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Business Development

Investors: To Be or Not To Be - A Licensed Realtor

levelHey Moguls, JD Esajian here…

Today’s lesson is about a common question I get asked all the time: “Should investors be licensed Realtors?”

Let me start by saying there are definitely benefits to being licensed, but some people might also argue that there are some disadvantages. So, I’ll present you with some helpful info so you can make an informed decision for what’s best for you.

Firstly, you should know that you certainly don’t need to be a licensed Realtor to do REI. But, there’s nothing wrong with having your license as an investor - it’s important to note that it’s not illegal if you do choose to be an investor who also happens to be licensed. Licensed Realtors are actually held to a higher standard, which I think is a good thing.

As far as I’m concerned, I think being an investor who’s licensed is great. I’m all for it, actually. I say that with a slight word of caution because if you’re a licensed investor, you do have to do a few things differently, which we’ll get to in a minute.

I believe that there are more things you can do as a licensed investor to not only benefit your client, but also yourself and other agents. I, personally, have been licensed since I started investing. And let me just say – I have never had a situation in which being licensed prevented me from doing a deal. Actually, there are plenty of times when having my license allowed me to monetize a deal that I probably wouldn’t have been able to do had I not had my license.

Disclosure Is the Name of the Game

So, remember how I said if you’re a licensed investor, there are a few things you have to do differently? Here’s the biggest one:

If you are licensed and you’re going to be buying a property as the principle – you must disclose that you are a licensed agent. It doesn’t matter if you’re buying off of the MLS or you’re buying directly from the seller - always disclose.

Let’s say you write an offer on a bank-owned property – I recommend having a conversation with the listing agent and letting them know 1. Who you are, 2. What you do, and 3. That you’re a licensed agent in your state. You’d then say something like, “I’m not calling on behalf of my license, I’m calling as the principal in my investing company, and I’d like you to write the offer for me.”

sellNow, you’re licensed, so you could write the offer… but by letting the listing agent write the offer for you, you’re giving them the ability to potentially make more money. And they’ll realize that and appreciate you more.

See, as investors, we don’t care about the commission on the deal, we care about the profitability. So by asking the agent who’s listing the property to write the offer is one way you can incentivize them. In my company, we call that the ‘Server Approach,’ because you’re helping that other agent potentially make more money.

Let’s look at the scenario in which you’re dealing directly with the homeowner – the conversation would be similar. When the seller lead calls in, you’d simply disclose that you’re a licensed agent, but you’re not ‘using’ your license for this deal – you’re not representing anyone as an agent for this deal. You’re having the conversation as a principal in your investing company.

In this case, unlike when you’re dealing with another agent, you should also go a step further here and have the seller actually sign a discloser notice, which states that they understand you are licensed and you’re not representing them or anyone in this deal as a licensed agent.

Even More Advantages

Being licensed not only affords you more ways to help people, but it also gives you even more big advantages:

  • You have access to the MLS.
    • The MLS is a great resource to finding good deals - quickly. Short sales, bank-owned, distressed sales, fire-damaged, properties that need to be purchased with cash... all available to you with MLS access
    • You have the ability to pull comps via the MLS.
  • You can capitalize on your marketing.
    • When leads come in, you’ll come to realize that as an investor, not every lead makes financial sense for you to do a deal on. But, perhaps it does makes sense for you to list it as an agent – or for you to pass on to another agent you know. So, you’ve turned a ‘dead lead’ into potentially something profitable for you or another agent and you’ve helped the seller get out of their situation.
    • The bonus is that because you’re licensed, if you refer that lead to another licensed agent – you get a referral fee. A typical referral fee is 25% of the listing commission. In my company, in just one year of referring leads like those – we made a 6-figure supplemental income just from referral commissions alone. Bam!
  • fsboYou can save money when you go to sell a property.
    • If you’ve rehabbed a property – you can personally list it as the listing agent. And you can save the commission to put back into the profitability of the deal. Of course, you do need to disclose you are an investor agent. (Remember, I have never lost a sale on the MLS being the listing agent on our own deals.)
  • You’ll have opportunities for more education.
    • Being an agent requires continuing education classes to retain your license. You’ll learn new information about real estate law – both locally and nationally – as part of this education requirement. Knowledge is power, right?!
  • You’re one of them.
    • Typically speaking, Realtors like talking with and doing business with other Realtors. If you’re licensed, you’ll likely be able to build rapport quicker in that initial conversation with agents.
  • You’ll meet new people.
    • You’ll be invited to attend events, which are only for licensed agents only – a terrific opportunity for you to network.

{Mogul Elite members: Download JD's PDF ‘Advantages for Investors Being Licensed’ in the Power Pack Tool section of this lesson.}

See Why Being Licensed Is Awesome?!

So there you have it. By being an investor who’s also licensed, you can help more people, save money, get more education and get moving on deals quicker with other agents. We actually encourage our investor students to be licensed for all those great reasons I’ve laid out. I think it’s a huge benefit to having your license as an investor.

Just remember – always disclose you’re a licensed Realtor and you shouldn’t have any problems.

What Say You

What do you think about whether investors should be licensed or not? Share below.


Do It To It! Immediate Action Steps

Get your real estate license.

Pass off ‘dead leads’ to other agents and profit from the referral fee.

Attend agent-only events and network.

Continue to educate yourself through the required course for retaining your license.

Always, always, ALWAYS disclose you’re a licensed agent.

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