a commission from the seller when the deal closes? The reason I am asking this question is because it seems like the only legal way to get cash back at closing. 8)

8

All states are going to require you to take a test, but some states are set up where you do not have to goto school again as long as you have a current license, i know each state is different. Florida i think is set up with about 8 states where all you need to do is take the test because laws change from state to state…

also i know if your looking at preconstruction deals in other states, many builders will still pay you the commission, they just call it a marketing fee instead…

9

DealMaker,
85% of my business is HUD and the 5% commission is a huge part of my cash flow. In my state (Indiana) on bank owned property, if the buyer also has a real estate license, many listing agents reduce or completely eliminate the commission. I personally think they’re cutting off their nose to spite their face. It makes no sense to me but continues to be the trend. Fortunately, there are many HUD owned properties. Most of these deals result in roughly $4000 commission up front and net return on flip of roughly $15,000. I don’t think I could do my thing without a license. I analyze 40 to 60 properties a week to find 6 good ones. I don’t buy them all for me. I have several investors who buy from me.
-h

10

Some states offer “reciprocity” if you hold a salesperson’s or broker’s license in another state. I’ve been kicking around the idea of getting my Hawaii Broker’s license via reciprocity (I could have 2/3rd’s of the exam waived).

From investigation & nearest I can tell - California does not offer reciprocity FOR ANY out of state licensee. You probably won’t like this but, for those states unwilling to offer reciprocity to out of state licensee’s…I wish other states wouldn’t honor THEIR licensee’s reciprocity either (seems only fair).

By-the-way…I use my commission to lower the price of the home initially (now some ding-a-ling will pop in here & go; “that proves it…buyer’s pay agents commissions”).

-Infowell

11

I think you wish for states not offering reciprocity to licensees from other states that do not offer reciprocity is already a reality.

My brokers license is in California. California offers no reciprocity and I don’t think other states offer reciprocity to California licensees. :frowning:

12

I’ve also been kicking the idea around of becoming a real estate agent. I do not like my current job and I have always had a great interest in real estate.

I like the idea of having a flexible schedule (working some nights/s some days) and pretty much being your own boss.

I have started to get cold feet with the idea however, because I keep hearing the market is over saturated with agents and sales are slowing which means tons more competition. Are there any other new or older agents which have some insights or advice to those considering a career in real estate?

13

I think that’s unfortunate. I thought opportunity was what America is all about.

“Are there any other new or older agents which have some insights or advice to those considering a career in real estate?”

IF you can succeed…being a successful real estate agent might exceed your realistic dreams.

However, you must enter the business with the tenacity of a Pit Bull & some realistic knowledge;

In the State in which I reside; only 19% of those who obtain their real estate license manage to renew that license at the end of their two year requirement period.

Of that 19%…only an estimated 20% make enough to feed a family.

Despite what you might read here from those with closed minds, and open keyboards…it’s costly to get started. Simply achieving your license is meaningless unless you have the financial wherewithal to get you over the rough spots.

I know one couple who sold their home (and rented it back), and poured $30,000 into advertising…even hiring an ad agency. They blew their entire wad right out of the blocks, and held nothing back for reserves. They had a positive attitude, but they weren’t realistic and both are back working the 9-5 grind.

If you’re one of the lucky few who make it…you can expect it to take 2-3 years before your business starts doing well.

Best of luck,

-Infowell

14

wow. when i asked, the general response was it wasnt worth the effort.

I have decided to have my wife take the class and get her license. There is an online class available where we are at

15

You evidently took my contribution wrong.

16

Of that 19%…only an estimated 20% make enough to feed a family.

Interesting statistic. I know it is costly to get started.
However, I planned on keeping my part time job that I work at about 30 hours a week. I make roughly 40-45k at that job which I work 3 nights a week at. I planned for that job to get me through the rough spots to get going.

I figured it would cost about 2500 to get started with classes, brokerage fees, and buying possibly a new laptop etc.

I know it can get rough, but I like the idea of the flexibility, the comission based pay, and working for yourself.

Thanks for the input infowell!

17

I do not agree with your statment.

Disclosure if not handled properly could set up a law suit from your sellers if they feel you took advantange of them, or made “Too Much Money” off of thier home.

Most of the investors (Muti- Millionaires) do not have a license.

Just my take on it.

Good Luck in your future.

18

Aren’t you covered as long as you disclose upfront in writing that you are a licensed real estate broker?

19

There are ALWAYS pros and cons (or call it risk/reward, if you will)to any decision, DFW. I thought that you’d understand that.

As to getting a RE license or not, the pros and cons of doing it (or not) fall greatly on your investing strategy. In short, in some strategies, it’s a great disadvantage to be an agent. In others, it will be a great help. What’s your strategy?

Aren’t you covered as long as you disclose upfront in writing that you are a licensed real estate broker?

Covered? Covered how exactly? Covered from getting sued? The answer is a big fat NO. In fact, as a licensed legal professional, you are much more likely to be sued and stand a greater chance of losing simply because you are a “professional.”
You’re never ‘covered’ from lawsuits. I’m in a situation now where me, the realtors, the lenders, the mailman, and the cat crossing the street are all be threaten with lawsuits. The buyer simply decided 3 days before closing that they would not buy the property. They failed in their obligation to the contract, have no legal leg to stand on, yet still are threatening lawsuits. So do you think you’re covered?

Some other thoughts:

1. I can join the local board of realtors and have complete access to the MLS.
You can usually do this without the expense and added liability of becoming an agent. Becoming a REALTOR increases that liability. A good Realtor can get you all of the MLS info that you need. Also, depending on your strategy, is MLS info even needed?

2. When buying properties I can legally get paid a commission which gives me cash at closing.
Your company can legally get paid a commission. Most states require that you work for a Broker in Charge. If you’re working for another company, then they will get their share of the commission, too.

3. When selling properties I can list them in the MLS without paying a listing broker.
Again, if you’re working for a company, I doubt that they are going to allow you to list your properties without giving them any commission. Even if you’re allowed to run your own company in your state as a newly licensed agent, you want to have a commission set. The investing and the agency are too different businesses. Co-mingling them together will win you a whole world of trouble.

Raj

20

FWIW, there is a company here in Atlanta that lets you keep 100% of your commission on every deal, less a $350 fee.

As for the liability issue, I am considering having my wife become the “agent” with me just being an “investor.”