You might need a real estate license to invest in real estate!
Becoming licensed does takes time and money. For those and other reasons, give plenty of thought to the question, “Should I get a real estate license?”
First Questions First
The first question to answer is “What are my primary goals regarding real estate?”
Do you want to sit in an office on weekends waiting for client calls? Will you enjoy showing houses to others in the evenings? Will enjoy explaining the buying and selling process to every new client? If you are answering ‘yes” to these and similar questions, then your time and money might be w
ell spent on a real estate license. You can still run your investment business on the side.
The main reasons for a license are:
- MLS Access – easier without a license today than ever before.
- A source of income – you get part of the commission or save it when selling.
- Networking – Getting in with other Realtors can be another source of leads and deals.
On the other hand, if you want to completely be your own boss – answering to no one else, then put getting a license on the back burner. Your answer to the question, Should I get a real estate license? Should be no.
A Real Estate License Requires Some Time and Money
Training and testing cost both time and money. State requirements vary for example, in my state of Michigan it is an 40 hour course but in some states 100+ hours of training is not an unreasonable. This is only the beginning point when considering if you should want a real estate license. There may be additional training your broker will require. Long term, you also need to consider the ongoing training courses required to keep your license current. For most people, I estimate the basic costs for just getting your license is somewhere between $1,000 to $1,500 plus the time commitment. This is a small fee to pay to save many times over that per deal.
There are other fees and time requirements to be considered as well. The brokerage firm you work for will have specific fees you have to pay. You may be required to join associations – even to gain access to the MLS, which has an additional fee. Also, brokerage firms requires a big chunk of your time manning the office phones, holding open houses, filling out weekly reports, and more.
Responsibilities Come with Saying “Yes” to a Real Estate License
Consider the added responsibilities when asking “should I get a real estate license?” From a professional investor’s point of view, the most challenging responsibility is full disclosure. I believe in full disclosure being an agent myself, because having a license does have a disclosure requirement, but that rarely will affect your deals. In every state I’m aware of, you’ll be required to disclose to all buyers and sellers you have a real estate license.
When brokering deals for other people, this works in your favor by enhancing your professional standing. But not so much when buying or selling your own investment properties. That same enhanced professional stature leads many private buyers and sellers to believe you have an upper hand that works against them in personal deals – even when it’s not true. This is an important part of understanding your primary goals when deciding if you should get a real estate license.
Ultimately, Are the Benefits Worth it?
Most investors are primarily interested in access to the MLS and to a smaller degree the professional networking with other brokers. Without a doubt, most retail transactions do go through the MLS.
But do most of your investment deals go through the MLS? At this time and in many parts of the country, the MLS deals don’t appeal to most investors. These MLS deals are priced at the high end of the comparable range and can even lead to bidding wars. Not exactly the types of deals most investors are looking for. Successful investors network though local investment clubs, probate attorneys, bankruptcy attorneys, and even the mailman who comes across distressed houses on his/her daily route.
You can always use a licensed agent/broker on the occasions you want to. By working closely with a few licensed brokers, they will give you the next best thing to unfettered access to the MLS.
Answering the question “Should I get a real estate license” really does start with understanding if your primary goal is becoming an investor or a broker. If you plan to work out of a real estate office, you will be added to the company webpage and receive marketing training along with given generic marketing materials. But it will cost you a lot of time and money. That’s time and money that may be better spent learning from other well-established and successful real estate investors.
Without knowing you personally and your specific circumstances, it’s impossible for me to give you a definitive Yes or No answer to the question “Should I get a real estate license.” However, I will be thrilled getting to know you and your circumstances so that the two of us can come up with the best answer for you.
By Wendy Patton
For more than 30 years, I’ve been a licensed Realtor and broker. If you ever want more information on getting a real estate license please call my office to find out more. 248-394-0767
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