Is Having A Real Estate License Useful For REI?
Does having an active real estate license mitigate any costs in buying an investment property? Would anyone here suggest this?
Thanks.
Does having an active real estate license mitigate any costs in buying an investment property? Would anyone here suggest this?
Thanks.
See post at http://www.thecreativeinvestor.com/ViewTopic39436-18.html
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the best benefit that i've seen that would be useful to the rei is full useage of the mls and just being able to have your hand on the pulse of the market. i have no use fro it. i have considered having a lic. but the benefits do not out weigh the time and fees involved.......km
Does having a license make the investing process more cumbersome? What if I am to start a brokerage in 3 years? Does having a brokerage involve too many regulatory concerns with regards to REI?
Thanks.
an investor friend of mine is an agent, and she lists her own properties. therefore she doesnt have to pay a commision to sell it. and her broker approves it. obviously she does the transaction so that it doesnt look at arms length. i guess there are pros and cons.
what're the cons? besides the classes?
I am a real estate broker. Here are some of the cons. License fees, MLS fees, office expenses, continuing education class fees. When buying or selling a house you must disclose that you are a real estate salesperson and must state this in every advertisement. Sellers and buyers might think they are not getting a good deal when dealing with a real estate salesperson because the salesperson is an "expert". I feel that I am held to a higher standard in my real estate investment dealings because I am a broker. A number of real estate salespeople do invest sucessfully in real estate. Investment advice books tell you to invest in what you know. It is natural for a real estate saleperson to invest in real estate. All aspects of business and many aspects of life involve salesmanship. Learning how to sell is a valuable skill.
how much are mls fees? and by office expenses do you mean your own office or paying a brokerage for office expenses?
MLS fees will depend on the local MLS. With local, state and national dues I believe I pay about $1,200/YR. There also is an initiation fee, I do not remember what that was. Some brokers will let you hang your license without charging an office expense fee. They will of course want a healthy commission split going to them. After all when you think about the cost of having a commercial office with phones faxes, computers, advertising, utilities, franchise fees and office supplies the money has to come from somewhere. Some brokers charge an office fee but then let you keep the commission. On the upside you can save on some of the commission when you list the property yourself and you get the MLS and all of the market information with it. Plus you can list and sell houses which if you work hard can lead to a nice commission income.
Do you have to pay for local, state, and national dues? What if you want to keep your business within one state?
Yes, you have to pay local, state and national dues. They are structuring the fees to encourage full time agents. An agent that sells 100 houses per year pays the same fees as an agent that sells one house per year. You could always hang your license with a broker that is not an MLS member; then you would only pay licensing and continuing education classes. Of course you would not have the use of the MLS. In my State you have to work as a salesperson for a broker at least 3 years plus other requirements before you can open your own office.
Do you think it's necessary to have access to MLS? Would I be at a serious disadvantage without it? Also, do you know any agents that work part-time? If so, how do they do?
Thank you for answering my questions. I appreciate you taking the time.
A vast majority of real estate salespeople belong to the MLS although I started out in real estate working for a non MLS broker and she was very successful. Using the MLS for one deal can save you the cost of the yearly fees. If you are a better buyer than seller it is nice to put your house up for sale in the MLS, and have hundreds of great agents on your side to sell your house. So what if you have to pay them 2-3% or whatever you decide. They earn it. An agent acts as a buffer between you and the buyer. Many times I have been grateful to have an agent between me and difficult buyers; buyers that if I had to deal with directly would probably have resulted in a blown deal due to a personality clash. I started part time, then full time, then overtime (you can really spent a lot of time doing this) then a little burn out, and now a happy balance now that I have hit all my home runs.
How did you do it part-time? Was it hard finding a broker that would allow it? How many hours were you working in your other job? This is certainly the route I'd like to go. I'd greatly appreciate some insight into the part-time to full-time route. Do you have investment properties along with your brokerage now?
Thanks.
