let’s talk : PROS & CONS to getting your real estate license
& Happy Valentines Day!
Recently, I have been working towards my New York Real Estate license, and while I will definitely complete the course, I find myself constantly going back and forth as to whether or not this is necessary. I have compiled the below pros and cons list based on what I have read. However, I want to hear your thoughts after reading them.
SO, as we do, let’s talk real estate, let’s talk GETTING YOUR REAL ESTATE LICENSE- the pros & cons…
PROS TO GETTING YOUR LICENSE
Getting your license helps you better learn the process and vocabulary
Increase Your Network
Working as an agent can help you grow your network and your business. Under a broker, you will have access to established systems, methods and contacts you can utilize to build your portfolio.
Access To The MLS (Multiple Listing Service)
Having access to the MLS can help you get a hold of the market & deals that much faster, without having to rely on an agent to find the properties for you.
Secondary Source Of Income
Acting as a licensed real estate agent can provide you a secondary source of income in a couple different ways. (1) Commission : on top of the profit earned from flipping, or rental income, you can also collect commission for facilitating the purchase or sale of your portfolio assets. (2) Kickbacks : let’s say you’ve built up a network now- woo, and you end up connecting a realtor to a buyer, it is much easier for a realtor to compensate you for helping them if you also have your license.
The more involved you can be, the more control you have over your own deals, and schedule.
CONS TO GETTING YOUR LICENSE (AS AN INVESTOR)
Not As Easy As It Sounds
Becoming an agent entails 100+ hours of course work (depending on the state) just to obtain the license. Once you obtain the license, you must apply to work for a brokerage in order to be able to use it. In order for a broker to bring you on the team, you will normally need to complete a background check, and the broker may ask you to take additional courses.
Before you get your license you must invest in course work and the exam fees. Once you pass the required exams and join a brokerage you will be faced with broker fees, MLS fees, subscription fees, ongoing training, insurance, fees for boards, etc.
Tons of paperwork shuffling around between lawyers, buyers, sellers, other agents, etc.
Brokerage Partnerships & Fees
In order to use your license, you must have your license sitting with a broker. Working for a brokerage comes with fees, and at times limitations as to who you do business with. You are not able to buy a property without informing your broker. Furthermore, working for a broker can also come along with hours of required training and marketing.
When you become a licensed real estate agent, you must disclose to every buyer and seller that you are an agent. Some investors who are also agents have stated this has caused a negative impact on their portfolio growth.
SO, now the question is, to be or not to be (an agent) – what are YOUR thoughts?
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Data Sources for today’s content:
“Real Estate Investing in your 20s: Your Rise to Real Estate Royalty” by Ross Hamilton