What keeps a real estate investor from obtaining a real estate license?
From a reading of posts on this discussion board, it seems as though many investors don’t obtain a license. Couldn’t an investor save a serious chunk of change in commissions on the sell side of flips by doing so?
Does having a license create liability that a non-licensed investor doesn’t have? Other reasons for not having one?
I have found that having a license limits you! I do not have one and dont have to follow the ethics as I would if I had one the other problam with having one is all the disclouers!! There are pros and cons to this and I feel as though I do well enough without one!! But please keep in mind I very rarely use a realtor!
Some do and some don’t… you take on some liability and agree to the ethics requirements and you do always have to disclose it to sellers. I’m not doing any shady or deceptive investments, so the ethics requirement doesn’t bother me a bit.
Here in Texas, it’s also one of the only ways to get access to sold data - MLS is not public information. After working with several Realtors, I decided to get my license. I have increased my income by getting a comission on the buying end and the selling end of my investments. I also list properties that I can’t buy, so I can help more sellers. I haven’t found the license to be limiting at all - quite the opposite! ;D
Thanks for the reply kbird.
Do you find that buying distressed properties or preforclosures below market rate creates an ethics problem for you because of your real estate license? TREC rules say “A licensee shall not use the licensee’s expertise to the disadvantage of a person with whom the licensee deals.” This comes from the section about acquiring or disposing of ones own property.
Granted we all want all deals to be good for everyone involved, and as investors our expertise must be compensated, but if we buy a property at 50% of the market value and flip it for 100% of market value, someone may not remember how the deal helped them.
Any thoughts?
Good question! If I am concerned about it, I will have them sign a printout of the tax appraisal as an acknowledgement that they are aware of the value. I have never had a seller come back before. Generally, these people are very happy to be rid of the property and know that I’m buying the property as an investment to resell or rent for a profit.
Thanks again kbird.
One last question on this subject. Am I correct in assuming that you present your Tax printout for your seller to sign at closing? Or do you get it out of the way sooner?
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This has been a topic of debate for years. I do not have my license and I have probably lost over $500k in commissions the past 10 years!
Also, there is the liability debate. A friend of mine was sued for selling a house that had an illegal room addition and had to pay $30k. If he had been a realtor, he would have had insurance that may have protected him.
If I had to do it all over again, I would get my license for MLS access, list only houses that fell in my lap from family and friends and concentrate on being an investor. I would take advantage of the free money when family and friends constantly ask me who they should list their house with!
Best Regards,
Jeff Adam
In Calif you have to put your license with a real estate office. You can only work on your own if you are a broker. Most brokers will charge a percent on any thing you list or sell. There are also fees that have to be paid, such as access to the MLS.
I started of without a license but quickly determined that this was not the best course of action for me.
A huge benefit of being a Broker to me is the number of investments that fall into my lap because I’m in the business. ;D
Depends on the state. I’m in CA and have my license. It does limit you somewhat. RE in this state is quite highly regulated and litigous. You must be very careful.
Right now I’m working a deal with someone in foreclosure on a house that is listed. I cannot really even speak directly to the owner. I must communicate through the listing agent, and the listing agent is going to want the commission, which is over $15k. That takes a big bite out of any potential profit. Also makes it a bit harder to work creative deals, because you have to explain to both the listing agent and the owner.
I sometimes think of suspending my license, but want to be open to listings and helping friends and family buy, too, not to mention the savings on my own investment purchases.
Just my $0.02 worth.
AllCash
8)
yes, I am thinking about getting lisence too… I already took the class, now need to take the test.
Hate to depend on Real Estate agents
How many classes are needed to get the real estate license in Texas?
Yes my partner has a RE license, and it is not a problem when it comes to ethics. If you are doing shading business you will not last. Anyone saying that they do not want to follow the ethics needs to take a step back and look at themselves and their mission statement should reflect their ethics of doing business. If you can not be trusted, that word will speard like fire. Yes it is nice to have my partner as an agent, we get paid on boh ends, buying and selling.
To the last question, you will have to check in Texas each state is different, some allow night classes, long weekend classes, day classes. You get the point.
to get your license in texas you must take 4 required classes: Principles of Real Estate I and II, Law of Agency, and Real Estate Contracts. I’m taking classes now! ;D
in Texas. in addition to these courses you must have a review of your college transcripts ;as there is a classroom minimum hours requirement that a college degree in any subject satisfies. if no college degree ,electives in other areas at a real estate school such as Champions will help satisfy min. hour requirements. Bottom line is TREC is trying to ensure people entering the field as licensee is educated and not just receive an easy mail off certificate. As a consumer that has to be appreciated.