Should You Get Your Real Estate License?
Should you get your real estate license? I give you my thoughts as a real estate expert on whether or not you should get your license.
Should you get your real estate license? This is a very common question I get in my DMs or whenever I'm speaking at an event. What's interesting is my answer has actually changed in the last year due to a few different things. There are new laws and regulations that people have to be aware of, and there are also also new brokerage models that are really interesting. So in this blog, I'm going to give you my thoughts on whether or not it makes sense to get a license.
I got licensed back in 2010 at literally the hardest time ever to be a Realtor. I see a lot of agents now complaining that the market is really tough and there's no inventory, and that much is true. But back in 2010, it was way harder for various reasons. First off, the prices of houses were so much lower than they are today. That might seem great as an investor, but when you're a realtor who gets paid based on the price of the home, it's really bad. Houses that are now selling for $400,000 today were selling for less than $100,000 in 2010. So doing the same amount of work to get that house sold made me only a quarter of what you would make today selling that same house.
To make matters even harder, getting clients was much more difficult. On the buyer side, many people could not get financing because they had just gone through a bankruptcy, they lost their business, or now they were going through a short sale. Banks were super tight on credit restrictions and it was really hard to get people approved for loans. On the other side of the coin, if you were trying to get listings from sellers, there simply was not that many of them. If you look at all the inventory, at least here in Las Vegas, the majority of it, I would guess at least 80% of the properties were owned by the banks.
These banks already had agents that represented them on all of their properties. So 80% of the market was already accounted for by the banks and the agents who had those listings. That left only ten to 20% of the market to go get actual sellers who still had equity in their home. So it's a really tough time to be a realtor for anybody. That wasn't even taking into consideration that I was a 21 year old kid who had just got licensed, who had no experience, didn't really have any mentorship, just trying to wing it and figure out how to sell houses, and I was lucky enough to sell a few houses back then But by no means was I a good agent.
Now, fast forward a bunch of years into 2017, I've started to flip houses. I was starting to buy rentals. I've represented buyers and sellers throughout those many years. Now, as we fast forward through the story in 2017, I decided to open up my brokerage called Forever Home Realty.My partner, Nick Devon, and I opened it with no other Realtors. It was just us, and we figured that people would join us as things went along. The reason being was I was starting to become pretty well known in Vegas for all of my real estate investing. I figured that there'd be a lot of Realtors who wanted to learn about investing and who would join our brokerage and it proved to be correct.
In just four years after opening the company, we had almost 180 Realtors at our brokerage. This year, in 2022, I actually made the choice to move our entire brokerage to a new company called Real. First, is that it allowed us to now go nationwide and not be limited to just Las Vegas. The second is that it allows our agents to now have a new stream of income for anyone they bring on , but the last piece that made us do it was it allowed me to open up a brand new company called Wealthy Agent.
With Wealthy Agent, we teach real estate agents completely for free how to do the things that actually make them wealthy, how to start investing in real estate, how to build their personal brand on social media, how to utilize the tax system to not pay anything with their real estate professional status. If you want to learn more about how you can get started and get all that for free, you can go to Wealthyagent.io and watch the case study.
Now that you know my journey as a real estate agent and as an owner of a brokerage to now the owner of an education company for Realtors, let me give you the pros and cons of whether or not it actually makes sense to become a realtor.
The first and most obvious pro of being a realtor is that you can now go legally, represent buyers and sellers on real estate transactions and go make a Commission doing it. I can't stress this enough. This should be your number one goal of having your real estate license.
There are other perks that come with the license that I'm going to talk about here, But if you don't plan to actually use your license to make commissions, I'll give away the rest of the blog right now. You should not get a license if you do not plan to make commissions with it. So that's the first thing you need to realize, whether you're thinking about getting a license or you're thinking about keeping it.
Now, the second biggest feature of getting a license is access to the MLS. If you don't know what the MLS is, it stands for Multiple Listing Service and essentially it's just all of the properties listed right now on the market. Now, back in the day, the MLS used to be a far more valuable tool because it was kind of like the Realtors were the gatekeepers. They were the only ones who knew who had the listings and who didn't. There wasn't Zillow, there wasn't Redfin. There wasn't all these other websites that automatically just took all that MLS data and made it public. So the MLS isn't as valuable today. You could probably get 80% of the data you need from Zillow, Redfin, or your county assessor website. But even with that being said, the MLS is better than those things. They have a ton of different features that can help you out, whether you're a Realtor or whether you want to just use it for investing. Whenever I'm coping out a property or looking for new deals, I always use the MLS.I do not use those other websites, so there's a lot of value in getting your license and having that MLS access.
