If you’re planning on selling real estate, you may want to get your real estate license. Depending on your state’s requirements, you will likely have to take classes and pass an exam before becoming licensed. Some states have different licenses for different types of transactions, such as brokerages and property management.
In most cases, you’ll need a real estate license to list homes for sale, represent buyers in a purchase, or work as a property manager. As such, you don’t necessarily need to become a real estate agent to buy and sell real estate. As an investor, you can work with an agent who will do these things on your behalf.
However, even as a fix-and-flip investor, you may still want to consider getting your real estate license.
Do I Need A Real Estate License To Flip Houses?
There are several ways that you can flip houses as an investor. Whether or not you need to get your real estate license depends on how you plan to flip houses.
- Retail Flipper: If you’re going to be a retail flipper, then you will need a real estate license because you will be representing the buyer in the sale and purchase of the property.
- Wholesale Flipper: A wholesale flipper does not need a real estate license because they are not representing the buyer, but instead, finding a property under market value and then selling it to another party (usually an investor or another flipper).In this case, you would not need a real estate license although it certainly helps. If you don’t have a license, then working with an experienced real estate agent is recommended.
- Individual Flipper: If you’re buying distressed properties, fixing them, and selling them yourself, you don’t need a real estate license. If you’re doing this part-time, then a license isn’t necessary.However, if fixing and flipping properties is going to be your full-time job, then it can be beneficial to get your real estate license even if it’s not legally required.
What You Can Do With A Real Estate License
Although you don’t necessarily need a real estate license to invest in fix-and-flip properties, getting one can present you with additional opportunities. With a license, you can not only act on your own behalf (as an investor), you can also work as the following for additional income:
- Sales Agent: You can list properties for sale and work with buyers to help them find the right home.
- Broker: You can open your own real estate brokerage and work with agents who list properties and work with buyers.
- Leasing Agent: You can find tenants for landlords and help them with the leasing process.
- Realtor: You can work with buyers and sellers in all aspects of the transaction, from finding the right property to negotiating the sale (it’s worth noting that to become a realtor, you’ll need to pass an extra credentialing exam and meet certain standards).
The Benefits Of Having A Real Estate License As A Flipper
Even if you don’t legally need to get your real estate license, it’s advantageous to have one. This is especially true if you plan on flipping houses full-time. The following are a few examples of the benefits of having a real estate license when investing in fix-and-flip properties:
1. Save On Agent Commissions
If you’re going to be buying properties and selling them yourself, then you don’t have to pay a buyer’s agent commission. However, it’s important to know that representing yourself in the purchase of a property and its eventual sale is a lot of work and requires a lot of know-how.
If you decide not to get your license, you’ll probably end up working with an agent to help guide you through the process. In most cases, the commission for an agent is 3% of the sale price. If you do have a license, it means you’re at the point where you don’t need outside help.
As a result, you don’t have to pay agent fees. Agent fees can add up quickly, so you could save a significant amount if you have your own license.
2. Extra Income
If you plan to invest in fix-and-flip properties full time, it could help to be a licensed agent. There may be times when you can’t find a property worth investing in – or are waiting for major renovations to be completed before you can flip the property.
In such cases, being a licensed real estate agent means that you could make some extra income on the side by representing other sellers.
3. Get The Lowdown On the Real Estate Market
To get a real estate license, you’ll need to do a certain amount of coursework as well as pass an exam. The amount of work you have to do varies from state to state. However, it means that you’ll be well versed in the ins and outs of real estate law by the time you get your license.
As a result, you’ll be very familiar with things like permits, disclosures, housing discrimination, and more, all of which will make it easier for you to operate as a real estate investor.
In addition, the coursework you’ll need to do to get your license will teach you a lot about the real estate market. This is valuable information that you can use to help make investment decisions.
4. Gain Direct Access To Multiple Listing Service (MLS)
The MLS is a database of properties that are for sale. It’s a valuable resource for anyone who is looking to buy or sell property, as it includes information on price, square footage, number of bedrooms and bathrooms, and more.
In order to get access to the MLS, you need to be a licensed real estate agent. This means that you’ll have direct access to information on all the properties that are for sale in your area. This is valuable information that you can use to help you find properties that are undervalued and have the potential to be flipped for a profit.
5. Build A Network With High-Quality Contractors
If you’re going to be flipping houses, you need to have a network of high-quality contractors that you can rely on to do the work. These contractors need to be reliable, reasonably priced, and skilled in their respective trades.
As a licensed real estate agent, you’ll have an easier time building relationships with high-quality contractors. Contractors are more likely to take licensed real estate agents more seriously as they present a potential opportunity for more work.
6. Earn A Higher Level Of Trust From Potential Buyers
If you’re going to be flipping houses, you need to find buyers who are willing to pay a fair price for the property. This can be challenging as there are a lot of people out there who are looking for a bargain.
As a licensed real estate agent, you’ll have a higher level of trust from potential buyers. This is because they’ll know that you are a professional who is knowledgeable about the market and the properties you are selling. They’ll have more confidence when it comes to buying your property if you’re a licensed real estate agent.
Why You Should Think Twice On Getting Your License
There are two potential drawbacks to getting a license that you should keep in mind. These drawbacks are the cost of securing a license and the time it takes to do so.
First of all, to get a real estate license, you’ll need to take a pre-licensing course. The cost of the course varies from state to state, but it generally costs around $350. You’ll then need to take the licensing exam, which tends to cost around $100 to $300.
If you don’t pass the exam the first time, you’ll have to pay to take it again. Finally, once you do pass the exam, you’ll have to pay between $200 and $400 to activate your license.
