Should I Give Up My Real Estate License?
The quote below was from wendypatton on "Becoming a Realtor." She seems to contend that it's better to be licensed. One thing she didn't mention is a Realtor's obligation to disclose to the client what they think the property is worth. Wouldn't the squash most sales? Or do most investor-realtors simply not abide by this rule? And to my knowledge it not a law it's just a violation of the Realtor's code of ethics.
I'd appreciate your thoughts on this.
Thank you,
Steve
"Investors tend to be adamant one way or the other about being a licensed Realtor. I am on the side of being licensed. Being licensed has been one of the best tools that I have as an investor. Being licensed allows you access to your database of ‘comps’ or comparables. This is the data you need to buy and sell real estate. If you have a great Realtor and you don’t want to be licensed, fine, but I still think it is better to be licensed than not.
Some investors say it gives you more liability to be licensed. I have two answers to that:
1) What are you doing to create liability?
2) Don’t you think a judge is going to know you are an ‘expert’ anyway when they find that you do real estate investments?
Some investors say that sellers won’t sell to you if you are licensed. I find the opposite is true. Most sellers are happy that I am licensed and ‘know what I am doing’.
My recommendation is to GET LICENSED!!!
You convinced me that you convinced yourself . From what you say, your preference is obvious. Stay licensed.
I'll just add that I responded to that within the comments section of the article, AND in most states, it IS a law that a RE agent must disclose, not merely a code of ethics. But to each his own.
Roger
Just wanted to know since we are on the subject of RE license, that when I become licensed I wanted to know do I have to work for a broker. I want to get my license to add credibility in my target market. I plan to to be an investor for my own business and do realize I will have to disclose that I am licensed. No problem there.
Again I just wanted to know that when I am licensed do I have to work for a broker or can I just be licensed in my state to invest in real estate for my own business. Thank for all response because this is really a critical issue for the initial start of my business. I plan to use subj to investing in conjuction with selling notes.
I would go Roger one better and bet you that in all 50 states, real estate licensees are required to disclose their license status. It's not just a question of violating codes of ethics. It's a question of violating the licensing laws of the particular state.
I don't know about FL, but in PA a licensee who doesn't disclose can be subject to fine or license suspension or revocation.
And besides all of that, disclosure is just the right thing to do.
When a property is sold through a real estate, it is the broker that earns the commission. It is the broker that gets paid. The broker then splits the commission with the agent according to their individual contract.
So the answer is yes, you must work for a broker until you get the experience necessary to get your own broker's license. This ensures that people in the field are knowledgable. In New York, that is at least two years experience and enough points earned through the deals that they work. Good Luck!
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On 2004-02-15 22:18, NancyChadwick wrote:
I would go Roger one better and bet you that in all 50 states, real estate licensees are required to disclose their license status. It's not just a question of violating codes of ethics. It's a question of violating the licensing laws of the particular state.
I don't know about FL, but in PA a licensee who doesn't disclose can be subject to fine or license suspension or revocation.
And besides all of that, disclosure is just the right thing to do.
Of course you have to disclose you're a realtor. That's not a problem. My concern was that a Realtor has to disclose HOW MUCH they thought the property was worth to a potential client.
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On 2004-02-15 21:58, pdcoles wrote:
Just wanted to know since we are on the subject of RE license, that when I become licensed I wanted to know do I have to work for a broker. I want to get my license to add credibility in my target market. I plan to to be an investor for my own business and do realize I will have to disclose that I am licensed. No problem there.
Again I just wanted to know that when I am licensed do I have to work for a broker or can I just be licensed in my state to invest in real estate for my own business. Thank for all response because this is really a critical issue for the initial start of my business. I plan to use subj to investing in conjuction with selling notes.
In Florida if you don't work for a Broker you can't be activated. So you can't join the board, or access the MLS. I see no reason why you couldn't still say you were licensed, but what would be the point?
iammagi,
Disclosing your (as an agent) opinion of FMV was exactly what I was referring to.
