Should I get my Real Estate License?

Question

Hello,

I've been lurking/learning here for a little while. 
LOVE this site and it's lovely helpful contributors!

I'm considering getting a Texas Real Estate License before I start REI.
I've been studying/investigating, going to auctions, taken a few classes on Foreclosure and Tax sales for the last 7 months and have decided to start with a couple REO properties as rentals.

Financing them will not be an issue.

I would like to know the pros and cons from others who have become an agent for their own benefit.

thanx so much for any input.

Jason Cummins · Answer

I am not an agent, but we plan to get my wife this summer to take the courses and the test to get hers.

There are obvious pros to getting your  license.  First and foremost you can do your own comps vis MLS, which is HUGE.  Texas is a non disclosure state, so comp sites like realquest may not have all the info you need.

You can also make your own contracts and submit offers on REO's with out having to bug your real estate agent to low ball some offers.

I cannot wait until my wife is an agent.

Ralph S. · Answer

That's very true.  I did what you're thinking about and there are a lot of bennies.  I got licensed and kept my day job, working for myself, family and friends (no self marketing, promoting, etc.).

I haven't regretted it at all.  As an investor, every percent you get and someone else doesn't helps.

Not really.  Be upfront and disclose you're a licensed agent when required.  When you buy or sell properties for yourself, that needs to be disclosed.

Not unless our MLS is behind the times.  These are City/County Clerk items.  You may find two things locally of importance.  The MLS might be behind somewhat in tax and owner data, as they get periodic updates from the Assessors Office on sales, so it is better to check with the Assessor directly.  Either through the city or county website.  Many offer property assessment searches, which can tell you alot about a property.  The other is the city or county clerk's office.  While not free, many clerks offer documents over the internet, either for a subscription or by the document.  You can search by property id and essentially do your own title search.  Some include pdf's of certified plats and other docs as well as transfers, liens, etc.  The only type of payment history you might be able to find are the tax payments on the property tax.  Our Assessors show the taxes owed, outstanding balances, etc.

Good Luck!

Jason Hanson · Answer

I am not a real estate agent and would advise against getting your license.  It's not necessary. If you do get your license you will have to disclose it, every time you buy a house. Also, remember many people do not like Realtors, which is why they are selling their house to an investor in the first place.

I am a firm believer in keeping this business simple and getting your license is an unnecessary complication.

Jeremy Hardy · Answer

You dont need your license, but on the other hand it wont hurt you either. 
Although it is nice when I buy a property I get to keep the commision not someone else. Then I sell it using my company to list the proerty, there again I keep the commission. Plus I get to advertise on the MLS so all the other agents can see the proerty also. Just make sure you are compliant witht he state laws adn disclosures.

Donna Pattani · Answer

Thanx you guys,

i have been doing my homework, lots of it too!

I want to take the core classes for the additional knowledge they will afford me. also some of the required hours can be filled with great classes that i would want to take anyway.

And yes rjs3, You have confirmed the added bennies for me. The money saved is great but probably the most valuable will be the local connections, like joining a trade association, I love that!

Also regarding serving John Q Public, it's in my nature to help people who deserve to be helped/given a break. I'm thinking down the road I can help my rental customers obtain their dreams of home ownership with a good deal and possibly a get a referal to new great rental customers.

Ralph S. · Answer

Beachbum - Mahalo.

You're so right, on so many things, but, I think you missed a relative point or two.

Hoo-ray!  So refreshing to see someone doing their homework before diving right in.  What seasoned REI couldn't finish this line, "If I knew then what I know now...."  Your suggestions that other courses might benefit her more, and are all good thoughtful ones.  Mine are slightly different but still much the same.

I don't think she'll be getting her broker's license anytime soon, and venturing forth with the naivety you warn against.  I have a BS degree in Bus/RE (20+ years ago), with 18 years in Accounting and Finance roles for a large manufacturer.  About 10 years ago begin investing in RE, and a few years ago, studied up and passed the agent and brokers exam, got my brokers license and after interviewing local offices, chose the one that I felt could and would help me the most.  That's a priceless association that has helped me so much.  All the things you warn about, and all very good, and will be there for Nooni, looking over her shoulder.  And I can only hope she will find one as good as the one I found.

And, I am sorry if I have a slightly different view of the RE industry.  While NAR does a lot of tremendous things as an association representing homeowners and promoting home ownership, and it's members are, I believe, temendous as a group (so don't think I'm negative overall, this is just one aspect relevant to this discussion), the admission fee to being an agent is relatively low.  Are you 18? Yes.  Are you a Felon? No.  Here, take a course, any course, online, through distance education, at a RE office down the street, or at a junior college, buy this CD off the internet that will teach you the answers to the state test.  Pass the class and the test, and viola, you, too, can be an agent.  And the ongoing costs of NAR, state and local associations, MLS, CE, E&O, etc. is just the cost of doing business, and again, it's not very steep.  I don't think I've ever spent anywhere near $2k/year on maintaining my license.  This is why it's not like a cop, where you can't find one when you need one, and it's not like the attorney who represents himself, having a fool for a client, either.  In the aspect acting as your own agent, nobody's going to look after my well being better than I am, especially if I look to and rely upon my broker.  And, no relationship between a single agent and investor can, in my opinion and experience, compare to the resources and relationships that follow when an REI joins in as an agent.

