When getting involved in the real estate industry, many new investors are left wondering about licensing requirements. It’s not uncommon to encounter questions such as, “Do I need a license to work in real estate?” and “Do I need a license to sell real estate?” And the answer to that question varies depending upon your unique goals and objectives. That’s precisely what we’ll explore in today’s article from The Short Sale Gal Kristine Zelazo, long time real estate investor and founder of The Bird Dog Program.
Do I Need a License to Work in Real Estate? What About Selling?
Real estate investors often wonder about their opportunities to sell a property will be impacted by a lack of licensing. And really, it depends upon your unique circumstances.
Only licensed Realtors can list a property on the MLS, which is one of the primary tools for getting exposure for a property that you’re seeking to sell. But many investors will work with a single Realtor who handles all of the investor’s listings for a rate that’s slightly lower than what they would charge a typical client.
You generally do not need a real estate license to sell a property. In fact, that’s what FSBOs—for sale by owner properties—are all about. That said, getting the right exposure for a property can be challenging without the MLS. But more and more outlets are arising on social media and the web where investors can publicize a property that’s for sale.
FSBOs can be associated with some challenges, such as a longer holding time (and therefore, increased holding costs) and there are lots of issues that could potentially arise at some point in the transaction if you lack the right experience and knowledge. For this reason, it’s generally advisable to involve a licensed real estate professional, at least until you have several years of experience as an investor.
The Benefits of Getting a Real Estate License
There are many advantages associated with getting a real estate license. One of the major advantages surrounds the education and knowledge base that’s required in order to secure a license. This can place you in an ideal position to ensure that each deal you’re involved in is fruitful and profitable.
Additionally, you may save money since you won’t need to pay out a commission to a third party. Plus, you’ll be able to list properties on the MLS, which translates into lower holding costs and a quicker sale in many cases.
Of course, there are also some downsides of seeking a real estate license. Getting licensed can be expensive and it typically entails a fair amount of time. What’s more, your license is only good in one state, so if you’re working in multiple states, you’ll need to get licensed in each region. This can be costly and time-consuming (although an increasing number of states are offering online classes and web-based testing.)
Licensed real estate agents are also limited in their ability to be involved with certain arrangements due to the strong code of ethics associated with licensure. For example, Realtors are typically prohibited from paying a finder’s fee to an unlicensed party, so if this is part of your real estate investing model, then you could run into problems.
Ultimately, the decision of whether to get a real estate license depends upon actors such as your unique goals and the volume of real estate associated with your investing business. Wholesalers may find that there’s really no need to hold a real estate license, whereas a fix-and-flip investor who moves 6 to 10 properties per year may find that getting licensed offers a major advantage both financially and strategically.
Need Help Getting Started as a Real Estate Investor or Rehabber?
The decision of whether to get licensed as a real estate agent is just one of the many questions that may arise as you get started in the real estate field. This is where you can benefit from working with an experienced industry professional like The Short Sale Gal Kristine Zelazo, an experienced investor, negotiator and founder of The Bird Dog Program.
Through The Bird Dog Program, Kristine offers mentoring and guidance to new and even experienced investors who are seeking to make money (or make more money) investing in real estate deals, including foreclosures and short sales. In addition to working with her program participants on joint ventures, Kristine also serves as a consultant to real estate investors and other real estate professionals who are in need advice and guidance. She is also a licensed Realtor and as such, she is available to guide and advise investors who are in need of help.
Kristine Zelazo also works directly with property owners who are seeking to sell their home. To get started with selling your home, simply complete the home pre-sale form to provide Kristine with additional information on the property in question. Questions? Call 800.664.0616, x802.