LOS ANGELES – Is early summer or late winter the best time to get your new real estate license for the first time? A common question we get is if a new or experienced investor should take the time to get their real estate license. I think this is a very valid concern and must be considered carefully. There are big advantages and disadvantages on both sides of the argument. It is really going to come down to your specific situation and your specific goals. This article by the pros at Local Records Office should help you weigh the advantages of both to help you in the decision making process. This is the process of getting your real estate license in 2016.
The Commission That is Earned
Good commission will bring in a lot of money. This is obviously the biggest reason you will want to consider getting your license. You should expect to make more money on every deal you do because you can collect a commission when you sell, and many times you can also collect one when you buy. I personally think if you are just getting started and need some additional cash flow, this is something you should consider. It is also a huge benefit if you want to buy someone’s house but there is not enough equity for you. At that point, you can offer to sell it for them and pick up listings. Business is all about cash flow. Transactions for a real estate professional create cash flow, which will help supplement, other real estate activities you participate in. You never know, you might really enjoy helping clients buy and sell houses.
Entry to MLS Files and Much More
Access to MLS is a big deal to many new comers. The next biggest reason I see investors get their license is to gain access to the MLS. I want to point out that this is really a poor reason to get your license, but it is a fantastic benefit to having one. You can typically get access to the MLS without a license. For example, you can have your agent pull your comps for you or send you a list each morning of new listings. That is common, but it means you are relying on someone else. It is always nice when you have all the tools that you need to be achieved.
A Good Reputation in the Real Estate Market Will Go Along Way
Reputation is everything to many real estate agents without a good reputation they wouldn’t be able to sell the homes they sell. If you don’t deal directly with sellers, this is not a benefit; but if you are marketing and working directly with homeowners, this could be a tremendous benefit. Let me give you an example. Let’s say you got a call from someone going into foreclosure. They want you to buy their house but they are also talking to another investor.
If both offers are the same and they know that you are a licensed real estate professional, do you think it is possible they would rather work with you? What if you negotiate some kind of owner carry or lease option deal? Do you think they would trust you more if they knew you were regulated by the state? Is it possible you can convince them to only meet with licensed buyers and potentially prevent your competitor from ever having a meeting with them? I would think all of these are possible.
What Happens When You Don’t Get a License?
I chose not to get my real estate license for several reasons, but this was one of the biggest for me. I never wanted to spend the time listing my houses. I would rather pay someone that was good at that to get my properties sold for me. I know many great real estate investors that had a license and have decided to let it go.
Their time is much better spent letting other agents write their offers and sell their houses. They make money looking for deals and managing projects. What I have learned, is the more focused you are the more successful you will be. Although they can tie together nicely and it does work for a lot of people, I think being an agent and an investor are two different activities. Not to mention the time you need to put in to get the license and the time you need to put in to keep it.
Helps With Some Negotiations
Some would argue that having the license adds credibility to a negotiation, which could be true, but I would rather go into a negotiation without a license. I can really see both sides to this and it will all depend on the investor’s personal experience and confidence. For me, not having a license is better because I like to appear less sophisticated or at least at the same level with the motivated seller.
If the seller thinks they are smarter than you, they are more willing to work with you and feel better about the transaction. If they know you are smarter and more sophisticated, unless they are highly confident, they will be resistant and hard to negotiate with. They will constantly be thinking you are taking advantage of them and wondering if it is a good deal. If you are licensed, you are a trained real estate professional, which could be intimidating. Of course this is all based on my experience, and someone else’s experience could be different.
When I was buying and selling full time, before I started Pine Financial, I would meet with five or more sellers a week. I would sit down with them at their dining room table and talk really slow. I would even sometimes catch myself stuttering. I really focused on keeping their confidence level high and their guard down the entire time I was in their home.
Working with Family Members and Friends
When you have a license your friends and family will expect you to help them with their real estate needs. Did I mention they will also expect a discount? It is always nice to help someone when you can, but it could be nice to not be in a position to choose who you are able and not able to help.
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