Another big thing is if you're an investor, you can save on commissions by having your license. If you're going to go and represent yourself on the purchase of any property on the market, instead of having someone else make that 2% on the Commission, you can now use it for yourself and apply it to the deal. I've had numerous deals that I've bought off the MLS that would not have canceled out unless we had the Commission to add onto it. So utilizing your Commission on the buy side is really important and if you plan to go list your properties, then you can save a Commission there as well. If you were going to go pay a listing agent 2% and you decided to list it yourself, then it can save you a lot of money. But I will say as you start to do volume, this becomes less and less important. Eventually you'll be able to find a Realtor who's willing to do all of your listings for a flat fee. And if you're doing a lot of deals, it's way better to pay a flat fee and get your time back so you can go find more deals. So saving on commissions is definitely a pro.
Another big pro is what is now happening in certain States with wholesaling. If you're unfamiliar with wholesaling, essentially it works like this. Let's say you meet with the seller and you put their house under contract for $200,000. Now instead of you going and buying that house yourself, you realize that this other investor is willing to give you $220,000 for the property. Well, instead of having to actually go buy the property with your own money, close on it, pay all those fees, and then resell it to this investor. You can actually do what's called wholesaling. You would assign them the contract for the difference between the price you are getting it for and the price they are willing to pay. In this case, that would be $20,000. This new buyer would then fund the entire deal. You would get paid your fee, the seller would get paid their $200,000, and the new investor would get this property. It's a total win win for everybody. Personally, I've paid wholesalers millions of dollars. We've made millions of dollars wholesaling. It's a really great tool as a real estate investor, but certain States are now cracking down and saying that you cannot wholesale unless you are a licensed real estate agent.
So if you're in one of those States and you plan to wholesale, well, you pretty much have to get licensed, or at least someone on your team has to be licensed and I anticipate that these regulations are going to continue to get bigger and bigger. I remember years ago people were talking about it and only one state had actually did it. Now there are multiple States doing it, and once multiple States are doing it, it's only a matter of time before others start following suit. So I think having a license is great in the event that you want to wholesale.
The last problem is that prices right now are at all time highs. That means that commissions are at all time highs. There has never been a better time to be a real estate agent when it comes to making commissions on a per day basis. The story I talked about in 2010 where the same house was worth a quarter of the price, I would have had to sell it four different times to make the same as you would now if you just sold it once. So it's definitely a great time to be an agent when it comes to commissions.
Let's talk about the cons of getting your real estate license. First and foremost, one of the cons are the fees. In order to have your license, you got to pay fees every single year, not only to the division, but also to the Realtor Association. You've got to go pay the school to go get the license and speaking of school, you're going to continue to go to school even after being licensed.
They have continuing education that you need to take every couple of years. Just overall, having a license is going to cost you these fees and time going to school. Another big Con is that you're going to be held to higher standards than just the normal person, meaning that it opens you up for a lot more litigation and lawsuits. So if you're doing a lot of flipping or rentals or even wholesaling, just know that you still have to answer to the state and to the realtor association for those activities. Even when you're not representing somebody, that's just part of the deal that happens when you become a real estate agent.
If you're an investor and you're not a licensed agent, you don't have to answer to the state real estate board. So those are the main cons that come with getting licensed. So the big question is knowing all that, should you get it? Well, if you want a wholesale and you're in a state that requires it, I think it's a pretty easy choice. I also think that if you want to represent other people and make income that way, then it makes a lot of sense.
As I mentioned previously, if you join a brokerage like Real where you can get revenue share, it allows you to have another stream of income that you wouldn't have had access to before and if you decide to join our team at Real, you're going to get wealthy agent completely free where you can learn about how to invest in real estate, learn the tax game and learn the social media game. So if you're interested in that, you can definitely go to wealthyagent.io and get signed up today. The last thing I'll leave you with is do not let waiting for your license stop you from taking action.
I see so many people that say, yeah, I'll go and try and get deals once I'm licensed. No, you can get deals today real estate investing without your license. So make sure you go and take action. Peace.