Life evolves.  I bought a HUD, did the sweat equity thing and learned much, especially how others can do a much better job than I, in much less time.  I was a slow learner, tho, and did it again before I really learned the lesson.  Still did ok on the investments, but, had I known then....  I also learned a lot about what it takes to do these things.  Today, I hire out maint & repairs.  You're own story is one of an REI getting a license and now doing PM.  Sounds to me like you've done something very similar, yet say you can't imagine why anyone would?

Nooni's post points out a couple things.  She's looking before leaping, she's learning and asking questions.  Inexperienced, yes, to be warned about things she doesn't yet know or understand, yes.  There are many things she can do, in many different orders, that would help.  But, to address her question

I say the pros far outweigh the cons.  It's not a big commitment in time or resources.  Getting licensed is not a destination, it's only one step that makes you better, opens doors to resources you no longer have to rely on others for, and puts you in a community of others, much like joining any trade association, that can really help you do and be better.

Donna Pattani · Answer

Thanx Jason,

I read a post where you said that about your wife, cool!

Do you know of any cons? Ethical, Legal or otherwise?

Nondisclosure, that's why I've been spending too much time and $ digging up the facts (FLS and Realtytrac)! Aside from easy/better Comps on the MLS will I be able to find loan balance, payment history and liens?

I'm very motivated and excited about starting and feel lucky to be in such a healthy market to start this journey.

Thanx again

Richard F. · Answer

This topic keeps coming up, so I thought I would offer my perspective. I have, in the past, owned over a dozen properties. This was before I was licensed. Now, as a Property Manager, with a Broker's license, and a member of the NAR, as well as NARPM,  I do not currently own, but manage for about 40 clients. I have been a PM for about 13 years.

I simply do not understand why anyone would even consider taking the necessary steps to obtain a real estate license, if they have no intention of providing services to John Q Public.

First of all, as is frequently pointed out, there is very little in the typical classes that are particularly useful with regard to the practice of REI. Add to that the expense of maintaining an active license (and finding a broker willing to let you, in light of the fact you will not be practicing), and the additional legal implications to ANY transaction you do participate in, and I just don't see the benefit.

If all you want is access to the MLS, find an agent that you CAN build a rapport with, and that IS willing to spend time with you and provide you info. Negotiate an agreement to pay him for his time and service in a manner that satisfies you, the agent, and the broker. Treat them as a business partner and include them at every opportunity.

Even an agent (operating out of a real, operating, office) that has only done a few transactions is likely to be more aware of certain localized issues and requirements than someone who has done none (through "normal" channels), and, if you establish a proper relationship, you should expect that the broker is (per licensing requirements) "supervising" the agent, and will also be providing valuable input.

A legitimate real estate brokerage adds a layer of protection that you simply can not obtain on your own. Professionals can be held accountable. If you are acting under your own license, errors and omissions insurance will not cover; and there are other ramifications as well. These items account for some of what you get in return for commissions. Consider what it will COST you if you overlook something, or fail to obtain correct documentation, or make some other error, without this extra layer of responsibility.

If you are looking for ways to cut expenses for your REI efforts, train and build a talented rehab crew and focus on related construction and project management skills. The amount of waste most crews create could easily offset an agents commission. Why don't YOU keep the 20% profit and markup for all repairs/improvements?

Now, before a few of you start jumping up and down, MOST of the above is directed to those newbies asking the posted question. For those more experienced investors, or those with other, RE related backgrounds, that already understand significant aspects of the business, getting a license, especially for a spouse, CAN be very advantageous. But, again, for the newbies, you have SO MUCH to learn, you should focus on learning things that matter directly to your chosen business model, for example, painting, or construction 101, or even accounting. If you want to learn how to crunch the numbers, take the CCIM course 101, Financial Analysis, or 103, User Decision Analysis. You will learn more in one week than in dozens of guru courses, and take home some useful tools to boot.

To summarize, although possibly few, and far between (I blame society in general for this, not the RE profession!), there ARE good and useful agents that can help you achieve your goals, allowing you to focus on areas that perhaps make better use of your time, skills, and temperament.

Just my two cents...

Donna Pattani · Answer

Thanx rgs,

I will start my classes next week.

I'm also hoping the classes will address some of the many lingering questions on my mind.

Did you have to be under the wing of a Broker before you were active? I think that's required in TX. There's a cost involved and it looks like there are many requirements/hands out looking for food.

I don't mind the cost/time investment if it's beneficial for the goal of making $ and being financially free in the long run.

also, (legally) why, when and where do you have to say you're an agent/buyer/investor?

Should I get my Real Estate License?

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