To obtain a Realtor license or not and why?

Question

My husband and I are just starting out with our business and are laying the framework for a buy, rehab, and hold structure with intent to lease in the Milwaukee market. One of my main questions is would you recommend that I obtain a Realtor license and why? Also, any other info that you think might be important of course! We will be attending the RPA Meet-Up tonight (7/19) so hoping to see some of you in person!

Bruce Woodruff · Answer

Are you going to work as a Realtor? Then no, no, no. Why would you?

To refute the above comments:

a) you do not automatically 'save the commission'. You can ask the seller to lower their asking price by 2-3%, or you can make yourself the preferred buyer by coming in 3% lower, but it is not an automatic, and you can do this without a RE license.

b) Being able to use the MLS is not an advantage in todays internet world. I am offered access to it often by Realtor friends and I usually decline. Other platforms are just as good and in fact superior, in their search engine capabilities and the way they display pictures. And they are not limited by area like the MLS.

And yes, I speak from experience. I had a RE license in Cali along with my GC license to help in doing flips, etc.....It had zero impact,

Now if you want to add a big weapon to your arsenal, get your GC license..... :-)

Bruce Woodruff · Answer

@Kevin Sobilo is right, except that I think the OP is just planning on doing a couple of flips a year...in that case, I really don't think that a license would have much value.

And in CA and AZ (and other states like these) in order to obtain a GC license, you must have the knowledge first, or learn it somehow. A GC in those states is really different than in the states where anyone can get a license....

Randy Rodenhouse · Answer

You do not need to get an agent license to be buying properties as an investor.  It will just be a distraction.  Just find a good agent to work with.

John Morgan · Answer

@Jenna Cawlfield

Not worth it for buy n hold investors. I just use the listing agents and get great deals since they work hard to convince the seller to take my offer for obvious reasons. Lol

John Mocker · Answer

Jenna,

From an Insurance perspective, if you plan on acting as a realtor, you should have Professional Liability Insurance (aka errors & omissions or E&O).  If you affiliate with a brokerage they may offer the coverage (often charge for it).  If you are independent or if the brokerage does not offer it, you will have to purchase it.  Figure that cost in when you are figuring if the commission savings is worth it.

Hannah Thorn · Answer

If you're purchasing a decent volume of properties, it may be worth it to save on commission. However, you do also have to factor in needing to be signed to a brokerage, potential brokerage fees and commission split that comes with that, continuing education, MLS and association fees if you plan on utilizing those tools in your home search, etc. Regardless, going through real estate school, connecting with real estate agents and lenders, and having access to additional educational resources through a brokerage or association could be beneficial for you.

Erin Church · Answer

@Jenna Cawlfield

I’m with @Steve K. And  @Bruce Woodruff on this one. If you’re “just” doing a few deals a year, it isn’t worth the fees, continuing education, the much higher standard for knowing the law, being forthright (letting everyone you deal with in RE know you’re an agent). I love the comparison to getting a plumbers license to pull permits and do the plumbing. :)

I originally got my license because I wasn’t having luck finding a good agent (literally losing money and deals because of them). If I was only motivated to get my license because of commissions, I wouldn’t have. That being said, I really enjoy being an agent now. I’m still selective in who I work with (but really like the ones I do work with) and have no ambition to do 100+ closings a year… I make sure I’m giving my clients the time/education/info they need, and I’m too busy also being an investor to want to do that kind of volume consistently :) (I should also mention that while money is a factor, it isn’t the primary driving force in my life - time autonomy is.)

Also, I would like to mention that agents aren’t good because their licensed. They’re usually good because of their experiences and “general” knowledge. You can learn a lot of important bits when working with a great agent, and it isn’t taught in any continuing ed that I’ve seen.

Steve K. · Answer

I got my license for this purpose initially and that snowballed quickly into working as an agent full time.  For me it wouldn't be worth maintaining my license if I were just looking to do a few deals a year on my own.

Yes you will need to keep your license with a managing broker. Most will expect you to hit certain minimum sales goals per year, as they'll want you to be a productive part of their agency. There are some out there with low fees who won't care what your sales numbers are, but typically you won't get much support, training, or education from this type of brokerage. You will have monthly and annual fixed costs like errors and omissions insurance, MLS fees, Realtor Association fees, desk fees/technology fees to your brokerage, continuing education etc. and your broker will take a split of your commissions. They will also be responsible legally for you, so all of your real estate activities must go through your broker and comply with their policies, fees, etc. Once you have a few years experience, you can become an independent broker and work for yourself if you want.

I like having my license because I like having something to do on a daily basis besides run the investment side of my business. I enjoy learning new things and meeting new people, and the money is good. But it wouldn't be worth it for me to have my license just for the several deals I do per year personally. I also wouldn't get all the benefits of being an agent by using my license just for my own purposes, such as being in the mix with other agents who are doing lots of deals, getting off-market leads, becoming an expert at negotiating and understanding the contracts and sales process, learning from working alongside other agents, networking, etc. This only comes from doing a high volume of deals and becoming proficient as an agent, and from being well-known and connected in your local scene.

You will actually be better off having an agent who is an expert represent you than representing yourself in your transactions. If you only do a few deals here and there with your license you will never really learn the business. It also depends on what the prices (and commissions)  are in your area, how you are sourcing deals for yourself, whether or not you have a "day job" or other time commitments that would interfere with being able to do your continuing ed, attend meetings with your broker or whatever is needed to maintain your license. For me personally, I wouldn't keep my license if I wasn't working as an agent full time.

Marcus Auerbach · Answer

@Jenna Cawlfield I would not, for the same reason you wouldn’t get a plumbers license. I have been investing 7 years without a license and the first 2 years after getting licensed where my slowest as an investor. Investing is all about leverage: other peoples money, time and also knowledge. I hope you had a great time at the RPA meeting, missed it, on vacation

Oliver Evans · Answer

Sounds like you plan on doing buy and hold but if you ever wanted to sell your properties or flip, having your license would allow you to save on commission, gain back commission if buying on market deals, and give you access to the MLS to see for yourself what the market is doing based on stats. Also to mention, you would be able to get and receive referrals for a fee being licensed.

To obtain a Realtor license or not and why?

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