To be a licensed agent or not be a licensed agent? That is the question. Well, all joking aside, it really is the question for many investors.
Hi Moguls, Jason Lucchesi here to help answer that much-asked question.
First I’ll start out by saying that I am not a licensed agent. I actually studied the courses and passed the test, but never took the next step to have my license listed with a broker. No real specific reason why—I just didn’t do it.
But, in this lesson, I want to go over some of the benefits and potential drawbacks of being a licensed Realtor. I want to give you all the information you need to make an informed, quality decision that’s what’s right for you and your business.
Not Licensed
No Disclosures
If you’re not licensed, that means you don’t have to make any disclosures in any of your paperwork.
Become an Assistant
Even when you are not licensed, you could still have access to the MLS. You do that by becoming a non-licensed salesperson (sometimes known as an “assistant” to a Realtor).
This way, you could still have access to the MLS but with a few restrictions…
For instance, you can’t make offers on HUD listings. You can’t go look at properties unless the agent is with you. You cannot sell and make commissions.
List with Small Local Brokerage
If you like the idea of becoming a non-licensed salesperson—an assistant—my suggestion is that you hook up with a small mom-and-pop type of brokerage.
This would be instead of a large company such as Century 21, Keller Williams or ReMax. More than likely, they would not be okay with this.
Even though it’s up to the agent, it’s also up to the broker, because lots of agencies have more than one broker. Obviously, there would be a managing broker of the office. There are different brokers who do different things in their office...
The smaller broker could be more friendly and accommodating to investors. They understand what we are doing in our investing business. You can find such a brokerage by asking your local investor-friendly title company. They should be able to hook you up.
Don’t have an investor-friendly title company?
I suggest you network with other wholesaling investors. Or you can call the “We Buy Houses” bandit signs in your area. Contact them via Craigslist, or network in your own local REI meetings. Here you’ll be able to connect with agents and title companies.
Be Licensed
Submit HUD Offers
Once you are a licensed agent, you can begin submitting your own HUD offers within the state where you have your license. You can get your license in several different states if you want to expand your business.
You have to make sure the brokerage you’re with has an NAID (Name Address Identification number). You will need this number in order to submit a bid on a HUD property.
No longer will you have to worry about an agent submitting those bids on your behalf. There’s nothing wrong with agents submitting on your behalf, however, agents get very busy and may not have time to monitor all the HUD offers that are submitted.
In my business, I submit quite a few, and they can’t monitor all those deals. Plus, it doesn’t really pay off for them to monitor your 40 offers when possibly you’ll only close on 4 or 5 of them. It may not make sense for them to pay attention to that.
Earn Commissions on HUD Deals
I’ve found there are agents who are fine with the number of offers you want made and will do it for you, but if you’re having problems in this area, the solution might be to get your license.
The other benefit is that you can make commissions on your HUD offers. When you make a HUD offer, HUD is going to pay you 5%-6% commission. You take your half, and the listing agent takes his half. You get paid right at closing.
You can apply commission against your net profit. You can either collect the commission or you can zero it out. Either way is fine.
Dislosures
When you’re licensed, you have to disclose that on all your paperwork. Since I am not an attorney, you should verify with your attorney the details needed about disclosing that you’re a licensed sales professional.
If you’re a professional, and you don’t disclose, and someone feels they have been taken advantage of, and they find out you are licensed, it could come back and haunt you.
My thought on the matter is: The more disclosure the better.
Access to Vacated Houses
In my business, I hardly ever go look at properties. I have one of my team members do that or an agent that I work with. However, looking at properties may be something you want to do in order to ramp up your business.
As a licensed Realtor, you’ll have a card with a chip that you can insert into the lockbox and gain entrance. (Only with vacated properties, obviously.) No more calling and scheduling appointments with your agent.
If you find a deal and there’s not enough profit in the deal for you to make money, you could still be that agent who sells the deal to a buyer and you could earn a commission. There really shouldn’t be any deals that you can’t make money on – just choose the strategy for each deal.
If you’re having a difficultly getting deals and connecting with agents to become their non-licensed sales person (assistant), then I highly recommend that you become an agent and start doing the things that you want to do in your own business.
Not Locked into Retail Business
Just because you get a license doesn’t mean you have to do retail transactions. You can still focus on your own investing business.
Get your license held with a small, local brokerage, tell them exactly what you want to do so they don’t have huge expectations from you—like asking you to take on many listings in a certain month.
Just let them know you’re trying to scale up your business. This is why you got your license and want to hold it with them.
Most of the time, any mom-and-pop, investor-friendly brokerage will be fine with this setup.
Summing Up
This lesson should give plenty of information for you to decide if you’re ready to make the time, effort and financial investment required to get your license.
In the end, you must do what’s best for you and your own business.
Your Thoughts
What are your thoughts about getting or not getting your Realtor’s license? Leave your comments below.
Avoid getting your Realtors license just for the sake of being licensed.
Weigh the advantages against the disadvantages.
Always do what’s best for your own business model.
Search for and use a small, local brokerage.
Ensure you always disclose in your paperwork if you’re licensed.
Verify your paperwork is legally accurate with an experienced attorney.
Jason Lucchesi
Jason Lucchesi is the co-founder of real estate and marketing company Global Fortune Solutions, LLC. Jason has been in the real estate industry since 2002, where he began his career as a Loan Officer. His career flourished in the mortgage business when he accepted an Account Executive position with Countrywide in 2004. Within his first six months, he had achieved the #1 Account Executive in the Midwest territory. In January of 2006. During this time, Jason began investing part-time in multi-family rental properties while also becoming involved in wholesaling. By 2006, Jason was transferred to the Indianapolis area to save a struggling branch. He quickly took the branch out of the red into the green while also beginning to purchase distressed residential properties part-time. In 2007, Jason began pursuing his ultimate dream of becoming a full-time real estate investor and began investing in REOs in 2008. Since then, Jason has been involved with many aspects of real estate including short sales, tax sales/deeds purchasing, purchasing homes in distress, wholesaling, and many other avenues. Jason has been married to his wonderful wife Jamie since 2007, and they are proud parents to their sons Brady and Gavin.