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One of the most popular questions I receive is “Should I get my Realtor License to invest in real estate”
The short answer is “it depends”.
The Cons (for some): Having a real estate license means you need to operate ethically and disclose certain things to the sellers and buyers. For some, this may be a problem and frankly they should not be investors either if that is the case. The state usually requires you disclose you are an agent to any buyers or sellers, again, in 17 years of transactions, never once has this hindered me in any way. Ask yourself this question, is disclosure really a bad thing?
Let’s discuss the benefits:
As a licensee, there is no need to hide in the bushes and sneak around to get paid. A real estate license allows you to collect a fee in exchange for real estate services. “Wholesalers” tend to spend more time figuring out how to get paid and less time actually doing deals..that worry in your stomach? Is it really necessary? Just get a license and collect checks (keep it simple people).
Having the license makes the transactions easier from a compensation approach. The state has laws to protect the compensation of someone with a real estate license. As far as disclosure, don’t be a shady scumbag and you have nothing to worry about (it is really that simple)
With a Real Estate License you have the ability to monetize every single lead you receive!
Sellers who want retail (and deserve it) get listed on MLS and therefore top dollar to a retail buyer usually with bank financing of some sort. This is because the property is exposed to the most amount of people possible and also “easy to buy” by most folks standards.
Sellers who need to sell fast or who’s properties won’t generally qualify for financing- Sell direct to investors on terms or with cash. Encourage the sellers to accept payments for their equity in order to receive more for their equity as compared to an all cash purchase. When you make a property more attractive by making it easier to buy people tend to fight over it resulting in an increased sale price.
You can refer the lead to another agent anywhere in the country and receive a referral fee in exchange, in many cases this can be upwards of 30% of that agents commission. Now THAT’S what I call and easy payday.
Being licensed puts you in front of more buying opportunity. An investor who has more opportunity closes more deals and has a larger portfolio in most cases.
Having a license makes it a little easier to saddle up next to a listing agent in order to negotiate with the sellers direct (in the presence of the listing agent of course). Building rapport with the listing agent (aka Gatekeeper) is critical in order to get in front of the decision maker. Although weak listing agents often try to reject this means of negotiating, the National Association of Realtors in our your side on this topic. According to NAR MLS Guidelines, a buyer and buyer’s agent have a right to be present at the presentation of their offer. A listing agent who tries to refuse this without written support from the seller could face severe sanctions.
The Bottom Line:
Being licensed gives all sellers many options, all of which result in your earning a nice payday for very little work. Being an agent doesn’t have to be difficult, although some agents tend to act as if they are moving mountains. If you focus on adding value to every person you work with, many more opportunities to build your portfolio and fill your wallet will present themselves.