Should I get a real estate license?

Question

I'm just starting out in the property buying business. My goal is to start out small. Acquire --> flip small/medium sized properties and build from there. If I'm a novice, which I am, should I try to take a course. Would getting a real estate license make any sense?

Dan P. · Answer

Trina,

I just recently became licensed myself to supplement my RE investment ventures.  I was able to weigh all the pros/cons of getting licensed thanks to the suggestions and articles of BP members, including those on this post.

If you do decide to go after licensing, I would highly suggest hanging your license with a broker that meets YOUR business needs.  lf you hang your license with a big name real estate business then you may find yourself surrounded by education and encouragement to become a traditional RE agent, rather than an investor.  Plus, you may find their fee's to be much higher to support their "marketing strategies."

For me, starting out, I looked around for a broker that blended well with MY business strategy - acquire property for flips.  The fee's are much less per transaction than your traditional real estate business.  I pay $650 per transaction, but I get 1on1 support from my broker and his staff, which has been very helpful through my first deals and starting out.  Eventually, after I become more familiar with all aspect of the business, I may move to less costly per transaction brokerage if it aligns well with my business.

Hope that helps!  Good luck!

DP

Darrin Carey · Answer

A license can be argued "yes" or "no". It really depends on your personal objectives and feelings on the issue. Keep in mind, getting licensed will NOT teach you about investing. It will teach you how to represent a third party in a real estate transaction and comply with state and federal law. Additionally, in Ohio, we've figured out that the average agent spends about $1500 per year just to maintain the license. Even if they never do a deal.

Agents get two major benefits: direct MLS access, and their portion of a commission for any deals they do where they represent themselves.

On the otherside they must disclose to any individual that they are an agent even when doing a personal deal. They must comply with the agent restrictions, including not paying referral fees (eg Bird dogs). In the event something goes wrong, they have given the Department of Commerce authority over them; By default they are viewed as a "real estate expert" and held to a specified standard designed to protect consumers from agents.

All that said, I know experienced investors that will vehemently argue the issue one way or the other. And both sides are right.

The real question WHY are you considering being an agent? You implied you want to learn investing. if so, find your local REIA and take a course there. Your local REIA is ACRE www.acrepgh.org

Ask the experienced investors there this same question.

J Scott · Answer

My thoughts on getting a license:

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

And, as pointed out above, there are costs associated with getting and maintaining your license.  I didn't address those as much as I should have in my article.

JOAN DICKIE · Answer

Be aware that there are ongoing costs associated with getting and maintaining your license. You may have a fees to join a national, regional and local realtors association.  Many associations won't let you have access to the MLS without joining.  Then there is typically MLS fees and maybe desk fees from your broker. Make sure your prospective broker understands that you will primarily be an investor so they don't impose minimum production numbers to hold your license.

Account Closed · Answer

@Trina Aguilar I will go with getting a real estate license (long term it will save you money and give you instant credibility) and since your objective is Flipping, I will strongly recommend you to search for articles by @J Scott on BP. My objective is not flipping but still planning to buy his books just for estimating the costs of a new home purchase (rehabbing costs).

Disclaimer: no relation with J Scott. I just read his posts and articles on BP and don't even know him personally. But I was impressed with his simplicity and real life knowledge he put in those articles and post.

good luck!!!

J Scott · Answer

I actually think the third major benefit is by-far the most important -- control of your deals.

When you can talk directly to the other agent, when you can speak with the other party's lender, appraiser, inspector, etc., you don't have to rely on someone else to communicate for you, you don't have to rely on someone else to negotiate for you and you don't have to wonder if the information you're getting is real, watered down or even incorrect.

Since we've been licensed, our deals very rarely fall through; I can't say the same for when we dealt with other agents.

Just my perspective...  Of course, the extra $100K we earned/saved last year in commissions and access to the MLS was nice as well...  :)

Bryan L. · Answer

Basically yes.  This question is asked by somebody almost every week.  Search the forums using a keyword search, and you will find lots of answers.

Should I get a real estate license?

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