Real Estate license if not planning on being a realtor?

Question

This summer I would have ample time to work on getting my real estate license and have been considering doing so. I plan to use the license to save on realtor fees and get access to the MLS for house hacking that I will be starting in my sophomore year of college, (still a high school senior). I've heard some people on the forums say that getting your license is a waste of time if your not going to become a realtor and that working instead of getting my license may be a better use of my time to raise capital. I'd appreciate any advice.

Jon Schwartz · Answer

Michael,

Don't pursue a real-estate license. Getting a license is easy and inexpensive enough; I think I spent $700 total for the books and the exams.

BUT! Once you pass the exam, then you have to pay annual fees to the National Association of Realtors, the Oregon Association of Realtors, and a local Realtors group to maintain your MLS access. For me in LA, it's about $1200/year that goes to NAR, CAR, and GLAAR ("C" for California and "GLA" for Greater Los Angeles).

So really, you're looking at a several-thousand-dollar investment.

Plus, as a buyer, you don't directly pay any Realtor fees. The seller pays both agents' fee out of the property's purchases price.

I commend you on being so knowledgeable and invested at such a young age! But spend your summer working and reading investing books. If you can, find an investor in Salem (which you can do right here) and shadow him all summer. You'll learn the stuff you need to know doing that, not studying for the RE exam.

Good luck!

Jon

Wale Lawal · Answer

@Seth Michael Carp

If you’re having trouble deciding whether the investment of getting a license is worth it or not, then perhaps it will be helpful to receive a detailed analysis of the benefits. Remember that some of these real estate agent benefits are enhanced on a deeper level if you are an investor with a real estate license.

Here are the five irrefutable benefits of a real estate license investors shouldn’t go without:

You can earn extra income.

You’ll gain access to more deals.

Your contact network will expand.

Your business knowledge will increase.

You can earn commissions.

how much does it cost to become a realtor

1. Extra Income
If you are starting, there is a good chance any extra income will be welcomed. Even if you don’t intend to make a career out of being a real estate agent, it can provide you with supplemental income. Listing one house every few months or completing one broker price opinion will not help you retire any time soon, but it will generate a little income here and there. Additionally, it is a great way to learn the business from another perspective. You can see how real estate agents work and what they need to be successful. All the while, you can work with the contacts you have to make money and learn the investing business at the same time. If you plan on wholesaling real estate, your first wholesale deal may take months before you get going. A real estate license will help supplement your income during that time.

2. Access To Deals
One deal every few months is nice, but it is not the primary reason you would get licensed. Getting your license opens doors to deals that you may have never thought of in the first place. Instead of waiting on your Realtor to alert you of any new deals, you will be the first point of contact. As soon as a new listing hits the MLS, you will know about it. You can quickly see properties in locations you like and make an offer by the end of the day. Access to new deals is the primary reason to get your license.

3. New Contacts
Being a real estate investor and Realtor can be a delicate balance. Some are skeptical about working with an investor who also wears a Realtor hat. This number is small compared to the number of new contacts that being a Realtor can help you make – not only in your own office but at open houses and local networking functions. One of the benefits of being a real estate agent is the opportunity to develop contacts internally at banks that could give you the inside track for bank-owned properties. You are also open to working with other brokers and agents within your office. In doing so, you can learn through their experience and get tips on saving time on certain tasks. Brokers can warn you about certain legal issues you may face and educate you on contracts. Other agents can also introduce you to reliable real estate professionals such as surveyors, appraisers, and lenders.

No matter how you slice it, having the opportunity to dramatically increase your network is one of the major benefits of a real estate license. The more people you can meet, the greater the chance that you will close more deals. Meeting the right real estate agent or being in the right office can completely change your investing business.

4. Education
You can’t put a price on real estate education. The more you know about the business, the greater the chance of you becoming successful. Almost every investment deal you get involved in will have some contact with a real estate agent. Knowing how the real estate side works will give some insight into structuring a contract and even what to look for in a property. You will have a better feel for what is really needed to get your deal closed. Even if you have closed a few deals, you may not really understand what goes into an addendum or legally binding in a contract. Being a real estate agent will give you a different perspective: one that can save you time and money down the road.

