Should I be a Real Estate Agent?

Question

Marcus Auerbach · Answer

I have been an investor long before I quit my corporate job and became a real estate agent and Realtor. Looking back I would very much discourange you to become licensed just so you can write your own offers. First it takes quite a bit of time and money to become lincensed. Second there are ongoing expenses, fees and dues that will quickly eat up the profit from a hand full of deals. Then there is continued education - I just had to complete additional 18 hours of CE. And to answer the question from @Emily Kessler at least in Wisconsin you have to be with a broker, who is ultimatley responsible for anything you do and usually expects in return about half of your commission.

But here is the main reason: the worst co-brokers to deal with are part timers. They know just enough to feel confident and do things without fully understanding what they are doing or asking for help. They often lack the experience, know how and skills that are necessary for a professional transaction. Usually the other agent has to pick up the slack. REO or HUD transactions ad another level of complexity and require their own paperwork, which is extra extensive and hard to understand if you lack the background. I guess as long as you only get yourself in trouble it's alright, but then why would you do that to yourself? I would say that anyone who does less than 30-50 transactions in a year can not get the experience to become a good agent. It's like taking a few classes in law and then trying to represent yourself in court.

John Mathewson · Answer

Becoming a licensed agent was the first thing I did when i started in the investing world. Mainly to have access to the MLS and not wait for someone else to write up my offers. That being said it has been a huge asset to me. Few pro's that have really helped because I am a licensed agent.

1. Access to MLS

2. Write my own offers (this really comes down to timing I want my offers in right away)

3. Being able to pick up commissions on buying houses. (this was just an added bonus. It's not much because the houses are cheap but an extra 700-1500 for something you're going to do anyway)

4. Selling commissions this for me has been huge as well because i flip properties quite a bit. More than the extra money being in charge of the listing and knowing exactly what is happening is extremely valuable to me.

5. Slow times. If you ever get slowed down or you're money is tied up you can always find properties for other investors or make extra cash listing properties.

6. Learning to pull your own comps. Investing is all about the numbers and when you can run your own comps you don't have to worry about someone else's numbers. At the end of the day it's on you.

That being said check with maybe an attorney in your state. Some states have very strict laws about wholesaling while you're an agent. I have seen them both ways where some states it's ok and some states it is a very very gray area.

James Triano · Answer

@Emily Kessler

I've done this both ways.  If you're planning on listing a property for sale and want to use MLS then yes, you do have to go through your broker who will broker the transaction for you.  This is what I've done when attempting to sell a rental and will do with a flip I'm working on.

On the other hand, I've purchased properties at sheriff's sales and off-market which I have not gone through my broker to do so.  These were deals that were received through mutual friends, family, others in my network.  Anything that you're going through the MLS for, you'll need to work through your broker.  I will note that I never used any of the standard contracts, forms, etc. in my off-market deals and went through an attorney to close those transactions.

Emily Kessler · Answer

@John Mathewson and @James Triano I am a real estate investor and am also looking to get my license, and have a question that maybe one of you can answer. If you buy or sell a home for yourself, do you still have to go through a broker to oversee the transaction?

James Triano · Answer

@Zachary Foust

I would say this depends on how new you are to investing and what type of investing you're doing.  If you're absolutely brand new to investing and looking to just do 1-2 buy-and-hold deals per year, I would develop a relationship with an agent and not get your license yourself.  Even though you may lose out on some commissions and the agent may not be as responsive, there is a ton of education, regulatory requirements, and some expenses associated with having your license.

On the other hand, if you're looking to do a few flips per year (now we're talking two commissions and closings per home you purchase) it may be smart to get your license.  Not to mention you're going to be more reliant on an agent to pull comps, write offers, and perform research.

Personally, I have my license but it's really due to the amount of volume I'm aiming for and my long-term goals in real estate.  This question is asked a lot and I believe it's very subjective.  I think you need to ask yourself what your long-term goals are and if being an agent (even if just for yourself) is something that's part of your plan.

Waylon Gates · Answer

@Zachary Foust First of all congratulations on make the decision to get in to REI and making the first steps to completely changing your life.

I have done quite a number of deals and I have solidly determined that there is no reason to be a licensed agent.  If you are using the commission to justify the deal than the deal is no good.  I look at it like this, a real estate agent gets paid to be a real estate agent, a contractor gets paid to be a contractor, and my accountant, lawyer, etc all get paid to do their job.  If I were trying to do all of those jobs I wouldn't be able to focus on my investing.   I have met more people that were once active realtors and investing and now are just investing and stopped trying to do everything them selves.  All of that being said, I would make sure that you have a aggressive and knowledgable agent that can represent you very well.   I would say that my agent has helped me make many times more money than what they have earned in commissions.  A good agent will be involved in the local real estate agent community and let people know what you are looking for, this exact scenario has put me in the position to buy many off market deals.  If you are going to be an agent and an investor you will limit the time that you have to be a great investor.

I know that there are many people who will disagree, frankly those are people who are trying to justify the way they run their business and will never know how it would be if they weren't an agent.  I would try to find an investor who was once an agent and see their take.

Most of all, whatever you do just treat it like a business, not a hobby.  Have your business make money for you by putting the right people in place to do the legwork of your business and you just spend your time working on your business and not in your business.

Waylon

Kuba F. · Answer

Good writeup @John Mathewson

@Zachary Foust I usually don't recommend becoming an agent first because of the time and expense, and because people usually use it an excuse not to start investing.

You don't need a license to be successful, and most investors aren't licensed, but you do need someone on your team who is.  Now if that's you or someone else, it doesn't matter as long as it's someone you trust.   Eventually your team is going to be more than just you, and if you want to systematize your process so that you're working on your business not in your business then you're going to have to outsource most of the work eventually anyway.

Brian Pleshek · Answer

If you're going to be doing a number of deals, then it would probably be in your best interest to get it.  I know that sometimes my agent gets back to me in a timely manner and sometimes they don't.  If I need comps quickly, it would be better if I could do it.  You also can save on commission each time you buy one.  After awhile, it will pay for itself.

Brian

Should I be a Real Estate Agent?

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