Practicing real estate without a license???

[Sam M.]

I think this topic deserves its own thread. This might turn out to be a hard read because I copied and pasted quotes from another thread.

Bill and I started a discussion at the end of another thread with regard to who is required to have a license. I started the discussion by putting down a prominent broker in my area for telling me I would be “practicing real estate without a license†if I did more than X transactions in a year without getting a license.

Here are quotes from the discussion.

Originally posted by Sam M.:

Lily, According to my broker (agent/broker who sold me my house years ago) I need a license if I am going to buy/sell more than a few homes a year. Otherwise I would be "practicing real estate without a license"
This is a prominent broker in the area.....also believes they must present all ss offers to the lender.

Originally posted by Bill Patterson:

James & Sam,
It involves being classified as a "dealer". I can check the details here in Michigan under our Real Estate Code. It has been a long time since I took that RE course!
Bill

Originally posted by Sam M.:

While I have seen this with vehicles and mobile homes I have yet to hear of a real estate dealer license. I have been wrong before so don't think I'm not teachable.
Google won't even pull up "real estate dealer license" So it must not exist ; } lol
Update: Dealer is a tax classification and has nothing to do with licensing

Originally posted by Bill Patterson:

It's not like a car or boat dealer license. It's a regular real estate license. The difference is that as an individual, you can buy and sell your own property. Where the problem comes in (as I remember) is when you do so many (5 if I remember correctly) purchases and sales in a year, Michigan classifies it as a business and to conduct a real estate business (market, sell, buy, manage, etc.) in Michigan, you need to be a licensed real estate person. Like I said earlier, I will dig into this a little more when I get to my home office and I can check my real estate books. It's been a long time since I have thought about this and I can't remember what exceptions there may be or what the details are.

One thing to remember.....you can buy and sell as much as you want as long as you use a broker. I can't think of a case that we are not using a broker on the short sales that we are doing now.
Bill

Originally posted by James Ward:

Bill,

I would be VERY interested in seeing that info.

Please share when you find it.

Originally posted by Bill Patterson:

I don't know how to attach a pdf to this post, but I'll e-mail it to you James. If you would like it too, Sam....or anyone else, colleague & PM me & I'll send it to you. It's from the MI Real Estate Laws and Rules, what we agents in Michigan fondly call our "little red book". Basically, it says a broker's license is required (or engaging the services of a broker) if you engage in any of the following:
5 or more real estate sales in any 12 mo period
Holding one's self out to the public as being principally engaged in the sale of real estate
Devoting over 50% of one's working time or more than 15 hrs per week in any 6-month period to the sale of real estate.

Of course, as I said before.....if you are using a real estate agent (Realtor or non Realtor), you can do as many as you want! Good luck Sam!
Bill

Originally posted by Sam M.:

I still think you are off. The definition of a broker is:

Any person, partnership, association, or corporation that sells (or offers to sell), buys ( or offers to buy), or negotiates the purchase, sale, or exchange of real estate, or that leases (or offers to lease) or rents (or offers to rent) any real estate or the improvement thereon for others and for a compensation or valuable consideration.

To engage in 5 or more real estate sales is materially different than selling 5 or more properties. If doing this for others and for valuable consideration I would then be a broker.
Why is this so difficult? Agents make it sound like one is taking a HUGE risk by doing a FSBO.

Originally posted by Sam M.:

Bill, did you add (or engaging the services of a broker) or is this exactly how it is worded? Could make a huge difference in how you interpret what is written.


Or is it referring to a RE salesperson (different license) who engages in 5 or more sales in a 12 month period or....Must engage the services of a broker or be licensed as a broker. You get the point!

I had a couple of updates but they don’t seem to show up when you copy and paste a quote???

Originally posted by Bill Patterson:

Sam,
I sent it over to you! It does say "or engage the services of a broker". A RE salesperson working under a broker is treated the same since they can't actually practice RE without either having a broker's license or working under one.

As for the Michigan rules...I don't write them, I just have to follow them! No problem for me here!

Bill I hope you don’t mind me removing a part of this post that wouldn’t make sense without my reference to having misspelled a word.

Originally posted by Sam M.:

Bill,
I still think this applies to an owner who is also engaged in the sale of real estate as principle vocation.
You stated that an agent must operate under a broker or be a broker themselves. Thus an agent (Sale of real estate is principle vocation) cannot sell property they own without being a broker or engaging the services of a broker with the only exception being a personal residence.

Conducting the business of buying and selling real estate is different than selling real estate and getting paid a commission or other valuable consideration.

[Account Closed]

The problem is some investors actually have a much better education and experience than many real estate agents that past an exam based on a 30 hour course in real estate basics. I'm sure there is value in what has been taught, but to say investors lack the education or experience misses the mark.

I see value in some real estate agents, but it seems that there are a lot of them out there that have no clue how to work with an investor. While Sallie Homemaker might want to look at a home that is priced to high to make any investment sense an investor generally doesn't want to waste time with these.

I have a real estate agent that I work with that works very hard for me and I know that he does some behind the scenes due diligence for me. He also works for me rather than trying to do a dual agency.