Many real estate investors ask whether it’s worth the time and money to get a real estate license. There are several advantages of getting a license for real estate investment. Using your own real estate license to find good deals, networking with licensed agents, and making more money with commissions are all incentives for taking the extra time and expense to get a real estate license.
Of course, you can always find the perfect fit with a real estate agent to work with exclusively, but that means paying the agent a commission every time you sell, which costs you money. In addition, you’ll need to find a real estate agent who specializes in investment properties.
How a license could help with real estate investment
Based on feedback from investors and studies that show how real estate professionals earn more, here are five reasons it could be worthwhile to get a real estate license if you’re working in real estate investment.
1. Access to real estate investment deals
Getting ahead of your investment competitors is a big advantage of having a real estate license. As a licensed real estate agent, you can gain access to the Multiple Listing Service (MLS), providing you with two benefits.
First, you can focus on the best neighborhoods and spot new properties on the market faster than relying on a real estate agent to locate them and relay the information to you.
Second, there is valuable historical data on every property and neighborhood that you can mine. The MLS will give you information about past and present sales prices, comps with similar properties for comparisons, and other valuable information. While some of this information may be available on popular websites like Redfin, Trulia, and Zillow, the MLS will always be better. With MLS data, you can see which neighborhoods sell faster, the types of homes that are most popular with buyers, and the kind of buyers to pursue.
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2. Networking opportunities
Networking with other real estate professionals always has its advantages. Being a licensed real estate agent opens new doors by allowing you to work with experienced brokers and agents in the office you align with. They can teach you a lot and give you tips to save time. They can also introduce you to competent and reliable lenders, appraisers, surveyors, and other real estate professionals you will need for your investments.
Earning commissions will save you money when selling your real estate investment properties. Think about it. You earn a commission when you buy properties. Let’s say you buy a $200,000 house where the total commission is 6%. That means the selling agent’s office gets $6,000 and your office gets the other $6,000. If you have a 50/50 commission split with your office, you get a $3,000 commission. When you sell the house for $300,000 as the listing agent, you will end up pocketing a $4,500 commission after all the splits between offices and your broker. Better yet, you sell your house without another agent being involved, earning you a $9,000 commission.
4. Control of your deals
Taking control of your deals is another advantage. Being your own agent when you buy properties gives you more control. Selling your own homes gives you full control, as you set the bottom line sales price and payment terms, including if you want to do seller financing or a lease-purchase deal. As the seller, you will work directly with the lender, appraiser, inspectors, and closing lawyers or escrow company.
5. Educational opportunities
The educational opportunities that come with getting a real estate license will help you understand a different aspect of the business. Even if you are an experienced real estate investor, you do not have access to what really goes on in a real estate office and how agents interact with one another. The required real estate courses will enlighten you regarding writing contracts, negotiation skills, new trends for marketing and advertising properties, preparing for open houses, and more. Ultimately, understanding all aspects of being a real estate agent will help increase your chances of success in real estate investment.
About the author
Steven Rich, MBA has over three years of experience as a successful real estate agent. He was awarded the Top Condo Salesperson for two of those years by his real estate company. Steven has served as Associate Editor for a real estate magazine and is the author of a 104-page e-book on How to Buy, Develop, Lease, and Sell Real Estate.