By default, a RE agent works for the seller, even IF the buyer happens to be you (the agent). As the seller's representative, you have to disclose your opinion (backed by accurate data) of FMV. At least in NC, you, as the agent, cannot choose to NOT represent the seller. The seller is the only principle in the transaction that can choose to represent himself.
Can you see the conflict here? As buyer, you want the lowest price, but as seller's agent, you goal is to get the most for the homeowner. I'd wager too that most sellers would be a little wary of an agent who is supposed to have their best interests at heart, but is the buyer in the transaction.
Roger
iammagi,
I posted the reply, that you quoted, for 2 reasons:
1. to correct your understanding since your initial post said that you thought disclosure was required by codes of ethics -- not because there were laws.
2. expanding on Roger's first post.
I realize that one concern is the potential conflict of being licensed and dealing with consumers as an investor. A key to resolving the issue is the timing of the licensee's disclosure to the property owner and the way it is handled.
If you're interested in the property as an investor, then that needs to be put on the table up front, along with disclosing your license status. If your initial contact with the owner is as a licensee but you're not sure if you might also have an interest in the property as an investor, tell the owner that. Express your concern that you don't want to offer value or other recommendations because of your sense of ethics. If the owners are motivated, you're being licensed shouldn't be a stumbling block. The owners will respect your honesty and this increases your credibility with them.
Roger,
I would point out that whether a licensee is automatically considered to be representing the seller is strictly a matter laid out in the licensing and agency laws of each state.
For instance, in PA, all licensees are required to give consumers a written Notice. The Notice defines the different types of relationships between the consumer and agent (e.g., seller agency, buyer agency, dual agency, transaction agency) and sets forth the licensee's obligations to the consumer under each.
The PA Notice specifically advises consumers that "...unless you select an agency relationship the licensee is NOT REPRESENTING YOU."
The states are all over the place in terms of how they structure their agency and licensing laws. The websites I've seen for different state Real Estate Commissions/Depts provide info on their laws, if not the actual text of the laws & regulations.
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On 2004-02-16 11:32, NancyChadwick wrote:
Roger,
I would point out that whether a licensee is automatically considered to be representing the seller is strictly a matter laid out in the licensing and agency laws of each state.
For instance, in PA, all licensees are required to give consumers a written Notice. The Notice defines the different types of relationships between the consumer and agent (e.g., seller agency, buyer agency, dual agency, transaction agency) and sets forth the licensee's obligations to the consumer under each.
The PA Notice specifically advises consumers that "...unless you select an agency relationship the licensee is NOT REPRESENTING YOU."
The states are all over the place in terms of how they structure their agency and licensing laws. The websites I've seen for different state Real Estate Commissions/Depts provide info on their laws, if not the actual text of the laws & regulations.
It's that way in Florida too but in practice most Realtors don't get anythng signed unless the seller is ready to list and fill out the paperwork.
I've been told even on the phone on the initial contact you must disclose you're a realtor as well.
So are you saying that upon EVERY SINGLE initial contact with a seller you tell them you're a Realtor then when you meet with them you have them sign a disclosure? Then you ask them to pick a relationship? Then if they don't select an agency relationship, "all is fair in love and war?"
Again... How is all this to the investors advantage?
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On 2004-02-16 11:14, NancyChadwick wrote:
iammagi,
If you're interested in the property as an investor, then that needs to be put on the table up front, along with disclosing your license status. If your initial contact with the owner is as a licensee but you're not sure if you might also have an interest in the property as an investor, tell the owner that. Express your concern that you don't want to offer value or other recommendations because of your sense of ethics. If the owners are motivated, you're being licensed shouldn't be a stumbling block. The owners will respect your honesty and this increases your credibility with them.
