Is it easier for real estate investors wholesaling houses if they obtain a real estate license?
Many people turn to wholesaling houses each year specifically for the ease, speed and affordability of getting started. Once in, many begin to question whether getting licensed as a real estate agent and becoming a Realtor is a savvy move that will help them propel business volume and increase earnings. So what are the pros and cons of this move, and what alternative options may be available?
The main reason that investors are drawn to getting licensed is normally due to wanting to avoid paying commissions and to put more spread in the deal. Others just want to get inside access to the MLS themselves, and a few may see having a license as offering a way to generate some extra side income.
The first observation of most savvy real estate pros that have a few deals under their belts is that this can be a major distraction and add a lot to the work load. In the grand scheme of things this may provide little savings, or even limit wholesaling volume. So do the math carefully before leaping on this path.
Secondly, few have really done their homework and fail to realize just how much work, time and expense it takes to become a licensed agent, maintain that status and become an actual Realtor to gain access to the local Multiple Listing Service (MLS). For those that want to actively market themselves in this position and conduct business as an agent the costs and time demands are far greater, and commissions normally a fraction of that earned from actually wholesaling houses.
As an official Realtor the state normally has specific disclosure requirements at every stage of contact with the public. Some investors find this limiting and a big turn off to prospects, while others have reported it can give them some added credibility. Consider the impact on your wholesaling marketing and how your prospects perceive doing business with local brokers and salespeople versus dealing direct with a buyer or seller.
However, without a doubt the main reason few wholesaling CEOs want to go down this path is due to the dramatically enhanced liability. This can seriously limit what can be done compared to other unlicensed investors. This is especially true when dealing with distressed properties, foreclosures, short sales and REOs.
Fortunately there are other options for accessing the MLS and reducing commissions. This can include partnering with local professionals and negotiating reduced fees for a higher volume of work. Check your options before making a final decision.