Real Estate Agent
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Updated over 11 years ago on . Most recent reply
What is the cost of hanging license with Broker
Hi BP,
My uncle and I want to get started investing, he is looking to get his RE license in Saint Cloud (Minnesota), to access MLS and be able to see houses quickly. He approached a broker and he told him he charged $300 dollars per month to hang his license.
This sounds pretty hefty as we won't be looking for office space or increase his expenses in any way. Is $300 what everyone else is paying?
Thanks
Most Popular Reply
"This sounds pretty hefty as we won't be looking for office space or increase his expenses in any way."
As a principal broker all I see is liability when an investment deal goes south with the broker being on the hook. E and O insurance policies label investing transactions as one of the highest claim and litigation areas. Many investors who get licensed do not care about the license but making money. If they make a few hundred k and lose their license they still invest. A broker on the other hand makes their livelihood being licensed and being paid commissions. If they lose that they lose the way to feed their family.
Originally I had many agents years ago but I got rid of all of them. You would not believe how much paperwork having 50 agents is even if they are not closing anything. You get constant notices from the real estate commission on the agents not having renewed their license, not completing education requirements in time, getting license suspended for delinquent student loans, IRS request levy their commission for back taxes, child support demands and on and on. Only a few of the agents close anything and when they do they tend to be rusty. If I have 50 agents but only collect 300 per transaction maybe 10 of those agents are closing a deal a month. So I a manage 50 agents a year for 120 closings for 36,000 gross before expenses. It's a horrible investment of time and energy. When a problem happens I am basically doing the deal for them.
I can close one commercial deal and make more than that. I just help my clients one on one now and have zero agents and do my own investments and life is great. I am not babysitting agents and wondering "What nightmare will they create for me next??" Yes you can train and train them but many do not follow directions or skip steps because they are lazy.
Just like for property management you need hundreds of doors with structure to start making any kind of decent money.
There are people out there who do crazy volume just to make a little buck. If you look around you will find eventually an investor friendly broker who will take on anybody.
- Joel Owens
- Podcast Guest on Show #47
I would definitely shop around. Sometimes brokers will only charge a per-transaction fee with no monthly fee. Usually the catch is that there is a heftier percentage on the transaction side, which could cut into your profits. I am an agent with Keller Williams in Texas. It costs me about $67/month, plus I get the whole commission (well, either the buyer or seller side) when I buy or sell a house for myself. Some agencies will take up to 50% of your commission. I have to pay my own MLS fees (about $400/year), but the monthly fee covers my E&O insurance and other things. I would check into Keller Williams for sure if they're up there. Also, make sure they are a HUD-approved broker so you can place bids on those if you want. There are a couple of drawbacks about being an agent, though, such as having to disclose that when you buy/sell, going through the brokerage with all of your contracts, and being held to a higher standard in regards to liability.
Every broker is different, there is no set fee or commission split.....some have low "office fee's", under $100 and then have a 50/50 split. Some have higher fee's and give you more commission. I pay $100 per month which includes lots of perks but I also get 100% commission.
Other items you may have to pay for:
Error and Omission Insurance (usually quarterly)
MLS Fee's
Realtor Association Fee's
Also, continuing education fee's every other year to keep your license...
All said and done your paying at least a few thousand dollars each year just to maintain your RE license...so be prepared....
The best thing to do is go out and interview broker's.
@Steve Ramsey , good advice with the HUD. Most of the houses we will be targeting are going to be affordable housing through my moms non profit so that is definitely a must.
On a side note, my boss informed me a few days ago that we will be relocating to Austin, Texas. We specialize in large multi- unit properties so should you come across any let me know, 70 units +.
@Jon Frame , thank s for your reply. I think right now a low monthly fee but split on commission is ideal.
I am currently hanging mine with a broker that doesn't charge any monthly fees, and they don't even care how often I do anything. For instance, I have been pretty active with my investing, but I only use my license for my own investing purposes. I went to the office for the first time in over a year last week, and they were really excited to hear about what I had been up to and were very helpful.
Definitely do some looking around before just making a decision.
Keep checking around. There are many brokerages and many different business models. One question for you. Will your uncle be investing in homes in St. Cloud or Minneapolis? There is a MLS for the St. Cloud area and there is an MLS for the Minneapolis area. Both can see each others listings, but you may not get the same detailed information in both. Ask prospective brokers if they have membership in both MLS's. You will have to pay for both, but it may work out for the best. If he only wants the Twin City area, look for a broker in Monticello as there is a better possibility they have the Northstar MLS (twin cities area). If you have any questions, email me at the address below.
You've been given some great advice. But the broker will have some added costs when you come on board. But even more, he/she will have added liability. If you screw up (break laws, ethics, etc), the broker can/will be held responsible too.
#4 All Forums Contributor
- Real Estate Broker
- Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
- 19,594
- Votes |
- 28,492
- Posts
#4 All Forums Contributor
- Real Estate Broker
- Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
If your main reason for obtaining the RE licence is for personal use on you and your uncle's investment transactions I would definatly shop around and find a broker that will charge per transaction and nothing monthly. It's not hard to find one who will work that way. Remember when they tell you what the split is, everything is negotiable.
