Real Estate Licenses: Not Just Another Tool For Investors
By Paul Esajian on March 16, 2015
As a real estate investor, it is important to find as many different ways to close deals and make money as possible. Regardless if your business is booming or you are in a rut, one thing you can do to increase production is to obtain your real estate license. There is a segment of investors who are intimidated by the thought of getting licensed and view it as more trouble than it is worth. While getting your license is not always easy, there are many advantages to having one that can help grow your business.
The process of obtaining a real estate license is not necessarily an easy one, at least not as easy as some might think. Before you even consider what a real estate license means, you should know there is a lot more that is involved than you may be privy to. First off, you need to complete a local real estate salesperson class – then comes the exam. This exam is not as hard as the CPA exam, but it is certainly not easy. Once you pass the exam, you need to find a broker who will hold your license. There are some brokers who don’t want investor agents in their office. The odds are that you can find a broker who will hold your license, but between class and exam fees, and annual dues, you are looking around $1,000 before you look at your first house.
Once you get your license, you will start to discover some real advantages you have over other investors. The most important perk is the access to the MLS (multiple listing service). The MLS is the portal for which every new home that comes onto the market in a local area is listed in. With MLS access, you can get new home alerts on everything from bank owned listings to traditional sales. Instead of waiting on your realtor to contact you when they get around to it, you will get real time notifications. This will give you the ability to act as quickly as you want. Additionally, you can scan the MLS for past listings and sales and can be have a much better grasp as to what is on the market or has sold. This will help you be sharper with your offers.
Having access to the MLS and getting alerts are great, but as a realtor you can legally see the interior of any property without having to wait. Along the same lines of having immediate access to properties,you can view them as quickly as you like. In most cases, especially with bank owned properties, time is of the essence. The quicker you can submit an offer, the more likely you can get a jump on your competition. Even if you don’t want to make an offer, you can physically see what is on the market and be able to make decisions with more confidence.
As a realtor, you are in control of the deal. This doesn’t mean that every offer you submit will be accepted, but you are the point-guard for the transaction. This is important if you are working with short sales or foreclosures. These deals often hinge on what is submitted and how. As the realtor, you can include comparable listings or sales that benefit your offer. Additionally, you can add a list of repairs and any work that is needed on the property. You can also follow up in a timely fashion with the lender who will speak with you because you are on the contract as a realtor. If there is a counter offer or if there are items needed, you will know immediately – and can work on resolving them. You are in control of the deal and don’t have to wait for anyone to act.
Having a real estate license entitles to you to make a commission on every deal you are involved in. This may not be the main reason you get your license, but it is a real perk. If you close just a few real estate deals a year, you can more than pay for your license. As long as you fully disclose that you are the buyer or seller, there is no problem with you being involved in the transaction. You may not view yourself as a realtor, but if there is money to be made in the business, why not take advantage of it?
Finally, being a realtor can open doors and provide contacts that you would not have had otherwise. The more transactions you are involved in, the more people you meet and the more people you meet the greater chance that you can find deals in your area. If you are on the buying side of a deal, you should reach out to the listing agent and their attorney. These are two contacts in just one deal and if you do this on every deal you can quickly fill your network.
Not every successful investor has their real estate license, but it certainly doesn’t hurt. If you can get just a few more deals a year with it, you should consider it a good investment. The more tools you have, the better investor you will be.