Realtor License /MLS Access questions (Northern California Specific)

[Asim G.]

Hi,

I would like to start off by congratulating the founders and members of BP. To think about building a community to connect people with interests Real Estate is a good idea on paper. To actually build such a community with active membership from RE gurus and volunteer moderators is super awesome.

I have been on the fringes of buy and hold investing for a few years and am thinking of getting into it more actively. I had a few questions about getting a RE license, as I like the flexibility of checking out properties without having to coordinate with a RE agent. I would appreciate if folks on the forum could answer the following questions.

1. RE Broker: I believe every agent needs to be affiliated with a broker, with whom the realtor splits the commision. I am not a 100% sure of the role of the broker in the transaction. Can someone explain that to me. Also, are there brokers that are more investor-friendly than others. Is the typical commission split different if I do all the legwork myself and use the broker only for paperwork.

2. Cost of RE License: I am not entirely sure of the total annual cost of being a realtor. I guess there is the cost of RE education (variable), exam and licensing (~300 dollars in California). I am not sure the cost of MLS membership. I am interested in MetrolistMLS (For San Joaquin and Stanislaus COunty) and NorcalMLS (for Santa Clara/Alameda County). I am interested in the ability to view MLS data and have access to the magical realtor electronic key. I am not interested in listing properties.

3. Bid on HUD/Homepath properties: Is there any special steps I need to do to be able to bid on HUD properties.

Looking forward to answers

[Victoria Winters]

Thanks for writing our post.  This is an ongoing subject worthy of an answer.  

First, your choice to get a license is a personal decision.  It is true that every licensee with a Salesperson license must place their license under a broker in order to operate as an agent.  The broker is charged with the responsibility to oversee the activities of salespersons (agents under the broker).  State law requires brokers to supervise activities  of salespersons primarily to ensure compliance with real estate license law.  It is against the law for a salesperson licensee to represent a client in a real estate transaction without a broker. The salesperson can not receive a commission by law, without a broker.

Real estate investors can buy property without a license and also sell their properties without a license.

One of the advantages of a real estate license is the ability to collect available commission on the purchase of a property listed with a real estate broker. Another advantage is the ability to subscribe to a MLS system. Access to the MLS provides the investor agent with a powerful tool for listing and searching available properties. MLS access also makes the due diligence process easier.

Finding an investor friendly broker may be a challenge.  Many brokers offer services and commission plans designed for a residential brokerage.  The residential brokerage survives on listings and sales of property to buyers and sellers in need of representation on sales or purchase transactions.  An investor is primarily interested in their own property transactions versus the general representation of buyers and sellers.

There are brokers that offer high commission split plans, even 100% commission plans.  It is advisable to compare the plans, fees and services offered.  Even 100% commission plan brokers are not necessarily "investor friendly".  A real estate investor, in many cases, has no need to pay additional fees associated with a residential brokerage and may find working with a company that offers services for real estate investors more to their satisfaction.

The costs of being a "Realtor" is higher than being an "Agent".  All "Realtors" are agents, but not all agents are "Realtors".  A "Realtor" is a member of the National Association of Realtors, and annual dues are required to use the designation of "Realtor".  

MLS membership costs vary among the service provider, but the dues typically run about $400 a year. Depending on the MLS service provider, the subscription may be paid on a quarterly, semi-annual or annual basis.

Finally, in answer to number 3, a broker must have a NAID number in order for the agent to bid on HUD properties.

Please feel free to contact me if you would like more information about investor friendly brokers.