Having a real estate license can come in handy as an investor, but is it worth it? Specific license requirements will vary by state, but regardless of where you are there will be a time and money commitment to obtain one. For me, it was 90 hours of classroom training and several exams which were no walk in the park. There are both monthly and annual expenses I have to pay to various parties along with continuing education requirements to keep it active. As a new year turns and another round of the bigger fees are due, I always ask myself the same question: Do I still want this?
Here are some of the ways I’ve found a license benefits me in the REI world.
1) Access to the MLS. Always stay current with listings and get private notes that agents leave other agents that aren’t visible to the public who are unrepresented. While this is great, there are ways to get access to the MLS without having a license yourself.
2) Access to lockboxes. This makes seeing homes incredibly convenient. If I’m driving down the road and see a home for sale, I can just tell the listing agent I want to stop by and show it to myself. No pressure or obligation to a buying agent and fewer parties to coordinate it with. A lot of times the vacant homes can be shown any time without notice so you just whip open your app and unlock it (or get the code) and you’re in!
3) Commissions. If you are a house flipper, you can offer more than others because you know you can list it yourself and save commission costs on the other end. You’re also able to leverage your buyer’s commission in the negotiation when purchasing it. That can be anywhere from $5k to $50k of an advantage on investors who can’t represent themselves, and you can beat them on price.
4) No agent burnout. One of our acquisition strategies was to submit as many offers on MLS properties as possible using numbers that worked for us. If they accepted, great. If not, we moved on to the next. We made offers daily and were happy to do it. Investors will have a hard time finding an agent willing to do that for them long term because they get burned out from all the phone calls and paperwork, especially if they have other clients they are trying to work with at the same time. It’s a lot harder to burn yourself out on this.
5) New revenue stream. As an investor if you will speak with homeowners that just refuse to sell for less than market value because there isn’t much wrong with it so there isn’t really a deal you can create from it. If you’re licensed, you can offer to list it for them rather than letting the lead go. There are a lot of people who very make good money by keeping this in their back pocket for those situations. Even if you don’t want to list it, you can legally collect a referral fee form another agent to list it.
6) Additional Tools. This one will vary by broker and association, but most will come with benefits and resources available to agents. The two tools I’ve found to be the most useful included with membership:
- TransactionDesk. It’s integrated with the MLS, Authentisign, zipForm, and a bunch of other tools to help manage a transaction. I can get any real estate contract template in here and it auto populates with property and seller info on all forms in the places I need it. This makes writing contracts 20x faster and it’s seamless. TransactionDesk doesn’t clearly state pricing and availability on its website so I am not sure what the cost to have this or something comparable is. I do know electronic signature tools and others they have integrated can be purchased independently though.
- Realtor’s Property Resource (RPR). I use this daily and, in my opinion, it’s the best property evaluation tool in my area by far. It gives you a price estimate, a high/low range, a confidence level based on others sold, and the interface is great for running your own custom comps with their algorithm. It provides a lot of information as well – such information from the county recorder. However, there are plenty of alternate tools for property evaluation for investors you can use instead.
- Broker Support. I had a conversation with my broker regarding investment properties and how they wanted me to handle them, including off-market purchases and wholesale deals. If you get licensed, you need to do this before you sign up with them and understand their policy on it because not all brokers are the same. They gave me the option to run those deals through them for the extra layer of legal and insurance protection if something goes wrong (with standard transaction fee) or I can do it without their involvement given certain guidelines. I am also able to call my broker to help me with contracts in weird situations and answer questions for me which can be very handy. Bigger Pockets and Facebook groups have really been my go-to for answers though. The REI community is awesome.
I got my license before becoming an investor, so I entered the REI world with these benefits available to me already. Every year I have considered it worth keeping (so far) so I continue to pay my dues as an agent. Look up the requirements in your state and decide for yourself: Is it worth it for you?
Written by: Phil Bryson of Desert Pro Home Buyers