Nov
2022

Should Real Estate Investors Get Their Real Estate License?

Ask a large group of investors, there would be a split in the answers given. Personally, I think it is vital to get your real estate license. There are numerous reasons why you should obtain your license; however, I will highlight a few:

1. MLS – Having access to the MLS is extremely important to your investing career. If you do have your license, you won’t have to rely on agents, friends or colleagues for access. The MLS systems contain hundreds of fields of information about the features of a property. These fields are determined by real estate professionals who are knowledgeable and experienced in that local marketplace. The essential information found on the MLS is the address, sales term, tax information, HOA dues and loan information. In addition, you can obtain historical data from the MLS which is priceless. With proper MLS data mining, you can narrow your searches to exactly what type of properties you are looking for.

2. Networking – After obtaining your real estate license you will have the opportunity to network with other real estate professionals at your selected place of employment. In addition, you will have the opportunity to take advantage of the vendor services that your real estate brokerage office offers. For example, some real estate brokerages offer discounted advertising through local newspapers and magazines. Furthermore, networking with other agents has advantages. These advantages enable you to create some creative relationships. Offering part of your commission to other agents will entice them to close deals with you. In addition, offering part of your real estate commission to other agents over time will result in additional deals being thrown your way.

3. Additional Funds – Being involved in transactions after receiving your license will start to bring additional cash flows your way that would have been included in your expenses. Each and every time you’re involved in a transaction you will have a 3 percent (of the total sale price) commission coming your way. Those additional funds can be used toward any aspect of your business. For example, if you buy $2 million dollars worth of property in one year, that is an extra $60 thousand dollars in your pocket.

With an active real estate marketing campaign, you will come across numerous homeowners looking to sell their home. In a best case scenario, you are so busy that you aren’t really interested in listing the home yourself. Therefore, you refer the listing to another agent, for a referral fee. Keep in mind that you are still subject to commission splits and realtor dues. Using referrals as a part of your business plan could bear some fruit as well as other agents will be more likely to throw deals your way when they see a diamond in the rough or a sale that they can’t handle or do not want to handle. In today’s market, this is probably an unlikely scenario, but I can assure you that when the market is back and booming this will be something to consider. I can also assure you that the market will be back at some point, just like other industries…real estate is cyclical.

4. Controlling the Deal – From time to time you will hear about other investors losing deals because of their agent. Eventually you too will run into this problem, unless you have one of the few truly knowledgeable and dedicated real estate agents. Being a licensed agent will provide you with the ability to deal directly with lenders, appraisers, titles companies, inspectors, and closing attorneys on both sides of the deal. Moreover, you and your company will be controlling the showings to buyers, the marketing of the property, targeting for potential acquisitions and negotiating on purchases. Considering your time and money are involved in the deal you will be more motivated to sell the property than another agent would be.

I would recommend any new investor to get their license for all of the aforementioned reasons, but in addition to that, the knowledge base that the real estate courses provide are valuable as well. I truly believe that it will enhance and speed up your real estate investing career.