New York State Practicing Real Estate Without a License

[Meghan Mack]

Is it illegal to practice real estate without a license?

I am currently in the middle of my NYS 75-hour course. It seems as though once you are licensed you are limited to working under a broker, but if you are unlicensed you can simply work for yourself.

Can someone please shed some light on the pros/cons of getting licensed versus being a non-licensed real estate professional?

[Account Closed]

The most misunderstood thing I come across is what a real estate license means.  It means you have the right to represent someone other than yourself in a real estate transaction. Nothing more. 

It doesn't give you some specialized market knowledge. 

The courses you take to get a license mainly teach you how to be compliant with all the state laws when you do represent someone else.  Yes, there are courses on appraising and so forth that are helpful, but the bulk of the coursework is what I just wrote they are.

If you have a license, you park it at a broker.  Likely, the broker won't hold your license free. 

You will have access to the MLS.

You will have to carry E&O insurance one way or the other, either on your own or through your broker.

You will have to comply with the broker's rules for conducting business.  Your broker may require you to run all your deals through him/her even if they are for your own account so he/she gets a fee on the transaction.

I have read people's postings on this website who feel very strongly that a person needs a license to wholesale and based on the way I observe wholesaling conducted by some on this website and in my market, I sympathize with them but don't agree with them.

If you have an interest in a property, like an option to buy it for example, you have an equitable interest in that property and are representing yourself in any transactions. 

The trouble is the bad actors out there who hold themselves out as wholesalers who are really acting as agents and even worse, they lie to the owner about what they are doing in the process.  They are the ones making trouble in the marketplace for those of us who really know what they are doing.  Typically, they are the ones I read about here on BP who listened to a webinar and/or read an ebook and think they know how to wholesale.

For goodness sake, if you are going to wholesale a property, tell the person from whom you are buying it what you are up to. Truly motivated sellers won't care.

If they do care, 1) they aren't motivated, and 2) once they figure out what you are doing, they will get mad and make trouble for you.

If you can't tell them what you are doing and make them okay with it, walk away.  It's not worth it.   There are plenty of deals for you out there with no hassle.  It just doesn't seem like there are when you are new and untrained.

One final word, when wholesaling, you should always get a property under contract with the intention of closing on it, and if you can't find a buyer before you do, close on it yourself.  In other words, it should be a deal you would do yourself. If it won't work for you, what makes you think it would work for someone else?