Is Getting A Real Estate License A Good Idea?
Hello!
I'm curious if investors who have a real estate license or broker's license feel that having a license actually helps them in their RE activities, i.e. through MLS access, deal structuring, etc. For instance, even though I could always negotiate price down, if I had a license wouldn't it make it easier to get an extra 3% on the deal? Just curious to what everyone thinks about getting an RE license as an investment tool. Thanks!
-e-
I would say that the choice is yours, as you are the one who has to go to the classes and learn the ins and outs and all. But, If you look through the posts here on the site, you will find pros and cons of both worlds. This subject comes up quite frequently and the result is the same. It is the decision of the individual ultimately. Good luck
As for the extra 3%, I dont think it works like that...[ Edited by pejames on Date 02/13/2004 ]
pejames,
Thanks for the quick reply. I'll dig through some old threads to get a perspective. I'm already in an MBA program, so the extra time burden might be an issue. On the flip side, I studied for and took (and passed) the Calif. RE exam about 10 years ago, although I never actually applied for my license (got wrapped up in software development and never looked back).
An up front question that I have, though, is if I act as my own 'buyer's agent', wouldn't I have a claim to the commission? I certainly would if I had, for instance, my Father-in-law buy it. Just curious. Thanks again.
EDIT - Another question - Could I simply apply for the broker's license? I haven't worked in the field, but I believe a BA or BS degree would substitute for that requirement. Thanks!
-e-[ Edited by econrad on Date 02/13/2004 ]
econrad,
I think your questions will get answered through your searches..as a matter of fact, I am sure of it..one of the gurus here named Lufos has written some very insightful posts on the pros and cons of being a licensed Realtor. I know you have questions, but I cant do justice to the posts already here. LOL. Hope this helps a bit. Sorry I can't elaborate more..but, I can offer to guide you towards the information..
Good luck. [ Edited by pejames on Date 02/13/2004 ]
pejames,
It absolutely helps - I'll go through existing posts. As you mentioned, these are topics that have certainly been covered in depth. Thanks!
-e-
I am also a college grad and have studied up on Ca licensing.... currently studyig to tak the exam for the same reasons as you have mentioned...commission and just the possibe networking.....here is a link that explains CA requirements
http://www.dre.ca.gov/pdf_docs/re4.pdf
I think you will see that a degree does eliminate the need to have exp. to get a brokers license but you still must take and pass the required courses and the state test..........hope the site answers some questions
B[ Edited by BMan on Date 02/13/2004 ]
My thoughts are motivated by money. 1st, all commissions are split between the listing broker/agent and the selling broker/agent. The commission that the selling agent receives is based on an agreement that he/she has with the broker. My calculations come up with about 1.5% of the selling price. Now to the MONEY side of the question. Do I want to be tied down showing houses, sitting on Sundays at an Open House and manning the phones for 1.5% or do I want to use that time to make 20 -40%? I too thought about getting my license, but decided to spend my time looking for and buying homes. It's more flexible and profitable for me. Find yourself a REI friendly agent that is not afraid to discount his commission for several deals a year, and they will get you access to the MLS and deals before they even hit there. His/her motivation is simple...you will buy and/or sell several units per year, they know what you are looking for, they won't be waisting their time with lookie lous. Just my opinion. Good luck and make $$$$
tclifford - don't get me wrong. The last thing I want to do is be an RE agent! I'm just curious if a license helps my investment activities, that's all.
-e-
I am a RA (on-site only) in Atlanta. If I am not mistaken, I beleive you can get you license and then hang it with just about any broker. Your split with them is contingent upon the agreement with them. It may be 50/50, 70/30 etc. I also think you can choose to work as little or as much as you like...you will be an independant contractor. Which in turn means you can spend zero of your time showing houses to anyone at anytime. The best thing to do is go and talk with a broker (like at remax or century 21 or something)...they are usually willing to sit down and talk. Be up front about all your plans...that way you both know what is expected. Good luck.
Brian
suntzu18 -
Thanks for the advice. I have at least one friend who is a broker, so hooking up shouldn't be a problem. Of course, since I would be getting my agents / brokers license to save / earn myself a little on my own deals, doing a split with a broker is almost self-defeating. We'll see how it works out. I may just go for an agent's licnese for now, since I'm currently in an MBA program and don't have much time for additional courses, which I would need if I were to get my brokers license.
-e-
I have a lic and think it helps. It helps me when I have a property that I can't find a buyer for. It also is a good "in" on increasing your available money source(investor base). It has increased my earnings. I started a little investment company that I put my contract to purchases in and I still make a commission when I sale the property. It is kind of double dipping but it works and it is still a ethical way to handle this. You just need to be careful with a lic so you don't do anything unethical which is easy to do. [ Edited by bert on Date 02/15/2004 ]
as an investor, the best part of DRE licensing is not the license. its the education about RE principles that has the most value.
once you get beyond agency deals, i.e., selling commissions, and move toward truly creative deals, you'll never want commissions again.
education and licensing is part of the process. yet make sure to look beyond that as you progress...
