Every Investor Should Know Before Getting Their Real Estate License

So, you’re thinking about getting your real estate license. That’s great! I always get excited when more people get interested and become involved in real estate, in any capacity. And there’s certainly nothing wrong with getting licensed. In fact, as an investor-agent, it can come in handy in many situations.

But...have you really considered the value of doing this? Before taking the steps to get licensed, you should carefully weigh both sides to make sure that it will really pay off for your investment business in the end.

Pros of Getting a Real Estate License

• You make more money. Realtor commissions usually amount to somewhere near 7%, so every time you buy or sell a property through an agent, you’re paying them to complete the transaction. When you have your license, you’re saving this money! Depending on how many properties you buy per year, you can save tons of cash by eliminating these agent commissions.
• Access to the MLS. Real estate agents are the only people who have access to MLS (or are supposed to, anyway), which is a database that shows all local listings for a market. Every property that is for sale is shown on MLS, along with tons of historical data that you can use to learn more about a particular area. It’s an amazing tool for anyone who is buying or selling real estate, but you gotta be licensed to access it (legally).
• Control. When you’re your own agent, you have much more control over all the deals you make. You’re not working with another person or relying on them to make offers or negotiate with other people. You work directly with the buyer, seller, or listing agent, as well as lenders, brokers, inspectors, and anyone else involved in the process. You are also in charge of your marketing efforts, setting up showings, and following through with potential buyers. This affords you much more control over every aspect of every deal, whether you’re buying or selling.

Cons of Getting a Real Estate License

• It costs money. To get licensed, you can expect to spend at least a couple hundred dollars in fees for courses and exams. While this may not seem like much, this isn’t the only expense you’ll incur. Once you’re licensed, you’ll also have to find a broker to work with, and they will have fees of their own. These could be nominal, or they could run into the hundreds each month. It really just depends on the broker you choose and the amount of work you’re doing. Which brings me to my next point...
• You HAVE to work with a broker. Unless you get your brokerage license to go with that real estate license, you will have to work with a broker on every deal you do. It can be a tad annoying, because, hey, you thought you would be able to handle all your deals solo! But nope, you HAVE to partner with a broker to complete the deal, and you HAVE to inform that person about every deal you make.
• It takes time. Getting licensed isn’t as simple as filling out a form online and sending money to your state’s licensing agency. You have to take a course that usually takes a couple weeks to complete, and your state may have other requirements in addition to this. Plus, once you are licensed, you’ll have to enroll in a certain amount of continuing education classes each year to maintain your license.
• The paperwork is no joke. When you’re a real estate agent, you could easily get lost in the amount of paperwork you have to complete. There’s a form to fill out for virtually every step in the buying or selling process, and I’m not kidding when I say it’s time-consuming and tedious. Yes, it’s all part of the job, but it’s definitely a part that you need to be aware of before you get licensed.

Getting your real estate license isn’t a bad idea, but it’s not for every investor, either. Be sure to carefully consider both sides of the coin before you embark on a quest to get your license.