Hi Juan, I'm an agent in St Cloud and I'm with Keller Williams out of Elk River, MN. I chose KW because of the good rates the broker charges in comparison to other brokers. Feel free to pass him my name and number if he has any questions. Greg 320-293-3362
"This sounds pretty hefty as we won't be looking for office space or increase his expenses in any way."
As a principal broker all I see is liability when an investment deal goes south with the broker being on the hook. E and O insurance policies label investing transactions as one of the highest claim and litigation areas. Many investors who get licensed do not care about the license but making money. If they make a few hundred k and lose their license they still invest. A broker on the other hand makes their livelihood being licensed and being paid commissions. If they lose that they lose the way to feed their family.
Originally I had many agents years ago but I got rid of all of them. You would not believe how much paperwork having 50 agents is even if they are not closing anything. You get constant notices from the real estate commission on the agents not having renewed their license, not completing education requirements in time, getting license suspended for delinquent student loans, IRS request levy their commission for back taxes, child support demands and on and on. Only a few of the agents close anything and when they do they tend to be rusty. If I have 50 agents but only collect 300 per transaction maybe 10 of those agents are closing a deal a month. So I a manage 50 agents a year for 120 closings for 36,000 gross before expenses. It's a horrible investment of time and energy. When a problem happens I am basically doing the deal for them.
I can close one commercial deal and make more than that. I just help my clients one on one now and have zero agents and do my own investments and life is great. I am not babysitting agents and wondering "What nightmare will they create for me next??" Yes you can train and train them but many do not follow directions or skip steps because they are lazy.
Just like for property management you need hundreds of doors with structure to start making any kind of decent money.
There are people out there who do crazy volume just to make a little buck. If you look around you will find eventually an investor friendly broker who will take on anybody.
- Joel Owens
- Podcast Guest on Show #47
I am not trying to be a downer just explaining from a principal broker and owners perspective why I do not care to have any agents and why they are a headache to me and not viewed as this great income resource for the brokerage they think they are.
- Joel Owens
- Podcast Guest on Show #47
@Greg Gordon , thanks for the heads up will definitely be passing along your information.
@Joel Owens , I understand a little better what you are saying, I guess I didn't really think of the liability issue, which obviously is of huge concern to the broker and understandably so. We will do some looking around, just wanted to gage if $300 was a fair rate and after the comments seems most people are getting better rates. Thanks for your comment
Fees vary from broker to broker, area to area. With E&O insurance being about $800/yr, Realtor fees about $500/yr and multi-list (required) $700/yr, I tell new agents that its going to cost $2,000/yr+ You need to be either able to cover that with commissions generated or bear those costs as a business expense.
An alternative would be to be either a licensed assistant or an un-licensed assistant, which would limit what you can do but also limit your costs.
But on the other hand -
Once you get your license (which I highly recommend), spend some time in the office on a regular basis. Go to some of the sales meetings. Get to know the others in the office. The networking is priceless. And I've made good friends at the office too.
On the networking thing: Realtors talk with each other. Probably more than they are supposed to. Spend a little time in the office and get to know everyone and you might hear something like:
- I have this new listing that's about to hit the market at a great price.
- It's listed at 109, but they will take much less.
- I have a buyer looking for .......
I don't know much yet about anything in RE so forgive me for chiming in. I'm planning to buy an investment property or two in the Austin area per year over the next couple of years and have decided to get my license. I'm done with the required courses and submitted my application to the TREC (Texas Real Estate Commission) yesterday.
The main reasons:
- access to MLS without having to go through an agent
- access to properties (lockbox) without having to have my agent make an appointment with the listing agent. Too many people in between. I want to be able to call the listing agent if I drive by a property and go inside right then and there if the s/he's fine with it.
- collect the buyer's commission (and seller's if I end up selling anything at some point).
I agree that there are costs (I paid $500 for the courses (Kaplan), $163 for the application, and then there will be costs for the board and MLS. However, just one deal a year easily covers that out of the commission so it's a cost of doing business, and to me it makes sense.
Being held to a higher standard and having to disclose being a licensee isn't really a negative for me, I firmly believe the only way to build a sustainable, localized business of any kind is shooting for a win for both parties through full transparency and doing the right thing at all times and in every deal (sorry didn't mean to moralize).
On the broker front, I'm signing up with Summit Realty Group, they're licensed in Texas, operate virtually, and charge a reasonable per-transaction fee only.
I do agree with Joel, if its not going to be a win-win the broker has no incentive to hold your license. If all you're doing is using the resources of the broker and not contributing to their bottom line then its not a win-win. I don't do as much leg work as I really should to get business (I own two other businesses in town) but I am out there talking real estate and drumming business up. I'm more of an agent then investor, although I am both, and that's a win-win.
KW is a great agency and I love the people. I would highly recommend them once he's licensed assuming he wants to be both, investor and agent. We all have people we know and people buy and sell homes all the time. Might as well make money with your license. I would recommend approaching all potential "deals" he comes across with the utmost integrity. If its something he's asked to list and wants it for himself he has the duty and responsibility to tell his broker and the homeowner. Trying to slip anything under the table will not only open you up to problems it will cause you to loose your integrity and the peoples trust.
How is it going with Summit Realty? I am considering hanging my license with them but read lots of scary stories and reports about them withholding broker's commissions. Have you experienced/heard anything like that?
@Account Closed
I ended up going with a local broker here in Austin so unfortunately I can't give you any input on Summit after all. Sorry!