In GA you cannot get your brokers lic. unless you have a saleperson's license and have it active for 3 years. Then you can take the broker's course and get your broker license. If I am not mistaken, I am able to buy my own home and use the 3% how I like... applied as downpayment or simply have a check cut at closing. It is an agreement I have with my broker. I can do it one time a year and not have to split costs with him. I suppose you can work out your own deal with a new broker if you plan on purchasing investment properties only. I also think that you should be able to find lots of brokers to work with you under the understanding that you will be focusing mainly on investments. After all, when you buy or sell, the broker makes money, even if only a small percentage. Good luck with it..
Brian
Jim Voss,
You put your finger on it. Education in real estate is the foundation -- title issues, principles of contracts, easements, deed restrictions, the buy/sell process, etc. Knowing the principles, the basics, is invaluable when you're trying to look at a property as a potential investment. Get a strong foundation and then you can improvise.
I too am interested in getting a brokers lic. but first I need the Real estate sales lic. I live in NC, and our laws are much different. Here in NC, all we have to do to get a brokers lic is have a real estate sales lic. There's also no test for the brokers lic, and no time limit for when you can aqcuire the brokers lic. My classes start this summer, and I should have my brokers lic by Sept or so. I think it will help to have it, because it can very well bring deals right to you if you network the right way. Thats just what I think about it.
Source
I have a full-time job, two small children, and a real-estate license. Through "a friend of a friend", I met a commercial real estate broker. He is a fantastic guy. Most new agents have a 50/50 commission split in my area. He gave me an 80/20. I told him I have no intention of quitting my "normal" job (I make good money and have fun doing it) and he said he will allow me to be as involved or not involved as I want to be. But he warned that after awhile, I will be sucked into real estate full time, because it is a lot of fun.
I am so glad I got my license for several reasons. First I have access to the real MLS....not www.Realtor.com or any other substitute. I can search expired listings, read agent remarks, and look up tax/assessor records online. I also joined the local association of realtors and NAR. They have a great store where I can buy forms, publicatons, signs, etc. I can attend free classes (although during my normal workday!) I also can go look at homes that have lockboxes on them.
That's the good stuff. Now the not-so-good stuff. The opportunities are expanding so rapidly, that I am going crazy trying to keep up! I feel myself getting sucked in by the day....but I wouldn't change a thing! You need to find out about E&O insurance (errors and omissions insurance). My broker doesn't buy it at all for any transaction. His feeling is if you screw up, you learn from your mistakes. Be honest and you should be okay. E&O insurance is very expensive. You can buy it on an annual basis that covers all your transactions for the year, or on a per-transaction basis. In California, its a few hundred dollars per transaction. The only buying/selling I have done is for myself. If I do anything else, it will most likely be for family or friends.
My favorite thing is to write up offers as the buying agent for my LLC....totally legal as long as you disclose it. Nothing better than making a commission on a purchase!
Bottom line - poke your nose around. There are brokers that will allow you to be an independent contractor on a part-time basis. It is well worth the benefits!
[addsig]
It is basically a personal decision. I gave up my Alabama brokers license 8 years ago when I started doing a lot of investing. As long as you are a principal in a transaction you do not have to have a license in Alabama. Also attorneys who deal in estates can handle home sales w/o a license.
I know I have posted on this subject before, and obviously I am in favor of obtaining the real estate license and taking it as far as you want.
What I am really saying is get educated. Where ever you can. I worked at a Title Co. I did it as they changed over from old times to machine records. It was a great time. I worked as an Escrow Clerk and then an Escrow officer. So much to learn. Of course the appraiser got sick one day (hung Over) and I filled his function then when he got fired (same reason) I took over and appraised. I got the certification to do FHA's and VA's in the days when that was required. I did commercial real estate, heavy into probate work as various attorney's asked for appraisals and property management and finaly assistance in sales. It just goes on and on. Each new thing opens up another path.
Lots of things just came from hanging out with people in real estate.
Desert Land another specialty in its time. You know the old timers with the pointy boots big green rocks mounted in silver and worn around there necks and Stetsons with the brims bent in many shapes. Oh yes the 10% commissions. Buy land at 25 cents an acre and bounce it out at $2,000. Was it worth it? Interview a Coyote. Or speak to the second buyers on stream who held the land and watched it get developed into high desert communities. Everybody made money.
All that from just taking a Real Estate License it really opens you up. Walk down the street see three vacancies and your start thinking about an assemblage.
The test of the licensed person. You go out to dinner and find out that this really delightful couple are breaking up. Do you think of dating her? No, its the house and their second house in the mountains. On second thought she was pretty attractive. I know talk the soon to be ex husband into taking over and moving into the vacation house in the mountains. Sneeky but that's the practice.
It is an exposure and in the process you can make commissions, you can form syndicates and include yourself. You can make sales, and become property manager for the syndicate you formed from the investors you originaly met here on TCI. It just never ends
Try it you'll like it. Mikey does.
Lucius
As always, LUV YA LUCIUS!
[addsig]
Thanks to all for a lot of great information. I think I'm going to go for it, when I can squeeze it into everything else going on (it's all a metter of priorities).
-e-