Realtor vs Real Estate License for Making Offers

[Weston Bovee]

Hello, am just getting in to the realm of Real Estate Investing in the Denver, Colorado area and I'm here to ask a question about a particular aspect of finding a good deal...

Currently, I have a W-2 job in sales that yields a healthy income - I am 100% commission so I don't have a cap on how much I can (and can't) earn and in this roll. I work from my home/the road and have tremendous flexibility so I'm thinking that this bodes well for a BRRRR or flip style of engagement since I can be more available to refurb the property than someone who has to report to an office. On top of this, I have two sons that are 20 and 22 that I'm trying to teach the value of passive income to that I can use as "employees" on the refurb - both of whom have money of their own to potentially put down on a deal as a "partner".

My question is centered on how to make an offer on a potential property... I have found a few that I think would be good but it seems crazy to offer so far below their asking price in order to make the math work - ([.7 x ARV] - repair costs). We have a good friend that is an agent in the area who also works with investors... but I have been hesitant on approaching her prior to knowing a bit more about the process so as to not waste her time.

In addition, my wife does not work so we have ample time to invest in research and education but when we find a potential deal, we are a bit stumped on how to proceed which brings me to my actual questions (finally):

If we find a potential deal, can we approach the owners of the property to make a low ball offer directly or do we need to go through an agent?  If we need to go through an agent, should either my wife or I invest in getting our Real Estate License (most likely my wife)? 

I have been listening to the BP podcast in chronological order from #1 so that I can learn in an organic matter and so far I have heard a lot of anecdotes about, "knocking on the door and asking if they want to sell their house" and, "buying on the courtroom steps", but what I don't understand is how these offers are actually made?  Do buyers/investors simply interface with the current owners and make a deal that in turn is brought to an agent, or is it all through agents from start to finish?  

I want to start making offers on some properties but I don't want to do so in a way that is going to guarantee failure, so perhaps obtaining a license is best - for practical and educational purposes?  Any assistance is appreciated!  

[Dan Maciejewski]

If the property is listed for sale with an agent, you have to at least work with that agent.  They will have a contract with the owner to sell the house.

If the property is "off-market," you can just deal with the owner.

You will need a contract.  The best advice is to use one written by an attorney.  You can google and use your state's Real Estate board's approved contract -- that has been written by attorneys.

After initial negotiation, you will need a closing attorney or title company to do a lien search and verify clear title and to hold escrowed funds.  

It's a few grand a year (at minimum) to maintain a license -- the usual advice is if you're not either 1. selling as a full time job, or 2. doing enough volume to justify holding a license, then it's probably best to just hire a great agent that does it all full-time -- you'll get better negotiation and a better knowledge base.  

You also do NOT need a license to buy or sell your own Real Estate -- a license is needed when buying or selling for a third party.  Many people just use their own contracts and deal directly with buyers and sellers.  Most people do not like this and are not good at it.  I CAN work on my own car, but I would rather pay an expert to handle it for me.

And an aside for mindset -- don't think of offers as "lowballs," they are just offers at the price that makes sense for you.  You will get a lot more pushback if YOU think it's a lowball offer.  You will get more compliance if you see it as a reasonable offer for your needs.