As an Investor, Should I get my Real Estate License?

Question

I have over 10 years as a real estate agent in California.   I did some investing before I became an agent.  I remember my broker recommending me not to be an investor as a license agent.

I currently live in Charlotte NC

What are the advantage/disadvantage of being an investor with a real estate license?

Bill Gulley · Answer

I see the concern of that broker.

After ten years as an agent you should pretty well understand the game.

Fist issue is disclosure and being held to a higher standard of knowledge than those you may deal with. Ethical conduct.

Next is getting into situations of a net listing area. If you buy from some owner and then flip it for a significant profit, the issue of your greater knowledge comes into play and, depending on your relationship, flipping a contract can be considered a net listing issue, having a seller agree to accept a certain price with you taking all the profits above that price.

Next, is the broker liability, if you are out there doing flim-flam investor strategies the risk of deals going south goes up, if you tick off some owner in doing a screwy deal your broker can be held liable.

Barring that and other smaller issues, like marketing, co-broker arrangements, commission credits on deals with owing the broker a % of the credit being ironed out, no broker can really keep you from owning real estate. If they feel there is too much risk based on your knowledge or abilities they can ask you to find another home to hang your license at.

I think it would be hard to find a good size RE brokerage where some agent doesn't invest or own rentals, it's usual and customary. There is some other issue aloft if your broker is suggesting that you not invest, talk to them and see what the issue might be. Good luck :)

Vanessa Brown · Answer

Check the licensing laws to see where you would stand. In some states it's a huge plus because you have MLS, tax records, etc at your finger tips. You get the help of a lot of experienced people when it comes to contracts and such. No listing fees (here buyer's don't pay their agent anyway so you couldn't save money there). My company let's me put my commission toward my deal. Also in my area non-Realtor can't use the forms.

Your error and omissions insurance may or may not apply to your own deals so you'd have to check that too.

Unfortunately the downs are the fees, you will have to have a broker and you'll need to make sure he's investor friendly, you will be held to a higher standard because you'll have t follow the code of ethics and responsibilities to the public. In addition (in my state at least) it has to be disclosed on every offer I give that I'm an agent and some owners think it's a plus, some don't. The biggest disadvantage is that you could be perceived as preying o the uninformed because you're a professional and supposedly know so much more about this than them that you borderline defrauded them out of some money.

@Joe Mulcahy some states don't allow online pre licensing classes and some do. Just like some have license reciprocity and some don't. A local broker would be the best to ask about that.

Vanessa Brown · Answer

Bill Gulley hit the nail on the head. For a while I gave up my DC license and kept MD for all of those reasons. I was running into wholesales where I knew I was about to go 70-100K up. The definition of unethical for an agent.

I also have a partner who is not licensed. In all deals he is my client. The crazy thing is agents can't do it for themselves but to lowball someone on behalf of your investor client is actual following your license to the letter.

@Gerald Harris partner with an agent for a while. See how that relationship works and see if you even want to be bothered.

Gerald Harris · Answer

Hey Vanessa

I think this is why i get so many investors calling me, who i find out later down the line are licensed real estate agents.    Many of them either have their wife get licensed or they themselves are licensed and are doing their deals under a befriended investor's name.   Being with a large brokerage, they seem to shy away from you being an investor, this always confused me.

Bill Gulley · Answer

That's the great part of having the license, if it's a steal of a deal, act as an investor and go, if it's not, put your Realtor hat on and list it! :)

Gerald Harris · Answer

Thanks Vanessa & Bill

I think my of my first steps is to find a local Broker who has been in the business for a while and who is a real estate investors locally.   I understand the code of ethics and all.   Full disclosure is not an issue.

I currently have several bird dogs and people sending me deals.   The issue is that most of these deals do not fit the "investor pricing" i need to make a return.   Many of these owners are motivated, but the pricing at where I need to be is not there.

Having done comps on some of these deals and the prices they are looking for, they could be easy and quick sales on the MLS.

Great Advice guys.   Thanks!

Joe Mulcahy · Answer

I am also interested in this question.  Also, what is the best online real estate pre-licensure course.  I am in Pennsylvania and looking to start investing in real estate.  I thought this may give me a better understanding of the field and more credibility.  My goal is to get out of the nursing field.  My husband and I just have to take the plunge and stop looking and start doing.  I am in Gilbertsville, PA.  Anyone live in this area.  We will be attending meetups in the area and hope to find a mentor eventually.  Have a nice weekend.

As an Investor, Should I get my Real Estate License?

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