Should Investors get their Real Estate License?

020919_1684_0056_lslsI see a lot of new investors asking this question.  The answer seems quite easy to me. YES!!

The only major downside is you will be considered a professional in the industry and be expected to behave like one.  If you know of issues with a property you own, or are selling, you must disclose them.  If a legal battle does arise with one of your properties, you are acting as a professional and expected to behave like one.

The Upsides:

  1. You can pay for access to the multiple-listing service (MLS).  If you are licensed you can pay a fee to the local MLS association and get a list of all the properties for sale and how to get inside them.  You can also get a list of all the properties recently sold and a treasure trove of other tools available to agents.  I am still discovering more valuable tools in our MLS everyday.
  2. You can list and sell your properties yourself, and keep the selling side of the commission.  When we get a property ready for sale, we simply put a lockbox on it, price it right and list it on the MLS.  We typically offer the buyer’s agent 3% commission, but save on the typical 3% we’d pay.  Sure we don’t have open houses, but sometimes rookie agents will call and have an open house at your property to get buyers.  That’s a win-win!
  3. You can pay for access to thousands of stock real estate related forms.  Purchase Agreement, Option Agreement, Commission Agreement, etc.  This makes life so much easier.
  4. If you pay for MLS access, they typically offer other tools to their agents.  Ours has a free legal help hot-line.  I’ve used it a couple times already and it’s sure nice to have an expert real estate lawyer one call away (FOR FREE!!).
  5. Having a license puts you in the industry, even if you don’t have any property.  You’ve made your first step of getting in the game and now it’s time to hunt for those deals.

I mentioned the main downside.  There a couple others.

The Downsides:

  1. The biggest one, as I mentioned at the beginning.  If you are a trained professional, you are held to higher ethical and legal standard.  You must disclose everything, you must not break real estate law.  If you run your investments by the books this really isn’t that big of a deal in my eyes.
  2. Motivated sellers may treat you in a different light.  If you are an “expert” in their mind they might think you are trying to take advantage of them more so though a traditional investor.

Overall, if you are serious about this business, and intent to be investing for a long-time you should get your license.  The test (at least in California) is really not that difficult.

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10 Responses to “ Should Investors get their Real Estate License? ”

  1. […] Should Investors get their Real Estate License? […]

  2. Anthony says:

    Steve,

    I discovered you over in the Bigger Pockets forum.

    I’m still debating over getting a license or not. The potential to broker deals is what gets me excited, as I like the commercial side of things, although I’m starting as wholesaler.

    I bookmarked your blog. Nice layout and good articles.

    Regards,
    Anthony

  3. Steve says:

    Hi Anthony,

    Thanks for the compliments. The blog is a work in progress, but I finally changed the layout to something I like.

    I think its a no brainer for an investor to get their license. You get access to all the properties, the forms, the legal hot line and some cool tools.

    You can always let it go, if you don’t use it.

    My partner and I really want to get into the commercial side, but with the lenders being ultra conservative and most of the sellers not being desperate enough (yet!), we are going to wait. Before the market turns around, we hope to end up with a couple commercial deals that will cash flow for a long time!

    Good luck!

  4. Jennifer says:

    Is there a particular school or online site you recommend for the real estate license classes?

    LOVE your blog!!

  5. Steve says:

    I got my license with http://www.retrainersca.com/. The crash course was what helped me the most. The instructor had an “interesting” approach but it worked. Basically rather then explaining the math, she just was like remember “$32,484” and that turned out to be the answer…

    I can also help you get a discount with First Tuesday if you’d prefer. Email me through the contact site in that section if you want.

    All this assuming you mean California.

    Good luck.

  6. James Park says:

    Steve,
    I am currently a business owner and would like to get into investing in real estate part-time. What are your thoughts about getting my broker’s license over sales license. It the extra time and fees worth it?

  7. Steve says:

    James – you will have to check with your state specifically. In California, you must be an agent before you can become a broker.

    You have to take 3 courses and pass a test to become an agent. To become a broker you must pass 6 more courses, have 2 years of experience (or a college degree) and pass a long hard test to become a broker.

    I would definitely recommend becoming an agent/broker eventually. But if you have more money then time, I’d start by looking at a ton of properties and buying a couple. If you have some success you can pursue the career on a more full-time basis and I’d definitely get my license on that basis.

  8. Ben says:

    I’m currently working on the my license. What firm as an investor did you end up going with? What fees or requirements were involved?

    Thanks,

    Ben

  9. Steve says:

    My partner is a broker, so we have our own firm. I’d go with a discount broker house unless you want to represent some clients. You can probably put an ad on CraigsList and get lots of people willing to let you hang your license with them for cheap.

  10. Chuck says:

    I know I dug up an old post, but I would like to know if you are doing anything else with your license besides listing homes, and using the MLS access for comps and such.

    In Texas, you have to be a licensed broker (vs agent) to property manage. This property management seems intriguing to me. To be honest, we are already doing it for one house (w/out our license). But if we go legit and get someones portfolio of properties – it would seem to be a nice cashflow. The main advantage being your 10% per month or whatever would be essentially all profit.

    What else can you do with agent/broker license to pull in some cash on the side?

    Ch.

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