"I want to be an Investor! Should I get my Real Estate License?"

[Alex Ficco]

While running my local real estate investors meetup here in Reno NV every month, some of the top questions I get from newer investors has to do with being a licensed real estate agent. This question comes pretty split as “Should I get my license to be an investor?” and as a conversation starting with “I’m in the process of becoming licensed...”

There are definitely pros and cons to be licensed as an investor, and it seems like most people only think about the pros. As always, this post is written from my narrow point of view, gained from running a direct-to-seller single family flipping and wholesaling company in Nevada. Obviously, I can’t describe every single nuance in one post and real estate laws differ greatly from state-to-state, but here are some of my takeaways from starting out unlicensed, getting my NV Real Estate Salesperson license, and becoming unlicensed again.

Before we get into pros and cons, by far the number one justification I hear for wanting to become licensed as a newer investor is for the educational aspect. I think I can speak for all licensees when I say you don’t learn jack **** during the licensing process, aside from things that will help you pass the test. The NV post-licensing continuing education course was far more insightful on how to actually complete a real estate transaction. And to learn anything at all about investment… forget about it.

When someone tells me they want to get licensed strictly to learn, I always follow that up with “Do you want to work as a real estate agent?” If the answer is yes… cool, get licensed. If the answer is no, I think the cons outweigh the pros.

To go through some of the pros, the biggest one I see from a flipper’s point of view is to be able to list your own flips and not pay yourself as an agent. Depending on price point, that extra savings of 2.5-3% can mean deal or no deal in a competitive market.

If not getting paid for a listing wasn't a good enough pitch, the next pro is using your license to make additional income. Just like anything else, being a GOOD and top-producing agent is hard, but to get layup listings from your personal sphere as a part-time side-gig agent is pretty easy work.

Last point on commission. If you're actively BUYING deals on the MLS, it's nice to be able to negotiate away your own commission to make your offer more attractive to the Seller.

Other than that, I don't really think ‘MLS Access' is some great thing like its cracked up to be. There are a few advantages, but you can comp property just fine using free tools like Zillow or paying for a service like Batch Leads. You can also be set up as a realtors "assistant" to get MLS access for like $25 a month without being licensed. Access to the FORMS to be able to write offers on listed deals is more important to me, but again, good relationship with an agent will get you that for free.

Last point for the pros. I think it’s easier to talk to Agents if you are also an agent. If you know what you’re talking about, know the language of the industry, and are good on the phone, it's not an issue either way, but even with that, “This is Alex with eXp realty” vs “This is Alex with Reno Area Home Buyers” worked better. Agents are just used to hearing "[name] with [brokerage]."

Sounds great, you’re ready to get licensed now right?

Yes it costs money to become licensed and to stay licensed, but that didn’t even make my list for cons.

Most people don’t realize that they have additional liability when they are licensed. Even if you are direct-to-seller, and aren’t using your license in any capacity, you’re still a licensee. You’re considered a professional. Act ethically and it probably won't be a problem, but if there is a problem for whatever reason, you still have to defend as a licensee.

Piggy backing off of that, one POTENTIAL pro that I hear all the time is that “I can list all the deals that I don’t buy.” Yes you can… BUT I think it much better (and safer for you) if you are totally clear on which hat you’re wearing before the appointment with the Seller starts - are you the buyer or the agent?

It’s two totally different relationships. A Buyer and a Seller are opposing parties in a transaction. A listing agent and a Seller are on the same team. The agent has a fiduciary responsibility to their client.

You can see how it gets very gray very fast when you pivot to “Well I could list it for you! I think WE could get $300k in as-is condition on the market” when 15 seconds ago, your max cash offer was $225k. Just refer it as a listing to another agent.

Lastly, and this one is definitely a NV state specific thing, are the marketing laws. I'm not a lawyer and this is not legal advice, I’m just some guy that has been forced to dig through the code to defend his own complaints lol!

In Nevada, all licensees (should) know about the marketing laws. If you’re advertising for services that require a real estate license - IE representing buyers and sellers - you need to have your name, license number, and brokerage logo prominently displayed on the marketing piece.

Now, what most licensees DON'T know is that there is another section of code that is for licensees advertising for services that DO NOT require a real estate license - IE purchasing a home. The code states that you have to disclose you’re a licensee on the marketing piece and that's it.

On all of the mailers that I sent out (after learning this the hard way when I WAS in the wrong), there would be a disclosure at the bottom of the mailer that said "Alex Ficco is a NV real estate licensee license # XXX with eXp realty. If the property is currently listed, please disregard." According to my interpretation of the code, this is OVER disclosing. According to other agent's knowledge of only the marketing laws mentioned above for services requiring a license, this is a violation and DEFINITELY grounds for a complaint to my broker, the division, the MLS (why? lol), or whoever they can tell.

Ironically, following the marketing law as a licensed investor caused MORE issues than when I was doing it wrong. The complaints were never from a Seller, only from other agents. For me personally, since I never really used my license all that much and only work in the investment business, It made more sense to be unlicensed.

So there’s my not so short post on a few personal pros and cons for being licensed as an investor. As always, the answer to the question is… it depends. Hope this helps.