How has being an agent helped in your investing?

Question

Hello BP!

I am curious to hear first hand accounts from people that have gotten their real estate license and how that positively (or negatively?) impacted their investing.

I am interested in getting my real estate license in NC and figured it would help me better understand trends in my area as well as giving me access to the MLS, in addition to retaining the closing %s instead of paying those out as has been discussed in several podcasts. But is it worth it?

Thanks in advance!

-CS

Bob Okenwa · Answer

Having access to properties without having to wait is a huge advantage. Time is money, and getting into a property quickly can make the difference in getting or losing out on a deal.

Being able to read realtor remarks in the MLS, run sold and rental comps more efficiently, earn commissions or waive them as part of sweetening an offer to a seller, and save on seller-side commissions while selling are other big advantages as well. These are all tools in one's toolbelt. They are of little use if you do not know how and when to use them as there are plenty of realtors who have no idea about investing and really aren't that good at being standalone realtors either.

Ultimately, it's worth it if you make it worth it and close enough deals to make it worth it. Realistically, buying one flip house and earning the commission and then saving the listing agent commission when selling makes it worth it financially. Just remember, getting the license just teaches you real estate law and how to not get sued. It's up to you to learn how to be a good agent/investor.

Jonathan Greene · Answer

I was investing for 25 years before I got my license. Now I do both full-time and have a big multi-state team on-market as well so you never know where it will take you. I will add to the tips above, which are all great by @Bob Okenwa. I think the licensing course is way more important for investors than agents because agents mostly go into residential and don't have to deal with a lot of the more interesting things you will learn about in the class. But in the class you learn about all ways and if you go in with the mind of an investor, your brain will process the best information that way. Access is huge for new investors because you can go see all the vacant properties in the area and learn about repair costs, etc. You also have full access to real ARV and comps. The limited fees to join a brokerage are well worth it.

Marcus Auerbach · Answer

@Christian Soto it depends, but I believe for most people the answer is going to be: not worth it.

Here is why: most of the stuff you learn to get licensed is useless; you realize that after you passed the test and start working. The real knowledge comes from doing the job, the national average for agents is 7 transactions per year (between a piece of land, a condo, a duplex and 4 completely different houses - you have almost no repetition within a year, which is what you need to get proficient at anything). I consider agents proficient with at least 24 transactions per year, twice as many is great. Do this for a few years and you become an expert. But this is more than a full time job.

The alternative (brokering your own 3-5 deals per year) is like if you were to hire a complete rookie to do the job, because thats what you are. You probably get it right most of the time, but the problem is when you don't.

I agree with @Bob Okenwa on multiple points: most agents are not very good. It follows the typical pareto distribution, 20% of agents do 80% of transactions. Within those 20% you have only a hand full that understand investing (out of 140 agents in my office maybe 4 own at lease a small portfolio, the rest is clueless).

If you can succesfully combine the tools and knowledge of a good agent with those of an investor you have a big advantage. Access to MLS, comps is great. But having access to MLS does not mean you can determine ARV - this is one of the hardedst skills to learn for most new agents, its an art and a skill. And it takes experience! You can get comps from Zillow and they are actullay pretty good - they even have a tool to calculate ARV.

If you want to learn stuff, you dont need to get licensed - you can just download and learn it. For most investors it is more efficient to spend some time to actually find a great agent (not work with the first one) and then draw from their expertise.

Could you become licensed as a plumber and do your own? Yes.

Does it make sense? Depends on how much plumbing you will do..

Christian Soto · Answer

@Bob Okenwa @Jonathan GreeneI really appreciate all of the insight, guys. Super solid points on going ahead and getting licensed. it seems that the access and resources you get by getting licensed almost make it a no-brainer.

To @Marcus Auerbach point though, as investors, have you found it simpler to simply outsource the agent work instead of first becoming proficient in being an agent or have y’all found it pretty simple to grasp on to?

Cody Neumann · Answer

@Christian Soto

I am an agent in Wisconsin and it has helped me tremendously. It has helped build confidence speaking with sellers, negotiating, and building new skills.

Marcus Auerbach · Answer

@Christian Soto - becomming proficient in anything is simple, but it is not easy. Read that again. It's all about repetition. Do something for 10,000 hours and you'll get really good (from the book: Outlier)

You don't know what you don't know. My recommendation, find an agent who is also an investor. Who has been down the path you want to go and can mentor you. It's not that access and ressources would not be would not be useful, it's a matter of your time and focus.

If you find yourself flipping 25 houses every year you can still get licensed and save the commission, but odds are you won't have the time to do that and much rather have it done for you.

How has being an agent helped in your investing?

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