What are the downsides of getting your real estate license?

[Kyle Shankin]

There are many posts and have heard several guests on the BP podcast advocate for getting your real estate license, but no one ever talks about the downsides.

I'm a southeast Michigan-based investor who is using direct mail and PPC marketing to find new leads. I'm considering getting my license solely so that I can more accurately comp out houses and make better offers and maybe be able to view houses on the MLS on my own schedule. I don't have any interest in starting a career as a real estate agent as I already have a job (though the plan is to go full time into investing when appropriate).

How would getting my license negatively affect what I'm doing currently?

[Russell Brazil]

Thanks for the tag @Joe Splitrock.

@Kyle Shankin There are certainly downsides to having a license that people do not talk about.  Liability is the major one.  When you are licensed, you instantly become liable for knowing every law.  Ignorance is not a defense.  Also if you end up with a complaint before a real estate commission, fair housing commission, anything of that sort...you are by and large guilty until proven innocent, as opposed to the opposite you would enjoy a member of the public in a court room.

Fines for innocent mistakes can be drastic.  One agent in Massachusetts was fined roughly $100,000 for simply asking a client "So where are you from?"  You may have a license and not be in business....but in the eyes of the government, you have a professional license to practice a regulated activity, and will treat you no different than the guy making millions per year selling real estate.

Cost is the other overlooked item.  Licensing fees, continuing education, insurance, mls dues, board dues, sentrilock fees. It all adds up.

@Joe Sadusky You also want to keep in mind your broker needs to approve your wholesaling activities. They are liable for all of your real estate activities, not just sales. Also be aware that your e&o insurance does not cover you when you are a party to the transaction.  Id also contend that if you are using assignable contracts to wholesale, you are engaging in a de facto net listing, which is illegal in most states.  I always suggest to wholesalers to either not get licensed, or to double close on properties to avoid the net listing issue.