I always had an interest in real estate my entire adult life. I worked for a large corporation in the late '80's and started fixing and flipping houses on the side during that boom which died in the early 90's. When I lost my job along with many others due to downsizing I asked a small broker that I had purchased houses from if they needed a salesperson. They hired me with no resume' only knowing that I had been a reliable buyer of houses. At that time I had a dead end part time job. I felt it was a real stigma not to have some type of work. I thought of this real estate job as only temporary until something better came my way. It soon became hard to do both jobs, real estate can suck you in. I hesitated to quit the sure money part time job for lack of confidence(seems silly now) but I never looked back once I did. Besides the occasional flip, I own some long term investment properties. I bought properties I liked in nice areas; not great cash flow properties but properties for tax purposes and long term appreciation. I bought the majority during the early to mid '90's when stocks were the hot item and real estate was not. At that time I joked that I was in the wrong business. Not anymore.
I currently have a good 40 hr/wk, salaried job in commercial real estate but I'd like to learn about the industry and possibly make some extra money on the side in addition. Do you think an agent can work effectively through evenings and weekends?
Truthfully, I think it would be hard to work as a real estate salesperson only nights and weekends. Customers want a salesperson who can work around their schedule and they can be demanding. Settlements usually take place during normal business banking hours. I would give it a try though; find a broker who will work with you. They might want a person who can cover their operation nights and weekends. In return they could help your customers during the day. Your experience in commercial real estate is an asset. You might want to specialize in that area.
it doesn't make it more difficult. it has its +-'s . it's a individual choice....km
Does it make sense to form a company to write off the expenses involved in starting and working as a real estate agent?
You do not have to start a company to deduct expenses. Schedule C profit and loss of a business on the 1040 fed. income tax is where you would deduct expenses from gross income (commissions).
I took the weekend real estate salesperson class in my state just to learn some of the laws, forms, etc. I do not however have any interest in it as a career or taking the exam. It would take too much time away from being an investor and making REAL money. Its good for MLS listings, but having a good broker in your back pocket is a lot easier.
What might be a reason to form a company ? I've heard of people forming companies because of their expenses associated with doing business as an agent.
Reward and Fishbowl -
Thanks for having this conversation on the forum. It is helpful to read complete answers, thoughts, suggestions, and questions toward decisions made and to be made. To Mentor and be Mentored...
Taking the class is a great way to gather info, ideas, and legal knowledge!
I have had my license and currently do not. I am still not sure if the pros outweigh the cons. Having a good broker manager, that could be the deciding factor.
What is an average amount of hours put into a client in terms of showing properties and arranging a buy/sell?
Also, is there more work involved representing the buyer's or seller's side?
I am an agent in California. I pay about $30/month for MLS and about $200/yr for dues. In California, you don't have to pay the $200/yr. It goes to the California Associaton of Realtors and part goes to the NAR (National Assoc Realtors). If I don't pay the $200/yr, I don't get to call myself a "Realtor", just a licensed real estate agent. There are many benefits that go with paying the dues that are beneficial. I also don't have to pay the MLS but to me is one of the biggest benefits. I can use my lockbox key to go look at a home without setting an appt with an agent, there is a whole lot more information on the agent MLS than www.realtor.com or other sites, and my favorite is that I can bring up tax records from my computer. If there is a home not on the market but has been vacant for some time, for example, I can bring it up on my computer and find the owner, owner's address, what and when they paid for it, how much they owe, sq ft info, and other info. I can make a trip to the assessor's office and the recorders office to pull up this info, but the convenience and time savings of doing it from any internet connection is well worth it for me.
I don't market myself with a cute little slogan or anything because that is not my primary reason for having my license. I have my license with a broker that gives me an 80/20 split (I get the 80%) and no desk fee. I come and go as I please. My broker is first and foremost and investor as well. When asked by people in my search for deals whether I am an agent or not, of course I tell them I am and explain I don't market myself as an agent and I work mostly on a referral basis. When I tell them the name of the brokerage firm, most have never heard of it because it is a small firm and not advertised in every Sunday paper.
