Should I have a realtor license? Is it expensive? In this edition, I would like to answer these questions, and further illustrate why I have and maintain a realtor license. I remember reading an article stating that 1 in 52 people in the state of California have a realtor’s license. That’s about 2% of the population. Rather unbelievable to some, but to me, seems quite appropriate. Especially in very high housing costs areas, such as California, New York, Florida, Chicago and other areas, the expense of paying a realtor to sell your house is insanely high. A quick bit of math, if you owned a $500,000 house, and hired a realtor for the typical 6% fee, that would be $30,000!
Now let’s take that figure home (bear with me, I live in Texas), where I obtained a realtor license for less than $800. But Jeffry, realtors are professionals, and I don’t know anything about selling a house! Who said the typical realtor knows anything about selling a house?! Many don’t, and furthermore, the ones that do know how to sell a house are the realtors that know the most people.
The realtor game is simple, put a sign in the yard, add the house to the local MLS (multiple listing service), maybe run an ad in the local paper, and wait for a buyer. The good realtors will fax an information sheet to all the other local realtor shops, to fish for another realtor that is under contract to work with a potential buyer. Another thing a good realtor will do, is advertise and run an open house, to get some activity going with the other realtors in the area. Sounds difficult doesn’t it? Not to me.
Further, You may have a reservation based on not knowing how to do the paperwork that is involved in the transaction of selling a house. Let me assure you, it isn’t difficult either. In fact, in Texas, a licensed realtor isn’t even allowed to write real, legal contracts! Realtors (typically) are only allowed to fill in the blanks on a pre-written, canned contract form promulgated from their state’s commission, or association of realtors.
Last, I promised to share some personal reasons as to why I became a realtor. The items listed above have some merit on why I became a realtor, but I really never was afraid of doing the necessary paperwork, and knew the system realtors use to push houses. My main reason for getting a realtor license was the money. In the example above, if you compare the $30,000 spent to sell your house against the $800 it took me to get the license, you see why. Now the $800 was not the only cost associated with maintaining a realtor license, you will likely have to be a part of a local board in order to be active under a broker, but those fees aren’t much either (maybe several hundred dollars a year). But again, weighed against the insane 6% to sell your house, this is pocket change.
So to sum up, I encourage you to get past your fear of the “”professional realtor””, get your license, and at least sell your own house. You may have to pay a buyer’s broker 3% for bringing you a buyer, but hey, it’s still worth it, trust me. You might find that when you get your realtor’s license and sell your own house, that you may decide to use your license to generate some supplemental income, if not go full time into real estate. Whatever you decide, having a realtor license is very handy. Stay tuned for more great articles from Personal Finance Resources, or sign up for my RSS feed for real time updates.