Real Estate Articles

Do I Need a Real Estate License | By: Kim Tucker

Do I need a Real Estate License?

Having a real estate license as a real estate investor is a matter of personal preference.

In my case I have been licensed since my first days as a real estate investor and I have found it to be very valuable.

Why do I have a license?

Because it allows me to do a lot of different things that the average real estate investor cannot do AND it gives me more credibility with motivated sellers.

When I talk to a person wanting to sell their home or their parents home I can be honest and up front with them and tell them that I am a Realtor and as a Realtor I feel that I could list and sell their home for a certain amount in a given time frame.  However if they don't want the uncertainty of waiting for a buyer to come along who may or many not want them to do repairs, who may or may not be able to get a loan and they want to know that on a specific date their house will be sold and they will have their money in hand, then I am willing to offer an amount, usually considerably less than what I could sell it for as a Realtor.

For the most part, motivated sellers are not stupid.  They know they are taking a hit on price for the certainty that their problem house will be gone and their money will be in hand.

Do I need a license?

In most cases, if you get a house under a valid purchase contract or a valid option, then you have the right to resell it after you buy it.  So no, you don't need a license in this case.

If however you want to market for motivated seller leads (or buyer leads) and pass these leads off to another investor to buy or sell to, and you want to get a fee based on the sale, then you are acting as a real estate professional and you do need a license, unless that investor pays you a fee for each and ever sale, and then you are just providing a service.

I have a couple of blog posts by experts in this field that you may want to take a look at:







However as Joe Points out in his video listed above you need to disclose that you are a licensed Realtor and that you are not taking advantage of your people.  A Recent Article in Realtor Magazine for September / October "Fiduciary Duty is Not Expendable Like a Hat", outlines a case in Tennessee where  a Broker advised a seller in a bad situation to do something with the sale of her home, where the Broker ended up buying the house(s) and making a bunch of money.  The home seller sued and the home seller won.  So if you approach a seller as a Realtor, stay a Realtor and don't switch hats to an investor and make a profit.  However, I really feel that if you approach as an investor, and find that it might be better for the seller to list the house, then you can probably move up on the chain and list.

The article points out that "A relationship of trust between broker and client, the court said in it's ruling, "once assumed, continues until discharged either by operation of law, by order of a tribunal, or pursuant to a valid agreement of the parties."  In other words, brokers cannot avoid their fiduciary duties simply by claiming to have switched from the broker hat to the purchaser hat.

So in my 15 years as an investor all of my marketing letters that go out to sellers rather than saying "and I am not a Realtor, I don't want to list your house, but rather buy it" as all the gurus teach, my letters state "I am a Realtor . . . "  or "Our company has licensed Realtors on Staff." "If you would like to find out your options on listing your property, we would be happy to refer you to a listing agent."  Or "Call our sister company about listing your property."

We have spoken with numerous sellers with a scenario of "here are the comparables for your house.  We think that if you were to clean it out and have me list it and sell it we should be able sell it for $110,0000.  How ever if you want it sold and closed next week we can offer you $80,000 cash."  We give them both options up front that listing would generate more money, they know it going in and our contract specifically states and requires the seller to initial that we are purchasing their house to rent or resell for a substantial profit.

So do you need a license . . . maybe . . . maybe not . . but please review all of the above links before making a decision.

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