All in all, it can cost you around $650 to $1050 to become a licensed real estate agent, if not more. And that’s not all. To join a brokerage, it will cost you an additional $25 to $500+ a month. And if you want to go the extra step and become a realtor, it will cost around $185 to take the necessary exam.
If the cost isn’t off-putting, the time it takes to get licensed can certainly be for some people – especially if you’re already quite busy. Depending on the state, you’ll have to take a course that lasts anywhere from 63 hours to 180 hours.
How To Earn Your Real Estate License
If you’ve decided that the advantages of being licensed are well worth the time and money, then the following are the steps you’ll need to take to get your real estate license:
1. Check Your Eligibility
The first step is to check your eligibility. In order to get a real estate license, you must be at least 18 years old (or even 21 in some states), have no criminal record, and have a high school diploma or GED.
2. Enroll In A Pre-License Course
Once you’ve checked your eligibility, the next step is to enroll in a pre-license course. These courses are offered by a variety of schools, both online and in-person. Be sure to compare the cost of the courses you find as they can vary. You should also do your research to ensure that you enroll in a high-quality course.
3. Pass The Licensing Exam
After you’ve completed your pre-license course, you’ll need to pass the licensing exam. This is a multiple-choice exam that covers everything you’ve learned in your course. There are two sections: national and state-specific.
The national portion covers topics such as real estate law, ethics, and math. The state portion covers topics such as real estate contracts and fair housing laws. In order to pass, you’ll need to get a score of 70% or higher on both sections.
It’s worth noting that each state has its own rules when it comes to how often you can retake the exam and how much time you have to wait in between attempts.
4. Activate Your License
After you’ve passed the licensing exam, you’ll need to activate your license by paying the activation fee. To do this, you’ll need to submit an application along with your fee and any other required documents. In some states, you may also need to submit fingerprints and pass a background check.
Once your application has been approved, you’ll be mailed your real estate license certificate. You will also be listed under the licensees section of your state’s real estate regulatory organization website.
5. Decide If You Want To Become A NAR-Certified Realtor
Once you’ve become a licensed real estate agent, you may be wondering if you should take the extra step and become a NAR-certified realtor. The National Association of Realtors (NAR) is the largest trade association in the United States with over one million members.
To become a NAR-certified realtor, you’ll need to pay an annual fee of $185 and pass the necessary exam. The exam covers topics such as the Realtor Code of Ethics and real estate practices.
While it’s not required to become a NAR-certified realtor, it does come with some benefits. For example, it shows that you’re a serious professional who is committed to following the highest ethical standards. It also gives you access to exclusive NAR resources, such as the Realtor MLS system.
6. Access The MLS in Your Area
The MLS, or Multiple Listing Service, is a database of properties for sale that is only accessible to real estate agents. In order to have access to the MLS in your area, you’ll need to find a broker who is willing to sponsor you.
Once you’ve found a broker, you’ll need to submit an application along with a fee. Once you’ve been approved, you’ll be given access to the MLS in your area.
If you’re not sure how to find a broker or MLS in your area, you can contact your state’s real estate regulatory organization for more information.
How To Get Started Flipping Houses
Although it’s useful to have a real estate license, you don’t need to wait to get started on flipping houses before you get one. After all, there’s a lot of work to be done leading up to the purchase of a fix-and-flip property. You may even want to wait to see how fixing and flipping your first property goes before you take the leap and get a license.
After all, the last thing you want to do is pour time and money into getting your license only to figure out that maybe fixing and flipping homes isn’t quite for you.
With that in mind, the following are the steps that you’ll need to take as a fix-and-flip investor, whether or not you have your real estate license:
- Research the market: The first step in any fix-and-flip investment is to research the market. Ideally, you’ll want to find a market that has a high demand for housing and a low supply of properties. Buying a distressed property and investing in renovations can be risky if there’s low demand in the area and a large inventory of homes for sale.
- Find good deals: Once you’ve identified a good market, you’ll need to find properties that are being sold below market value. The whole point of fix-and-flip investing is to find distressed homes that are available at a lower than normal cost that you can remodel and flip for a profit.
As such, you’ll want to focus on properties that are priced low and in need of repair.
- Acquire capital: The next step is to acquire the capital needed to finance your investment. Fix-and-flip projects can be expensive, and you’ll need to have the money to cover the cost of the purchase, renovations, and holding costs. Fortunately, there are many financing options available to fix-and-flip investors, including hard money loans.
- Make offers: Once you’ve found a few properties that fit your criteria, it’s time to make an offer.
- Negotiate a fair price: When making an offer, you don’t have to match the asking price. In fact, sellers are often willing to negotiate, especially if they’re selling a property that is in poor condition.
- Rehab the house: After you’ve negotiated a fair price and closed on the property, it’s time to start the rehabilitation process. The cost of renovations and the time it takes to complete will depend on the home’s existing condition.
- Sell the property: Once the renovations have been completed, it’s time to list the property for sale. The goal is to sell the property quickly and for a profit.
Do I Really Need A Real Estate License To Be A Successful Flipper?
No, you don’t need a real estate license to be a successful flipper. However, there are some benefits to getting one, such as the ability to represent yourself (and thereby saving on commissions) as well as access to the MLS, which can help you identify potential real estate investments that you may have not otherwise discovered.
It’s just a matter of deciding whether the time and cost of getting your real estate license are worth the advantages of having one for you. If you’re only fixing and flipping properties part-time as a side hustle, it might not be. If you’re planning on investing in fix-and-flips full-time, then it probably will be worth it.