NUTS & BOLTS
REAL ESTATE LICENSING
lists of expired properties and be the agent who saves the day. A lot of realtors call the owners of expired listings to see if they can contract to list their home, but if you’re the person who wants to buy that property and you just happen to also be able to legally facilitate the whole deal, well, that’s just good business. The potential value in expired listings alone is a good enough reason to get that real estate license. within the real estate agent community. You might be surprised to find out how many deals are sitting off-market that agents know about (but no one else does) that aren’t being listed for some rea- son. You can find these deals at local agents’ association meetings. More importantly, experienced members in these groups can tell you all the “inside information” about local real estate profes- sionals and the local market. Once they ascertain that you have a license and are not a potential client, good agents will open up and “talk shop.” Figure out creative ways to make those conversa- tions yield payoffs for you and the agents, and they’ll be the best source of market information you’ve ever had. Being licensed and able to join agent networking groups is a great way to get deals and early warnings on trends and market shifts that you’d never find anywhere else. One of the arguments some people make for not getting your real estate license as an investor is that youmust disclose you are a real estate agent when you buy a home or are marketing for homes. You also must ask the seller to sign a form acknowledging that they may be selling a home to you belowmarket value while youmake a profit. Some investors believe these mandatory disclosures put them at a disadvantage because homeowners may not want to sell to an investor if they can, instead, sell their home to a family. They also fear that a seller may opt out of doing a deal if they realize that they are selling below market value. While it’s possible that this might happen occasionally, I do not believe it happens enough to be a significant detractor from your business. Unless they tell you they passed you over because you are an investor and an agent, you will never know for sure why a seller sold to someone else instead of you. In the clear majority of cases, sellers will go with the buyer who best suits their most pressing need, be that money, a fast sale, or an emotional resolution to selling their home. If you meet that need, then they will almost certainly sell to you. 2. CONFLICTS OF INTEREST Some clients prefer not to work with real estate investor agents because they fear that the agent might compete with 3. NETWORKING OPPORTUNITIES ABOUND Investors often overlook the many opportunities to network 2 POTENTIAL CON’S: 1. DISCLOSURE
them for properties. If those clients make up most of your customer base, then you might want to consider not get- ting your license. However, if this is only going to come up occasionally, consider referring a concerned client to another agent and making money via a referral fee on that deal. Not many realtors understand investors and how to work with them. Having a real estate license and being an investor means you can represent some of the local investors in your area and get paid doing so. At the same time there are opportunities to get referral fees from area investors. ETHICS & STANDARDS: YOUR CHOICE OF PRO OR CON Any real estate agent will tell you that they are held to a higher standard than other real estate professionals. Set aside, for the moment, whether you agree with them. It is certainly safe to say that real estate agents are held to more specific, regulated, stated standards of behavior than just about anyone else in the industry (see “disclosures” for more on that). In my opinion, this heavy regulation does often result in more predictable, sometimes better industry behavior on the part of investors who are also agents. However, there are some negative as- pects as well, such as the extra costs of errors and omissions (E&O) insurance, which is standard for every agent to carry on every deal, and the potential added liabilities that may come by combining your investing business with a traditional realtor business. Talk to other agents or investors and make sure to consult a real estate attorney as to what your best options are in protecting yourself. TO LICENSE, OR NOT TO LICENSE? THE ANSWER IS PERSONAL. So should you get your real estate license or not? That decision relies on your personal weight of the pro’s and con’s. If you are not very active do only one or two deals a year, the cost of paying MLS dues and local, state, and national associ- ation dues may be prohibitive. On the other hand, if you flip several deals every year and are constantly watching one or more real estate markets, you are leaving money on the table by not having a real estate license. Being able to get paid for referrals and represent a fellow investor or two is a great way to make extra cash while you go about your own business. •
GettingYour Real Estate License as an Investor GETTING (OR FOREGOING) YOUR LICENSE SHOULD FIT WITH YOUR OVERALL REAL ESTATE STRATEGY.
by Darren Soares
I
Think about it: Getting automatic, instant updates on new listings without having to hire an agent would make it worth the effort of getting your license. Since you pay agents thousands of dollars in commissions, once you get your initial license it takes under a $1,000 a year in most places to stay current on licensure fees, so you end up ahead financially. There is opportunity to further maximize your profits using your MLS access. For example, on a $100,000 real estate purchase, you could save between $2,000 and $3,000 just by buying off the MLS as you would get paid the buyer’s agent’s commission by doing so. Then, you can list your properties without paying the listing side of commissions when you sell, which could save you another $2,000-$3,000 on that same $100,000 deal after you have finished a rehab, for example, and are ready to sell. 2. AN ALL-ACCESS PASS You’re the agent now, so no more waiting to see homes. Get
f you ask 100 real estate investors whether it is a wise decision for an investor to get a real estate license, half will argue passionately for the license while the other half argue passionately against. As with most things in life, this decision cannot be made with a one-size-fits-all measure. This article will dive into the pros and cons of obtaining your real estate license as an investor. 3 BIG PRO’S: 1. MLS ACCESS OPENS THE “DATA DOORS” MLS access is one of the biggest perks to having a real estate license. It’s a big plus to be able to find properties, view them, and make offers before just about anyone else. The MLS is one of the best windows into the data side of the real estate indus- try, and that is why even investors who are not agents usually recommend working with someone who can access the MLS for you. Knowing the data and staying current is your business. Being an agent can open a few of those data doors for you.
Darren Soares is a Licensed broker and Director of Think Realty Real Estate Services you can reach Darren at DSoares@thinkrealty.com.
92 | think realty magazine :: january 2018
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