Real Estate License For Investors

Feb 06, 2013 Comments Off by

Getting a real estate license in order to sell houses as a career is one option. What do you do when you are a real estate investor and you are buying/selling a lot of properties? Giving away a 2.5% commission is a lot of money once you start buying more than 6 figures of real estate.

Looking back, I could have collected over $24 000 in commissions had I been my own agent. In the next 5 years, I have the potential to make $22 000 of my own commissions for all of my projected buying and selling of future properties. I’m considering getting my real estate license so that I can represent myself and rake in the healthy commission.

Past real estate agents didn’t meet expectations
In my experience, my real estate agent has not had my best interest in mind when I have bought houses through him in the past. Other real estate agents that I have talked to or heard about through friends haven’t been any better to consider switching. I’m actually quite disappointed with the service I have received and there are very few agents that can provide me the expertise that I need (I haven’t found a good agent yet).

Client’s best interest not aligned with agent’s best interest
There are few agents that have their client’s best interest in mind but most want to close a deal quickly regardless of how the sale price affects the owners. Buyers and sellers might prioritize the sale price, time to sell or other factors. Agents always care about the time to sell as it is their best interest to turn over a property quickly in order to get their commission. A buying agent does not want to have a client who takes 6 months to a year in order to buy a house as this takes intensive time to find and show multiple houses each month. It is therefore in the agent’s best interest to curb the expectations of their client in order to buy at a higher price or settle for less just to minimize their time. Whether the house is bought for plus or minus 10% of its listing price makes little difference to the buying agent’s commission but makes a huge difference to the buyer’s pocket.

Emotional transaction
One advantage of going with an agent is that it creates a filter between the buyer and seller who are humans after all and care deeply about the most expensive piece of property they are likely to own in their lives. The owner has a lot invested in their property and it is very hard for an owner to remove their feelings and think purely logical in order to close a deal. I’ve bought privately from a private seller who was acute in business. Yet he was adamant about holding onto his empty property and not selling below what he had bought at even though the property was bleeding him dry every month. I can control my emotions when it comes to buying or selling in order to get the results I want therefore I don’t need an agent’s filter.

Spare me the sales pitch
Good agents are salespeople who will decide and apply the best negotiation strategies with the other agent. The problem is that I don’t need to have my own agent trying to sell me the house I want. I know exactly what I want and can determine the price of the house myself based on recently sold comparable prices. I’ve had lousy excuses of why I should accept the listed prices from my agent such as “selling agents know how to list prices in this area” which is bull shit since it is homeowners that have the final say on the listing price. When I represent myself, I can play the role of the sales person when negotiating with the other agent without having to fight my own agent.

Expertise in rental market
I want an agent who can give me expertise in the rental market that I deal with, not someone who I need to educate on what my market limitations are. With my 5 years of rental experience and running my own property management company, I have not found someone better than myself who can give this advice.

Know the property value

When there is a significant list of houses sold in the area, it makes it easy to calculate the value of the house based on the location, square footage, renos, garage and other additions. When my previous agent told me that the house I wanted was priced right, I asked him to justify his reasoning. I don’t accept gut feeling as an answer when my money is on the line. He couldn’t justify his answer so I pulled out my spreadsheet based on comps showing exactly how I got to the price point which he could no longer dispute.

Pros of getting real estate license
- access to MLS information
- represent myself directly to the other agent
- 2.5% commission, standard rate in my city

Cons of getting real estate license
- cost to get licensed, expecting about $5000 for 1st year
- time to get license
- annual fees to stay registered, around $1000/yr
- emotional barrier removed

Are you a RE investor who is also an agent? What are some additional pros and cons that you have encountered?

Real Estate, Strategy

About the author

Clara Cannes, the chief author from Goldeneer is a Canadian that works as a full time employee in the engineering field. Her passion is real estate, entrepreneurship and sustainability. Clara has finally reached financial independence in her late 20's and is on the path to a comfortable retirement by 35.
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