Why should I get my Connecticut (CT) real estate license?

Question

Greetings, everyone! To my fellow Connecticut residents, and especially investor/agents who specialize in flipping, can you help me understand the pros and cons of getting my CT real estate (salesperson) license?

I understand the process involves taking the Principles & Practices Course (which unfortunately is only in-person and not online), and then sitting for the Salesperson exam. I'm fine with the costs involved.

My business plan is to flip 2 properties in the next year, and add 2 per year thereafter. If that's my focus and trajectory, is it beneficial to get my license (say, for access to MLS and savings on the buyer/seller side of my deals)?

If so, what else is required beyond getting the license itself to access MLS and represent myself in deals?

Thanks!

Jonathan Makovsky · Answer

@Philip Pape great question!

Like most things in real estate, there is no black and white answer to getting your Connecticut real estate salesperson license, but here are some considerations you might want to take into account.

Pros:

Savings on back-end Commission (This should actually be the easiest calculation for you to do - and really a question only you can answer: You will probably pay a Listing Agent 2.5% - 3% of the resale value of the homes you intend to flip. If you become an agent, remember that a portion of that will go back to the brokerage house. If the homes will be re-sold for $1M that savings can be significant, if the homes will be sold $100K it may or may not be worth your while.

Earn money buying the house: You can make a percentage when you buy the home.

You can run all of your own comps (and still run it by your own broker for an expert opinion)

You PREVIEW ANY HOMES YOU would like so you can A) see what you should do to your flip based on what comparable homes are doing, and B) get a good idea of pricing on homes . This to me is huge (and got it from@J Scott's THE Book on Flipping Houses). How many Realtor's are going to spend hours with you looking at comparable homes that they will never sell you.

You will learn some good information at the real estate course

You can possibly make ancillary money in real estate doing a lot of other things.

Cons:

Spend 60 hours of your time, in addition to taking and studying for the exam

Financial cost from: the State of CT, the MLS, joining a Realtor board, and possibly brokerage

There is some information that you will need to know by being your own agent and putting a house back on the market, so are you capable of it? (It's not too difficult, but does require a skillset of science & art)

You may or may not have an agent that will be at your beck and call to lean on.

Hope this is helpful in your decision making process.

Michael Noto · Answer

@Philip Pape Let's say all tolled there is $2k a year you need to spend to keep an active agents license in CT.

The market you are looking to flip in is extremely competitive and if you are relying on the MLS for potential flip deals, do you think it is worth $2k a year to have access to listings right when they come on the market and to have access to those deals right away?

If the answer to that question is no then I wouldn't get your license if you see no value in that.

I would recommend however that you work with an agent that has represented flippers and has flipped a house themselves.  Otherwise you are putting yourself at a serious disadvantage in my opinion.  You don't want an agent that just opens the door for you.  You want an agent that knows the flipping business and how to estimate rehab costs.

This is what I see happen a lot with flippers who are dealing with agents who don't know the business:

• Flipper contacts agent to go see house.  
• By the time they connect and schedule a showing they are going to see the house when it has been on the market for 24-36 hours
• Then since you are a new flipper and they know nothing about flipping you are going to want to schedule another showing so someone who knows how to estimate rehab costs.
• Now we are 2-3 days in and if the deal is a good deal it is either under contract or is in multiple offers.

An agent with experience repping flippers will know you need to be there within 12 hours MAX for a deal that meets your criteria, if it comes on the market in the morning you need to get there that day.  No excuses.  They will also be able to help you estimate rehab costs and in turn get your offer submitted quicker.

Mark McClure · Answer

Go to one of the local REIA meet ups. There is one in Manchester and one in Rocky Hill that meet once a month. At the meeting there will be real estate agents and brokers they will talk to you and help you. Your best bet may be to work with a small broker rather than a nation chain.

Elisha Brady · Answer

I am a new agent and I have to say there are a lot of costs you don't necessarily anticipate when becoming an agent. And, as someone who is a new agent and as someone who is looking to invest, I really don't see the perk of becoming an agent if you're only intending to use it for your own investments.

If you want to be an agent for more than just your own investments, I say go for it. But do understand that it's still a lot of money up front and it's typically about 3 months of active prospecting before you get your first clients.

If you'd like to know more about the costs I've come across and the industry from a new person's prospective, feel free to message me. I just don't feel like posting my finances on the Internet (I hope you can understand that).

Jonathan Makovsky · Answer

@Philip Pape

Google brokers in the area where you want to flip and call them to discuss it with them.

Paul Kaflinski · Answer

As a licensed agent you will have additional costs for MLS and errors & omissions insurance, plus annual license fee to the state and costs for continuing education requirements. Comes out to about $1000 year. Since you don't plan on selling anything but your flips, it may be a challenge to find a broker to hang your license and keep it active, unless you can negotiate a split that the broker is happy with, otherwise what's in it for them?

One of biggest pros Jonathan touched on. I love being able to go see a new foreclosure listing immediately and not having to rely on someone else's schedule.

Philip Pape · Answer

I forgot to ask, what is required to get sponsored by a Licensed Real Estate Broker, which is a requirement of the license?

Philip Pape · Answer

@Michael Noto, these are all extremely reasonable points so thanks for explaining. As a new investor, I see the prudence in teaming up with experts (who have experience with investors) and figuring out what works for me down the line. One step at a time :)

Philip Pape · Answer

@Elisha Brady, thanks for the reality check as someone who has been through this. I will definitely get in touch directly :)

Philip Pape · Answer

@Jonathan Makovsky and @Paul Kaflinski, these are all excellent points and addressed my question spot on. The idea of saving on deals and being able to see properties on a whim sound worth the cost, with my only remaining question being how do you find a broker to sponsor you after going through all the coursework and exam?

Why should I get my Connecticut (CT) real estate license?

Most Popular Reply