“Should I Get a Real Estate License?”

roller coasterHere we are with another Q&A session that’s sure to be of interest to all investors. Why? Because it’s a question that we hear repeatedly and one that cries out for an answer.

In this particular instance, the question comes from Franco:

“I’m in California. Do you suggest getting a real estate license? And, if so, why or why not?”

Because JP has actually been licensed in the past, I’m going to hand off to him first and let him lead out.

jpJP’s Insights

Let me start out by saying there’s no right or wrong answer to Franco’s question. If you search in various forums on the internet, you’ll hear the ongoing debate about whether or not real estate investors should be licensed agents. There’re pros and cons wherever you look.

As Patrick said, I’m an investor and I’ve had my license in the past but I let that go. And here’s why…

It ended up that I didn’t want to deal with the classes that I had to take each year. Because I didn’t like going to them, I procrastinated. And because I kept procrastinating, I would then have to go back to get caught up. It was an ongoing pain in the neck – it was no longer worth it for me. So for me, the drawback was that I had to keep up with continuing education once a year and also pay fees.

Another factor was that once I figured out how to get access to the MLS without being licensed, then the other benefits of being licensed didn’t have as much appeal.

Now on the other side of the coin, being a licensed agent does carry a certain level of credibility in the industry that you wouldn’t have otherwise. In fact, I used it as a credibility booster. I would say something like:

“I need to let you know, Mr. and Mrs. Seller, that I’m a licensed Realtor here in Tennessee. However, just so we’re clear, I’m not here to be your Realtor or to list your property or have any kind of agency agreement. I’m looking to buy as an investor even though I am licensed. But, I just wanted you to know that you’re dealing with someone who has credibility.”

realtorI would just throw that in there to remind them that I have the necessary education, which you and I know isn’t that big of a deal. But to the sellers, it makes them feel like, “Oh, he’s not one of those shady guys.” Without demonizing everybody else, it kind of pumped me up a little bit.

Now that I’m not licensed, I turn it around and say:

“I’m not here to act as a Realtor and try to list your house. In fact, I like to keep things simple and straightforward and not make them too cumbersome. I just use plain English.”

The contracts I use are only 1-page, 1-side; that’s the way I like to do business. Other investors seem to complicate the process, so that allows me to spin it in the other direction.

Now back to the question, again – there’s no right or wrong answer. I couldn’t recommend that you get your license unless I knew specifically what you’re doing and how and why.

Bottom line, I don’t think it’s necessary to have your license nor do I think it’s a problem if you do have it.

patrickPatrick’s Take

Another aspect to this situation is that some investors choose to get their license as a potential added source of revenue.

If you’re doing any kind of marketing and generating seller leads, then a lot of times people may not be motivated enough or may not have the equity for you to have a good deal. It wouldn’t make sense for you to put it under contract. But some investors would see that as an opportunity: “I can list this property and potentially earn a commission.”

On the back-end, if you’re buying properties and then selling them, you could potentially list them and get a commission.

I’m not a Realtor and I’ve never been licensed. I took the time to build relationships so I eventually had access to the MLS. (A friend who would share log-in details.)

By having a Realtor on your team, one with whom you can interact – you bring deals to the Realtor who in turn shares log-in for the MLS – it becomes a 2-way business exchange. For me, being able to hop in there to the MLS site and utilize it is the main benefit I’m looking for.

But as JP already said, there are no right or wrong answers to your question, Franco. But hopefully what we’ve said here will give you a better perspective and help you to make the choice that’s right for you.

Your Turn

Has this been a question that’s been rolling around in your head? Did this Q&A session help settle the issue for you? Do you now have your license? If so, how does it help in your business? Your comments help all of us, so don’t hold back. Let us hear from you.

2 Responses to ““Should I Get a Real Estate License?””

  1. Jide Osho Reply

    Thanks for your insight about the license issue. I am presently working on getting my license. I have the foundation certificate of RE-Practice and RE-Principles. I am study on the side to do the State Exam. Just as JP said, it is a very serious process, passing those exams and keeping it up by fees and re-study. My advice is, first thing first for me is to go out there making offers, doing deals, making errors and learning from it. Getting a license should be the second fiddle! That is just my opinion. MAKE MONEY FIRST, THEN GET A LICENSE TO MAKE MORE MONEY. This is a Win, Win Proposition for me.

    • Patrick Riddle Reply

      I like it Jide! I think that’s a great action plan.

      – Patrick

Leave a Reply