I feel my situation gives me the best of both worlds. It has also allowed me to do loans for people and myself. It has also been a good extra source of income.....much better than Tupperware or Mary Kay ever did for me! :-D
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Thanks for the reply Shirley. Are you a full-time agent? How many hours, on average, do you spend showing houses to one client? Also, how difficult was it to find a broker?
Great topic. I am a licensed agent who actively searches for rehab properties on the side. My goal is to spend less time ferrying buyers around at night and on weekends looking at 75 different houses and to spend my time thusly:
Buy property at .70 on the dollar minus repairs
Fund the repairs out of pocket
List the property on MLS on my own as a broker
Sell it and make $15,000-25,000
Do 4-5 of these a year, make good money and play with my 5 year old a lot.
Good luck. If anyone tells you that you can't do it, quit hanging out with them and find more positive friends.
Fish --
The way I do it is once I have a client (usually through referrals or networking as I invest) I tell them up front that I am not a "big name" agent and I work with a select few clients at a time to assure them the best service. Once I find out what they are looking for, I will email them property profiles for them to do a drive-by. This really narrows down the time spent showing them houses. The most houses I showed a client before purchase was about 6. An entire real estate transaction takes me less than 10 hours...usually less than 5....from start to finish over a 30-45 day period.
It wasn't that difficult finding a broker. First I looked for the one-office type brokerages and got lucky the first one I met with. I recently changed and now have my license with a guy I met networking while investing. We now work together on things and partnering on deals.
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Hey guys...great topic. I am also a licensed agent who works only on-site, sitting in a model home selling new home construction. Not been investing for a year now, not quite ready to give it a go full time yet. Most of the investments have been rehabs turning to L/O or flips. I really want to start buying sub to...what exactly do aI have to disclose to the seller? Only that I am licensed? Or that I am REALLY getting a good deal at the price I am buying...hopefully not the second...=)
Any RE professionals feel free to chime in!
Suntzu18
I just disclose that I am a licensed broker. I do not give them an opinion as to whether I am getting a good deal or not, obviously I think I am, but I really do not know until I sell. It is always a risk even with good information.
As to the question of which is better to be, a buyer broker or a selling broker: In this market the big money is in listing property. Work hard listing properties at realistic prices, put them in the MLS and watch the bidding war. The only time I ever drove buyers around looking for houses was when they did not have a car.
As to the $30/month MLS fee in Ca., I like that. I pay $195 every three months; still worth it for the reasons Shirley states.
Do any of you work part-time as an agent? Hanapa - it sounds as though you do/did...Have you found it difficult?
How can I find out what MLS fees are in Georgia? Does anyone in this forum know off the top of your head?
Thanks to everyone taking part in this post. I've found it extremely helpful.
Good info in this post, but wanted to ask another angle on the questions....
We are thinking of getting my wife into a job as a real estate agent. We will be moving to Melbourne, FL soon and are determined to get more active in real estate (Have 1 preconstruction already thats up signifigantly). Would she need to disclose that her buyer for a property is actually her husband? What are negatives and/or positives that you have had or heard of with this situation?
Much thanks....
Quote:
Buy property at .70 on the dollar minus repairs
Fund the repairs out of pocket
List the property on MLS on my own as a broker
Sell it and make $15,000-25,000
That is what I have been thinking about doing, In CA if you have your 4-year degree you can get your brokers licence without having to spend the 2 years as a full time agent.
one way that being an agent makes it awkard is that you must inform seller that you are a "agent" and sometimes the sellers may frown on this.......km
Quote:
On 2005-01-13 15:59, kenmax wrote:
one way that being an agent makes it awkard is that you must inform seller that you are a "agent" and sometimes the sellers may frown on this.......km
That's the one thing I have been afraid of. Of those are Agents, how many deals have you lost because of it?
As a broker, I have not lost any deals that I know of, but I avoid the FSBO little old lady estate type deals. I would not feel right buying a property from someone who was not informed about the value of their property. I would worry about telling the seller the value of the property and then buying and selling for much more. I have found many deals through the MLS where the seller is represented by another agent and through foreclosure sales and auctions. My license is not such an issue in these type of sales.