Is a RE license necessary??

Question

I've been marketing online and through advertisements looking to buy homes. I've done several deals now from these marketing efforts where I have essentially assigned the contract to a Rehabber here in the Bay Area.

Anyway, my question is at what point do I need to become official with the DRE in California? Is it even necessary if all I'm doing is assigning?

The only reason I ask is because I didn't think necessary until I had some blowhard scold me and tell me I can't solicit to purchase property if I dont have a CA license.

TIA

J Scott · Answer

My take:

http://www.biggerpockets.com/renewsblog/2010/02/24/should-you-get-your-real-estate-license-investors/

James Park · Answer

Nate, 
I got my broker license in California and had it transferred to Georgia. This allowed me to bypass the 3 year license requirement in GA to get a GA broker license. I initally had my license with Solid Source, but i had some similar complaints as J Scott regarding some of their strict procedures and policy: marketing, logo etc. I had a little tense moment with my broker that I refuse to put that ugly Solid Source Realty Logo on my website :)

I am currently with Park Mason Brokers and there fee is $195 a year plus $195 per transactions which is lowest fees I have seen in Georgia.

Wayne Brooks · Answer

No license require-you're a wholesaler!!!!!!!  
You buy/sell/assign for Yourself.
You only need a license if you want to collect a fee/commission to help
Someone Else buy/sell/rent.

James Park · Answer

J Scott,
I like the idea of becoming my own brokerage myself. Though you would have more control, wouldn't the costs be a lot higher : FMLS membership, e&o insurance.

What do you think are pro and cons are hanging your license with a low fee brokerage to having your own brokerage. I guess one pro is that the checks will be written directly to your own brokerage. Sometimes i wonder what happens to commission if your broker decides to file bankruptcy. When REMAX Greater Atlanta went belly up, I remember one of the agents I knew had $25,000 of commissions he couldn't collect.

NA Foster · Answer

Hello Thomas H-Don’t let Mr. Blowhard discourage you. His problem is he is jealous. Be prepared to stand your ground and demand he/she/they quote their section of the California Code. I have had licensed real estate agents and experienced investors state who should know better tell me why you can’t do assigning in California.

Take this to your California lawyer for clarification and laugh all the way to the bank!

Here is part of the California Business and Professions Code 10130-10149 and you can access all of  it online at http://www.leginfo.ca.gov.

10131.1.  (a) A real estate broker within the meaning of this part
is also a person who engages as a principal in the business of making
loans or buying from, selling to, or exchanging with the public,
real property sales contracts or promissory notes secured directly or
collaterally by liens on real property, or who makes agreements with
the public for the collection of payments or for the performance of
services in connection with real property sales contracts or
promissory notes secured directly or collaterally by liens on real
property.
   (b) As used in this section:
   (1) "In the business" means any of the following:
   (A) The acquisition for resale to the public, and not as an
investment, of eight or more real property sales contracts or
promissory notes secured directly or collaterally by liens on real
property during a calendar year.
   
Be sure to also ask your California REAL ESTATE ATTORNEY how to work when you pass your #7 assignment. If he doesn’t know……NEXT!

Nate Gelinas · Answer

You answered everything. Basically I wanted to know if I could get my sales license, and "work" under a broker (purely for MLS access for investing purposes) for 3 years and be eligible to then proceed to get a broker license.

I just was not sure whether or not you had to be actually doing listings with clients for those 3 years, or if simply having an "active" license fulfills the requirement.

Thanks!

J Scott · Answer

Nate,

Yes, in Georgia, it's required that you have your license for 3 years prior to being able to get your broker's license (you can take the coursework prior to 3 years, but can't actually get the license).

Not sure what you mean by "active," but yes, if you mean by the state definition of having an active license.  Technically, you don't ever need to do a deal during those three years, but you will have to be actively licensed during that time.

Not sure what you mean by "setup that your wife does"...can you explain or clarify?

Nate Gelinas · Answer

Awesome info.

Last question for you since you brought up an excellent "exit strategy" via the broker route. In order to get your brokers license, I believe for GA you must have your sales license for a minimum of 3 years. Does stipulation refer to 3 years as an active agent, or 3 years total? If 3 years active, would the setup that your wife does (and what I would plan on doing), count for the time requirement?

J Scott · Answer

There are both state laws and then rules that your broker will have.

State laws are pretty simple:  you must disclose that you're licensed at the earliest reasonable time (generally, agents take that to mean upon first phone or face-to-face meeting or upon making/receiving an offer), you must disclose in writing in the ad if you're advertising a specific property for sale and you can't offer to buy a property in return for a listing without first putting your offer in writing (this comes into play when you offer to list a short sale that you plan to buy yourself).  There may be a few others, but these are the ones we've run into.

In addition, our brokerage has some rules, and they tend to be more strict.  They require that any written advertising contain their logo (which has to be as prominent as your own logo if using both), must disclose licensure and they also want to review every piece of written marketing to ensure that it doesn't open them (or you) up to unnecessary liability.

Personally, that last piece is what makes it difficult for us -- our brokers are pretty rigid in what they don't want us to say, and it is detracting from our marketing success.  For this reason, my wife is working on getting her broker's license, which should free us up to do whatever we want, so long as we follow the state rules (and are okay with any liability our marketing brings).

The other option was to find a smaller brokerage that didn't really care what we did (and that was an option), but we like the flexibility of being our own broker, so we're going to go that route instead.

Nate Gelinas · Answer

Since you are in GA as well, can you expand on the disclosure requirements a bit? Are you required to disclose when you market, or simply once you begin discussions with a potential seller?

Is a RE license necessary??

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