Why You Should Drop Whatever You’re Doing and Get Your Real Estate License ASAP
Since writing my last article, “How Technology Will be The Death of Real Estate Agents,” where I predicted that technology is going to destroy the real estate agent business, I am doing a complete 180 and now telling you that you need to get your real estate license ASAP (never a dull moment around here).
Before you write me off as nuts, hear me out...
I started investing in real estate in 2004 and immediately got my real estate salesperson (agent) license and later in 2010 got my broker’s license. I have always been a strong proponent for investors to get licensed and in this article I want to address why you should drop whatever you’re doing (first finish reading this) and sign up for the next real estate licensing class in your area (or online).
Maybe you’ve heard the old myth that you should NOT get licensed if you’re a real estate investor. If anyone ever tells you that, ask them why and if they ever give you a half-way decent reason, please let me know because I have yet had someone give me one.
Being licensed does not negatively impact your investing in any way
The only requirement you have once licensed that may impact being an investor is what’s called “disclosure.” As a licensed agent, you are held to a higher standard and the general public needs to be disclosed of such. So if you do a “we-buy-houses-cash” mailer, you must disclose: “I am a licensed agent.” When you buy a property, you must write in the contract, “Buyer is a licensed agent.” When you sell a property, you must write in the contract, “Seller is a licensed agent.” Basically, anything you do as an investor, simply state – “I am licensed.” That’s it. Simple.
I had someone tell me once, “Well, I don’t want to be licensed and held to a higher standard.” My response was, “Oh, I see, so you want to lie and cheat people and not get in as much trouble?” This was followed by an awkward silence...
If you’re an honest person and always disclose, getting your license does NOT negatively affect you as an investor. As a matter of fact, there a several reasons why getting your license is extremely beneficial.
The primary reason is to get access to the MLS
The MLS is a private listing board just for licensed agents. Having access to the MLS is valuable for a few reasons:
Reason #1: Access to Comps:
Being able to pull your own comps on potential deals you’re looking to buy or when determining the list price on a property you are selling is invaluable.
Reason #2: Access to Public Records:
Most MLS systems are also tied into the county public records. I spend a lot of time here researching title history, lien recordings on deals, and also researching cash buyers.
Reason #3: Set up Automated Searches:
While an agent can set up automatic searches that are sent to your inbox, usually the information is limited. I have dozens of different searches with different criteria for all the different areas and types of deals I’m looking for.
Reason #4: Set up Your Own Showings:
This is perhaps one of the biggest benefits to being licensed. Some days I look at a dozen different properties. Being licensed allows me to set up my own showings and I don’t need an agent to be present with me (because I am one!).
Notice I haven’t mentioned at all using my license in the traditional sense of being an agent who lists and shows properties. While you certainly could work as an agent, I am simply pointing out all the ways being licensed helps you as an investor but you could also play agent on your own deals...
Reason #5: Represent Yourself as the Buyer:
You could make offers for yourself as a buyer’s agent and try to not only buy a deal but earn a commission as the agent. I’ve done this before but in reality the seller takes into consideration your commission you’re earning into the buy price, so it doesn’t always benefit you.
Reason #6: List Your Own Properties.
This one could be a big benefit because now you’re not paying a listing agent saving you 3% on your deal. This could be a huge savings, which ultimately puts more money in your pocket on the deal.
Reason #7: Better-Educated Investor:
Oh yea, since you already or plan to make reason estate a serious part of your income, wouldn’t it beneficial to learn as much as you can? Getting my salesperson license and later my broker’s license taught me so much more about real estate laws and practices and has made me a much better, smarter and safer investor.
Reason #8: See listings in Real Time:
I hate relying on agents to provide me with listings on new properties. I want to know about new deals the second they come available. By having your own MLS access, you don’t have to rely on anyone else.
Fees To Be Licensed:
It does cost to be licensed. There are fees to take the licensing class and state exam. Usually you have to join a board and you have to pay for MLS access. You may have to pay broker fees and there are annual continuing education requirements. All said and done, it may cost you $1,000 – $1500 year or so. To me, it’s simply a cost of doing business and I wouldn’t even think about not having my license. Ok, now you can stop whatever you’re doing and go sign up for a real estate licensing class.
Please leave a comment if you actually have a good reason why an investor should not get his or her license. Leave a comment if there is another benefit I missed or if you’re licensed and agree with me. And most importantly, let me know if you now plan on getting licensed!
Until next time, Happy Investing,