RE License, Should I Or Shouldn't I? Pros And Cons
I'm seriously considering getting my RE license (I'm in MD) because I feel it would help further my REI career. I'm self employed now (in another field) and my workload will be lightening alot in the coming months, so I will have the free time to devote to this. I think this will give me an edge for finding properties, networking with other industry professionals, not having to be at an agent's mercy to look at or make an offer on a property, etc. I'm not looking to make major bucks by listing and/or selling for other people (will just consider it an added bonus if it happens), mainly for our own investing interest. We have a very comfortable monthly income from our rental properties so I'm not looking for something to sustain me, just getting an early jump on things.
I'd like to hear pros and cons on this idea. The things I'm specifically wondering are:
1) I know I will have to devote some time to the brokerage, but ideally for me it would be less than 10 hours a week "in office". Would brokers be receptive to that little of a committment?
2)How does it affect my dealings with prospective sellers and buyers (in doing my own deals)? I'm assuming it changes the legalities of some things, mainly that I have to disclose that I am in fact an agent, even if the deal is strictly between myself and the seller/buyer and no agency agreement/commission is involved. I'm especially looking to start working with owners in preforeclosure. I'm not sure how differently I would be viewed as an agent vs. a private investor.
Oh and I do want to do a little bit of property management for others. We've been pretty successful with our own 6 rentals, and I've been approached by a couple people to manage their rentals. My husband is willing to do small handyman repairs (that dont require licensing) and I have a licensed HVAC person and electrician in our family who could be on call for me as well.
Any thoughts on pros, cons, or constructive critisim to my thoughts are very welcome. 
Tracy
I was considering getting licensed, but I think I will take the class but not the test. I suppose it could go both ways, but i have heard some pretty successful investors say its better to not be licensed so that when people ask if your an agent you can legally say no. A lot of people might be scared off by the fact that your an agent. If your husband doesn't get licensed it might not be a bad idea..
I can tell you only from my experience. I have a mixed view point....
I am a real estate investor since 1996. I got my WA State RE Lic. in 2001 and went to work as a property manager. I learned a lot this way.
I continued to invest in RE on my own. Then in 2003, I went to work as a Realtor. I found myself showing other RE investors properties that I found myself being attracted to. This is not a fun place to be. I did have access to the MLS though. That was nice. I also could run comps and get preliminary title reports. This was also advantageous. I worked for a small company and everyone was supportive and helpful. This is good for a new agent!
I moved to Alaska a couple of months ago and am debating whether or not to go after my RE Lic. here. The answer is, after careful consideration...YES! I still can find my own deals, get known by Title and Escrow companies, have access to the MLS, have others to help me, if needed, meet contractors, lenders, learn the market, etc... Also, I hope to be able to use my commission as a downpayment at times. Prices in Alaska can be quite spendy....although I still invest in WA which is more economical.
Been licensed since '71. Never found it a detriment. Disclose it every time! Never had a 'Deal Walk' because of it.
Most of the properties I have bought, I have shown to investors 1st. A lot of them were deals other agents were losing (I wouldn't have heard of them unless in same office)
When I decided to become a full time investor in 1988 (been investing since 1974), I felt that a Broker's license would help me me find potentially better deals ahead of the general public. However, my Attorney advised me to get rid of my license ( I did not tell him I was getting my license). I did not understand why. But I did as he advised and had my license revoked within a month of receiving it.
My investing was primarily SFR - hold for cash flow or sell after a period of time for profit. I did 1031 exchanges and did it again. In 1988, I became a land investor. I primarily did double escrows. My buy escrow would close then 5 minutes later my sale escrow would close. Using 1031 exchanges, did it again. I learned why my Attorney wanted me to get rid of my Broker's license. Here in California, if I had a license I would be required to tell the Seller of the property I was purchasing, I was selling his property for substantial profit in a very short period of time.
Since then I have gone into Commercial Real Estate now back to houses. Without a license it has made it possible to go to other Areas (locally and out of state) to invest.
I use Agents, Brokers, word of mouth and Services (who provide me with NODs and TD sales information). I have learned the better deals are in the Agent's and Broker's pockets not the MLS or what they talk about.
After you have established a repoire and trust (not that you have done a deal with them, but that you can). They might provide information of the better deals. If they do, and you are able to complete a deal (sometimes two or more) you will be on their inside track. They will not tell you of deals they are trying to complete themselves, but they can't buy all the deals they know about. Sometimes they can not complete their deal and you maybe able to step in and complete it after they have expended their own time and effort (compensation to them, what you feel is fair). They will give information regarding a Seller who does not want to list but wants to sell. I will pay them a Buyer's commission (no set amount, but what is fair) if I am able to complete a deal with the information they provided. I may use 25+ Agents and Brokers in the same Area. Some listen, some don't.
