Why is it so important for home owners in expensive areas and real estate investors to get a real estate license? It starts where most everything else starts – cost. Realtors are extremely expensive. Now on occasion the high cost of doing business with a realtor is worth it, but most of the realtors out there probably only know slightly more than a typical homeowner, and that is primarily due to the fact that there are state and local mandates for real estate education among realtors. The issue of having a sea of sub par realtors out there has always been a pet-peeve of mine. It seems wrong to me that a homeowner cannot gain access to their local MLS without consulting with a realtor. But on the other hand, business is business and we live in a ‘free’ market, not an ‘open’ market. So let me give you a few things here about the importance I place on getting a real estate license:
Cost of Doing Business Without a License
This is especially true for investors and homeowners that live in expensive areas. They typical realtor fee for selling a home is around 6%. Many realtors will not back off from getting their 6%, so a million dollar home will cost you $60,000 to sell. That is quite a bit of change that you could be putting back into your own pocket.
On the flip side, you stand to be able to put much better deals together if you can do it yourself. So instead of paying a realtor the commission, you can keep it yourself, or put it back into the deal to sweeten it just a bit.
Extremely Low Cost-Value Provided
You may not agree, but the fact is many, many realtors are just one step away from worthless. As far as really getting out there and pounding the pavement to sell your house, most of them will just put a sign in the yard, dump the property on the MLS, and sit back in the office sipping coffee until someone “decides to show up”. Granted, there are others out there that do more, but this seems to be the typical trend. If you can find someone who does more, you better thank your lucky stars.
As far as providing you with contracts and forms, these things just seem scary. But the fact is, the realtor may not even know what most of the stuff is in the contract. These contract forms are promulgated from their local or state realtor association, therefore the contracts you see in your community will not vary much between realtors.
There is one positive that I have to add here just to avoid being totally biased, and that is that realtors will take calls and show the house for you – which can be a very time consuming process. There are a tremendous number of people that will call in just to get a few details about your property, that will never take any action on the property. That is why smart realtors have started using automated phone tools and the internet to provide property details to potential buyers. It’s a huge time saver.
Ability to Act
In many states, you cannot manage property or perform other agent type transactions without a real estate license. This one fact could prohibit the growth of your business, and hold you back.
Speed and Fluidity of Action
This one is near and dear to me. Since I have a license, I have the right to take action on any deal, anytime, anywhere I wish in the state of Texas. I can manage property for others, I can search the MLS directly, I have all the rights to access the promulgated forms to do any type of real estate transaction, and I can call other realtors and get the straight story – instead of a script that they would read to a potential buyer.
Trust me, my life as an investor has been much, much easier since I became a real estate agent. Business is faster, easier, and more reliable than having to chase down a realtor to get an answer. I can call potential buyers directly, and get the answers I want.
So the jist of this post is – go get a real estate license. It can only help you in your business (and/or save you money if you are a homeowner only), while the cost of acquisition is extremely low, compared to other types of education.