5. Commission
In addition to making money on the deals, one of the benefits of being a real estate agent is saving commissions on your own personal deals. If you close just six investment deals a year and act as the Realtor, you are saving and making over $10,000. Since you would buy these properties anyway, extra income could be put back into your business. If you flip these properties and quickly list them yourself, there is another 2.5% on the sales side. After you pay your broker split and taxes, you are still making money that you would pay out to someone else.

Let’s go through an example scenario. If you purchase a property for $200,000, and the total commission is 6%, the selling agent’s office and your office receive $6,000. In a fifty-fifty commission split with your office, you receive a $3,000 commission in the same scenario. If you sell the house for $300,000 as the listing agent, you receive a $4,500 commission after splitting with your offices and broker. Another benefit of being a real estate agent is the opportunity to earn up to $9,000 commission if you can sell the property without involving another agent.

All the best!

Nathan Gesner · Answer

you may save in REALTOR fees, but it may cost you in other ways. You have no knowledge or experience in the market or the business. You have no negotiation skills. One mistake can cost you tens of thousands. You may over-pay for a property because you don't know market rates.

Learn the value of a good REALTOR, then do your homework and find one.

Ty Mar · Answer

@Seth Michael Carp Go for it. Get it and work in a brokerage while you're in college. I don't understand the naysayers. In Maryland, it cost me $2700 to get licensed and in first year fees. It'll be about $1800/year moving forward. Saved $9k in commission with first deal. Will save a whole lot more this year. If you buy more expensive properties your savings will grow and the cost to maintain the license will be negligible.

If you do get the license and do nothing though, that's different. Then why bother?

Also I don't understand the "you're not paying the realtor commissions when you're buying". Who is paying the seller? Because I am paying him and he is paying the commissions doesnt change the fact that all of it is coming out of my pocket. If I can make 2.5-3% of it back, it is all worth it.

High school senior ha? Kudos to you young man.

Dan Portka · Answer

I'll play the contrarian here.. If you end up purchasing a $500K property in Salem that has a 3% commission for the buyers agent that's a $15K check (minus fees) that you're leaving on the table. Yes, an experienced Realtor could likely help save you more than $15K by being an awesome negotiator and getting you the best deal. But say that $500K property they end up helping you get a better deal on and you settle at $480K.. Thats a $20K savings but the difference in your down payment assuming 20% is $100K vs $96K.. so you save $4K on your down payment. I'd rather have the $15K commission check any day. I got my RE license in 2021 and the only deal I've done with it was the purchase of my current residence, do you think I regret receiving a $30K commission check? I had previous experience buying rental property as an investor so had a bit of confidence and received guidance from my broker. Bottom line, it can be done - but I'd recommend to learn as much as you can and network with the right people first.

Joe Norman · Answer

Do a couple of deals WITH representation first, then decide if you want to pursue a license. You don't know what you don't know, and I promise you that the Pre-Licensing Course will not teach you the ins and outs of being a successful agent/investor - they are only designed to keep you out of trouble.

Bud Gaffney · Answer

@Seth Michael Carp there’s a lot of good agents out there that would love to help

Bud Gaffney · Answer

@Seth Michael Carp no need to get your license

Drew Sygit · Answer

@Seth Michael Carp a license will only save you 3% on transactions - NOT REALLY WORTH IT!

Yes, your time will be better spent invested in learning more about real estate and networking with other investors.

You may want to consider still taking the licensing class, but only to LEARN more about real estate and contracts.

Scott Bowles · Answer

Well I have a license in Oregon primarily for friends, family and investing. It is working out fine so far but you do need to sell/buy at least 2-3 properties per year just for it to make sense financially and time wise. That being said if you are in college securing a loan will probably be your biggest problem investing without a high paying W-2 job so I would probably work on that if you really want to invest personally.

Real Estate license if not planning on being a realtor?

Real Estate license if not planning on being a realtor?

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