If you need cash flow, a License may be a good option. If you don't, I believe it is far more efficient to use the Agents and Brokers. They are like your employees who you do not have to pay,
The key to me is to be fair to everyone involved in the deal. The Seller, Information Provider and to yourself. I have paid 10% commissions on the Sale end and still made substantial profits. Maybe not on that one deal, but on the deals to follow (they will come).
My two cents.
8-) Two cent's worth from a Florida agent:
This State has in the last 3 years become *much* more strict with licensee's activities; just representing the public (sellers OR buyers) has become laden with misc dangers (it's now almost easy to commit a 2nd or 3rd degree misdemeanor or felony - i.e., face doing time in addition to 5-figure fines & penalties due in full within 30 days, OR ELSE). I like my license a lot (25 year's worth) - and I am aware that if I did not have one, I could (legally) steal properties which, as a licensee, my obligation to disclose (or else violate law) shuts the door on. If I had it to do again, I'd take the course (not necessarily the test; might expose me to the 'knew or should have known' stuff) for the knowledge and information you acquire - and I admit I haven't the courage to let my license lapse. Hope the info helps.
What exactly does the course teach you? I have a friend who is a relatively new agent ( 9 mos.), and he really doesn't get into my questions regarding CREI. His perspective is 'get the listing, sell it, advertise more, and do it again'. Granted, he does well for a new guy, but I wonder how much of his training involved how to fill out the paperwork and be a responsible, law abiding sales person than the nuts and bolts of what is really available in this industry. I'm not talking about illegal stuff or anything, my point is when you are trained to be a car salesman, how much do they really teach you about the guy who owns the business and what goes on behind the scenes?
Pinkflamingo,
Here's a better idea, offer yourself as a personal assistant to a top producing agent this will expose you to all the situations and info you need without exposing yourself to the fiduciary responsibilities a licensed realtor is required to adhere to. 8-)
thank you all!!!! great points
Quote:
On 2004-03-30 00:53, commissiononly wrote:
Pinkflamingo,
Here's a better idea, offer yourself as a personal assistant to a top producing agent this will expose you to all the situations and info you need without exposing yourself to the fiduciary responsibilities a licensed realtor is required to adhere to. 8-)
That's a really good idea, I've never thought of that. Kinda a birddog in a sense? But I wonder how the brokerage would feel about something like that? What exactly do you think I would be asked/expected to do? I also wonder how an agent might feel if I found a deal, possibly thru one of their contacts, and bought it directly without it being listed. I guess I would owe them a fee? Lots of things to think about...........
Save yourself the time and money. Get you a good buyers agent, tell them what you want and let them find the property for you. If you find the property let them write the contract but don't pay them full commission. Just remember the listing agent works for the seller not you.
So many agents are holding property and they have their investors they take the property to first and keep it several weeks before they pit it on the MLS. They want both sides of the commission.
I made an offer a month ago on a REO property and it took the agent two weeks to present the offer and she told me I was low balling. I finally called the bank and they said I'd have to work with her. My next call was to the GREC when she called ****Must Reach Freshman Investor status before posting URL's***he listing had expired and was not current.
Just found two properties today, called the owner and talked to him and he wanted to know why I called him and not the agent. I said what agent? The properties were listed supposedly and she has never put them in MLS and has not put a sign on them.
I have had my brokers license and been in the business 5 years and I'll gladly inactivate mine. 99.9% of the agents you come in contact with only have a commission in mind and have no idea how to structure a creative deal. My last broker had no idea what the term OPM meant.
.1% of the agents you come in contact with are worth their salt.
I agree with you about getting a good buyer’s Agent. I use several in different areas.
Unfortunately, what you are saying about Agents holding properties for their Investors is more prevalent in today’s market.
Also, what I am encountering more and more is that the Agents are using aliases, relatives, friends etc., to buy the properties. Then reselling it.
They are not doing their fiduciary duty in informing the Seller what their property is really worth.
Therefore when they remarket the property it is still below comps.
THis is one of the oldest and most animated topics on this board. If your doing Shorts and like getting the 6% it's great! The same for REO's
Quote:
On 2004-04-01 04:50, Stockpro99 wrote:
THis is one of the oldest and most animated topics on this board. If your doing Shorts and like getting the 6% it's great! The same for REO's
Ok let me ask you this, when you are presenting a short sale offer to a bank do you "have" to reveal you are a R.E. agent? I would think it could work both ways, either the bank would think ok this property is a piece of junk if that is all an agent is willing to buy it for, or the other direction, if an agent is interested in buying this property there must be a good amount of equity or something really desirable about it, therefore making it harder to get a good deal. Thoughts? :-?
Pinkflamingo,
Would you turn down a free assistant? MY experience is the vast majority of RE agents are very lazy so avoid these at all costs, however most agents who regularly produce at an above avg. level feel they could reach higher levels of production if they had a little help (marketing, putting out fires, the real work!) the key is to learn fast, get involved make contacts and by all means pick the brain of a highly regarded lender, title ofcr. escrow, none of this is not rocket science but experiencial education is invaluable. now stop asking questions and go to work!