Good idea to have Spouse get Re Agent License?

Question

My husband and I have been investing in the Kansas City area for several years now. We've been kicking around one of getting our real estate agent license. Have read the pros and cons on this website and can see both sides. We hold our rentals in an LLC and do our flips through an S-Corp that we're both members of. If just one of us were an agent would the other have to go through all the disclosing and worry about the negatives discussed on this site? Would we have to rearrange the S Corp so that their was only one member (the one of us that didn't have the license)? Other things to consider when answering: we have a broker that would let us work under him for very minimal fees; wanting to get license primarily so we wouldn't have to worry about relying on others for their MLS log in, let ourselves into homes for sale, list our properties for sale on MLS ourselves, etc. Thanks in advance for any solid input on this.

Mitch Kronowit · Answer

Another benefit of having one real estate professional in the family is not having your passive losses in real estate limited if your income gets too high.

Mark Yuschak · Answer

I, too, am licensed and find the benefits FAR outweigh the downfalls. The number of deals I've closed with my license are countless compared to the deals which I closed before I was licensed. I've always strongly agreed with Jason on this topic. The extra disclosure is no big deal when compared to the net benefits of being licensed.

Steve Crawford · Answer

Scott. Nice strategy. I have my own, but I continue to learn. This angle (yours) .........i love it.. I can pull that off on every deal (well, my wife can pull that off).....and you know i would love to keep a piece of that pie for myself. Thank you. BTW, my wife read your web site today and I checked it out tonight....very impressed. Well done.

Whitney Hastings · Answer

Thanks so much for the input! One of our big reasons for not wanting to do it was thinking we would lose our leverage with the seller agents when we buy. Currently we don't use a buyers agent so they get the entire commission and want to make it happen with us. But, Scott, I love your angle and it would have the same results or maybe even better. Extra paperwork isn't a big issue. We do primarily buy off the MLS by staying very on top of price changes, new listings, etc so I think it would be a really good thing for us to do. No more waiting for seller agents to call back if the MLS even has their cell number in the first place...let ourselves in and get the offer made ASAP...sounds like a win-win situation. Thanks again for the input...you helped me see that the positives far outweigh any negatives.

J Scott · Answer

Scott - Not trying to sway your decision to get your license, but consider this... If you were a listing agent, would you rather get a phone call from a buyer saying, "I'm unrepresented and would like to make an offer on one of your properties..." or "I'm an agent, I'll be submitting an offer on one of your properties and I'll be giving you my half of the commission..." In both scenarios, the agent gets both sides of the commission, but in the second, the agent doesn't need to show the property, doesn't need to write the offer, doesn't need to deal with helping the buyer through financing or due diligence, and doesn't even need to show up to closing." In fact, we tell listing agents that all they have to do is submit the offer to the bank and then get the seller signatures when it's accepted, and we'll literally do the rest. We'll even pick up their commission check and drop it off at their office on the day of closing... Again, not trying to change your strategy, but this seems to work pretty well for us. Btw, we don't generally give our entire commission to the listing agent, as we've found that just giving $500-1000 gets us the same results, so we get the benefits of handing over part of the commission PLUS some extra cash.

Steve Crawford · Answer

Scott reasoning is sound and obviously works for him. We have debated it for a couple of years also. What keeps us from it right now...........we are not selling, we are just buying. And, when we buy, because the bank owned listings can move quick, I love to be able to call the listing agent and tell them we do not have a buyers agent (ie, the commission is all his/hers). I dont know if these agents give me a little quicker attention b/c they dont have to split, but that is my logic. when this foreclosure buying frenzy cools down, i have no doubt my wife will grab her license.

J Scott · Answer

First, here's a blog post I wrote on this subject: http://www.biggerpockets.com/renewsblog/2010/02/24/should-you-get-your-real-estate-license-investors/ As Charles pointed out, this is the route my wife and I went (she got her license), and I'm very glad we did. Since we purchase through our company that we both own, I need to make all the same disclosures she does. Even if I wanted to buy in my own name (or if she didn't own part of the company), I'd probably make the disclosures anyway, just to be safe. We purchase mostly off the MLS, so I've never had a situation where I thought disclosing my wife's status as an agent would hurt us. In fact, even with private sellers, disclosures have been a good thing -- the one private (probate) purchase we did, the seller felt a lot more comfortable that my wife was licensed, as it appeared to her to be "on the up and up." That said, it's probably not for everyone. If you'll be working with buyers/sellers who might be turned off because you or your wife is an agent, then maybe it's not a good idea. If you're concerned about the higher standards of ethics (or even the higher legal standards), then perhaps it's not a good idea. Or if you're just concerned about the ongoing paperwork and hassle of managing your own deals, then perhaps it's not a good idea. I'm sure there are other good reasons not to get your license, but I haven't heard them... :) But, personally, for our business, the benefits FAR outweigh the drawbacks...

Account Closed · Answer

You'll probably want to get in touch with Scott here. He and have a business model similar to what you have described. It seems to me though you'll want to have a better reason than the ability to access the MLS. There are other ways of accomplishing this.