6 Reasons Why You Should NOT Get a Real Estate License
Getting a real estate license is a step that takes a lot of thought and consideration before you pursue it. Many real estate investors think they need to obtain a real estate license to find success investing in real estate.
Today, however, we want to highlight why you may not actually need a license and perhaps why you should NOT get your real estate license.
At the end you can also learn more about real estate investing if you’re a beginner and looking for educational content. We built a resource library worth consuming through to grow your knowledge on real estate investing.
#1: Obtaining a real estate license isn’t easy
Obtaining a real estate license isn’t just about contacting the licensing commission to add your name to a list. In fact, the process needs time and requires a great deal of hard work.
You need to put in a 100-hour coursework and study hard before taking the test. Only then you’ll be qualified for the license.
Also, to your surprise, the test isn’t as easy as you might think; many people fail from the first time.
Other steps follow this process. These steps involve an FBI check and many other steps to assess how eligible you are.
Once you pass the aforementioned, the brokerage might require you to take some courses. You’ll also need to adhere to the rules which will be imposed on you by the regulators.
Only when the firm of the brokerage and the government agree on your paperwork, you’ll obtain the license that can be utilized only under the broker’s sponsorship.
#2: You will need to face some issues with disclosure
When you obtain your license, you’ll be deemed a better being. Whereas this may sound pleasant, the position can come with many responsibilities.
First of all, you will be required to disclose to your sellers and/or buyers that you have an official license. That is, you cannot take advantage in case a situation paves the way for you to.
Many agents having a license have discovered that their growing need for disclosure can impact their business negatively.
If you don’t wish to be an investor, or if you want to be a real estate realtor with 9-5 job of home selling, then such disclosures must not have an effect on you; the better being in this case should only enhance your ego.
#3: There is a lot of paperwork
You might love it or maybe hate it. Yet, paperwork shouldn’t be ignored. Once you get your license, the paperwork will increase to a level you wouldn’t expect.
Try asking previously licensed real estate agents, they’ll tell you that it takes 48 hours a week to get the paperwork ready.
The paperwork is necessary. Yet, they can make you a bit frustrated because you’ll need to write your own offers and submit forms to solicitors, agents, and/or brokers.
If you believe that spending hours preparing paperwork isn’t your cup of tea, you can simply outsource it to other people. Bear in mind that it can be to some extent costly.
You might not be satisfied with the results since they are not under your full control.
#4: You cannot purchase a property from any brokerage
Once you’ve obtained your real estate license, you won’t be able to do your real estate deals on your own. You have to earn your license along with a broker.
That is, you’ll be required to work within a brokerage firm until you obtain your own brokerage license.
Whereas the guidelines can be different from one state to another, the majority of places have similar guidelines when it comes to purchasing a property.
In a word, if you have no license, you can easily purchase any property from any brokerage. And if you don’t have one, things won’t be as simple as you might imagine.
With a license, you cannot purchase any property without notifying your broker.
Most importantly, every brokerage has its own rules which you’ll be required to adhere to. Thus, whilst some will require certain training hours, some will require certain hours to be spent contacting people or holding open homes.
You’ll be required to work under only one person most of the time, or sometime you’ll need to send reports to the head of the organization.
Brokers may charge you with an amount of money, depending on the kind of organization they belong to and also on the nature of setup they have.
Whilst licensed real estate inventors may earn commissions, those cannot come their way straight ahead because they first go to the broker who later determines the way how to divide them and then share them with the agent.
#5: The process of obtaining a real estate license is expensive
Not only does the process involve time, but also it needs money as well since you are required to take courses in preparation for the test.
Also, as soon as you obtain the license, you will need to work with a broker. This will in fact take more of your time and money since coursework with the broker may be costly.
There are also some additional costs such as the fees you will pay in return for maintaining the license, boards memberships, IDX subscriptions, and some other fees related to local real estate boards.
Whilst many people will try to convince you that the money and time you spend is worth it, claiming that you’re forming your own agent network, this is in fact an excuse.
Such networks can be built at other events which do not necessarily require you to pay a lot of money. As soon as you’re involved in this work, you directly build such networks.
#6: The MLS access is not all it is cracked to be
Experts consider MLS access as one of the advantages of obtaining a real estate license. Yet, it is worth remembering that getting a real estate license isn’t sufficient since you need to join the local board, pay its fees, and accordingly be a member of a brokerage just to get the MLS access.
Also, although the database has a fundamental amount of data, you still can have access to it via real estate search engines.
A lot of deals found on the MLS can be very expensive; that’s in addition to a list of a number of expired listings.
Whilst MLS access is only for those who’ve obtained a license, it’s in fact sometimes misused. For instance, if your spouse has got a license, you can get MLS access, too, in spite of you personally not having a license.
Obtaining a license has its own benefits. As soon as you’ve hit the burden of money and time and begun to love the piles of paperwork you’re supposed to handle, you have access to MLS database that has beneficial listings, besides building strong relationships with new agents.
Most importantly, you at least enjoy the feeling of becoming a licensed real estate agent that many people do not have.
However, keep in mind that having a license does not necessarily qualify you to be a real estate professional for the IRS.
It’s in fact your hard work and the number of hours that will help you get that status (being a licensed real estate agent).
When you see other successful real estate investors, you will discover that most of them aren’t licensed. The main reason behind their success in that field is simply their great-minded concentration on their work.
Before deciding whether to head out for a license or not, you’re recommended to look for both the pros and cons of the process and its results.
Ask yourself whether you’re looking to have a long-term commitment on the real estate. Look for the advantages of obtaining a license and balance between them and their counterpart.
Remember that whist you’re doing all this, decide what you really want from real estate: is it a kind of financial freedom or just a sales business?
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