Realtor License
Real Estate Investing, Buying a Home September 17th, 2007Should 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.
Internal Tags: Buying a Home real estate investing
Bookmark, Share or Email this article.
September 19th, 2007 at 6:10 am
If that is all you believe it takes to be a Realtor, you are in for one heck of a surprise. The idea of putting a sign in the yard and faxing (Who faxes anyway?) info to other Agents/brokers just doesn’t work anymore. Professional agents EARN their commissions because of the negotiation skills and their experience in all different types of transactions. I will admit that there are agents who are lazy and don’t take their job seriously, but your attitude is just adding fuel to the fire. What the real estate industry needs right now is to purge these bad apples from the marketplace (which thankfully is happening with the market downturn) and replace them with competent, qualified consultants. Please stop telling everybody to go out and get a license. All you are doing is adding more incompetent people to the mix of qualified agents, and giving all of us a bad name.
September 19th, 2007 at 8:13 am
Joe:
Negotiating skills? Experience in all different types of transactions? I challenge you to elaborate on these. In the typical real estate transaction, the buyer and seller never talk to each other, and one realtor is negotaiting with another realtor. But the “negotiations” are nothing more than modifying and sending new offers back and forth. It isn’t an 18th century marketplace where real negotiations happen over a horse or donkey; anyone can stratch a line through a contract and write in a new number.
I was investing in real estate 2-3 years before I acquired my own realtor license. In that time I developed my opinion of realtors through experience, and sadly, my view of realtors is true for most active agents. Now that I am a realtor myself, I see the same things going on every day, as I have described in this article. Unless a realtor has an established list of buyers and sellers waiting to be united, I fail to see how they can do much more than described above. I guess they could add the property to their own website, if anyone knows about or could find their website online.
Bottom line, I challenge you to show specific steps that are different, and highly valuable, that a realtor could provide.
September 22nd, 2007 at 4:11 am
I was not saying that “YOU - Jeffry Evans” should not get a Real Estate License. I was saying don’t tell everybody how extremely easy it is to 1) get their license and 2)sell real estate. It is a different story for investors. The problem is that the Realtors you have worked with don’t have any experience. Can you imagine if people with even less experience tried to sell their home? My point was simply that there are too many bad agents out there already, we don’t need to add a bunch more. BTW, if selling your own home was so easy, why do FSBO’s have a higher rate of real estate related lawsuits, sell their home for an average of 16% less than listed homes, and become one of the best targets for investors? Because they do not have any experience in negotiation!!!
There are plenty of things that professional Realtors do to sell homes at a higher price point and more quickly: 1) Competent pricing evaluation 2)Repair advice (where you spend your money for the best return) 3)Network of other agents who are looking for homes similar 4) Database of ready, willing, and able buyers for the home 5)Contacts with investors, if the home is right.
My point is that you can read all you want about doing surgery, practicing law, or weight lifting, whatever. But until you actually do it, what you read doesn’t mean jack. Experience trumps reading every day of the week.
September 22nd, 2007 at 4:14 am
Oh, I thought of another value of a Professional Realtors:
1- Short Sale experience, You want to talk about negotiation? Try telling a bank they do not get the $40,000 owed to them.
You can trade your own stocks on e*trade, but you will never be as successful as a professional stock broker. (Obviously not all stock brokers, but the Professional ones)
September 22nd, 2007 at 2:59 pm
I agree that there are too many bad agents out there already. But getting a license and selling your own house is very profitable for the seller. The seller can lean on the experience of their sponsoring broker to sell their home for the best price, and can move on with their life. But I would like to address the points you stated:
1) If a new agent cannot get competent pricing from their sponsoring broker, then they can hire an appraiser to do it, which will add value to a potential buyer and get an accurate assessment of value.
2) I have an article that outlines some basic repair steps that are the most inexpensive and highest value added return: Property Rehabbing
3) Network of other agents looking for similar homes can be gained by faxing/emailing said agents with details of the home.
4) Database of willing and able buyers - I would like to see one. Some agents may have a few buyers they are working with, but I would be impressed to see a large database of buyers who are not investors or companies. Most people looking for a home go ahead and buy one, they don’t wait months on a realtor’s list for him to find one for them.
5) Contacts with investors. This article doesn’t really apply to investor transactions, it is geared towards the typical home owner and home buyer. Short sales, etc are complicated, and most realtors won’t even touch them. In fact, many times, the realtor actually kills any chance of pushing through a short sale. I had dealings with a realtor that listed a home, and I wanted to offer on it, and was told that she wouldn’t help me push through a short sale, it was either give enough to cover the mortgage, or go away. Another bad apple, as you would put it, but nevertheless, I have yet to meet these “good agents”.
Last, perhaps my dark outlook on realtors is the fact that I haven’t met any good ones (other than my broker). Further, I have found it realtively easy to sell/lease the houses I am involved in. It’s mostly about the area and the condition of the house, and being in a market that is strong. If my market ever starts leaning towards buyers, I am sure it will get tougher. But for now, the hardest part is finding good deals on the buy side.
October 6th, 2007 at 7:53 pm
Thank you for sharing!
March 11th, 2008 at 1:56 pm
[…] know that I work in real estate, and hold a realtor license. I had received some feedback from post Realtor License via email that I think would be helpful to the community. In this article I explain my thoughts on […]