I've only worked as a Realtor so I don't know how the sale proceeds, but as a Realtor it takes me a good half hour to hour to truely find out their story. Once they let their guard down and tell me the truth about why they're selling how much equity etc., only then will I know the best way to help them. I doubt that I could ever reach the level of trust I get now if they knew I was interested as a buyer. Who knows, maybe I'm wrong.
i remember one seller finally told me they were selling because she was living with her x-husband and her boyfriend. She got caught cheating with the boyfriend, she got possession of the house in the divorce. The x-husband fell on hard times and she let him move back in. Now all three were to the point of killing each other but she was still feeling too guilty to throw the X out, so the only solution was to get rid of the house fast so the X would have some money to move on. Talk about a motivated seller!
iammagi,
I understand what you're saying about not knowing for sure until you're knee-deep in hearing the seller's story whether you're interested as an investor or as a licensee.
How would it benefit you as an investor to disclose upfront that you are a licensee and also an investor, that you don't know if you are interested in their property as an investor or as a licensee, but that you wanted to be honest with them, and by discussing their property or situation, you would have a better idea if you want to buy the property or list it for sale?
You'd gain the trust of the owner because you've put your cards on the table by disclosing investor and licensee status. By doing so, you're encouraging the owner to trust you.
Suppose you were the owner and someone approached you disclosing only that they were a licensee. The licensee listens to you, does a CMA maybe deliberately high balling the number, gets the listing and then at some point after the property's been sitting unsold because it's overpriced, turns around and tells you they want to buy your property because they're also an investor, and of course, they offer you a much lower price. Wouldn't that make you feel that they couldn't be trusted and that they just set you up for a low-ball offer?
The approach I would take with owners is after making the disclosures, ask them if they will give you X amount of time for you to explore buying the property. At the end of that time, if you and the owner haven't stuck a deal, then get first shot at listing the property. After all, by then you're the agent most educated in the property so you're the logical choice as listing agent.
[ Edited by NancyChadwick on Date 02/17/2004 ]
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On 2004-02-17 15:43, NancyChadwick wrote:
iammagi,
I understand what you're saying about not knowing for sure until you're knee-deep in hearing the seller's story whether you're interested as an investor or as a licensee.
How would it benefit you as an investor to disclose upfront that you are a licensee and also an investor, that you don't know if you are interested in their property as an investor or as a licensee, but that you wanted to be honest with them, and by discussing their property or situation, you would have a better idea if you want to buy the property or list it for sale?
You'd gain the trust of the owner because you've put your cards on the table by disclosing investor and licensee status. By doing so, you're encouraging the owner to trust you.
Suppose you were the owner and someone approached you disclosing only that they were a licensee. The licensee listens to you, does a CMA maybe deliberately high balling the number, gets the listing and then at some point after the property's been sitting unsold because it's overpriced, turns around and tells you they want to buy your property because they're also an investor, and of course, they offer you a much lower price. Wouldn't that make you feel that they couldn't be trusted and that they just set you up for a low-ball offer?
The approach I would take with owners is after making the disclosures, ask them if they will give you X amount of time for you to explore buying the property. At the end of that time, if you and the owner haven't stuck a deal, then get first shot at listing the property. After all, by then you're the agent most educated in the property so you're the logical choice as listing agent.
<font size=-1>[ Edited by NancyChadwick on Date 02/17/2004 ]</font>
Sounds good. I've always held nothing back and been as up front as possible. I believe people communicate at deeper levels than science has yet to discover. Honesty has been one of my most effective secret weapons yet. If I come across someone who I can't get the deal without lying, and believe me some people invite it, I've learned to walk away FAST.
Thank you for your feed back.
Steve
Steve,
Good for you in walking away from those situations and for placing high importance on honesty. Those who don't are members of the "Screw and Run Club" -- a club that's very easy to get into but very hard to get out of. Good luck to you.
I know it's an old thread but this is an issue that I struggled with for many years, and I have done it both ways. In my opinion your liability goes up but your opportunities increase also. I think what pushed me into getting a license was the realization that I might be missing opportunites, such as spending hours trying to buy someone's house and as often happens, there not ready for wholesale, but would be a good candidate for listing the property. As it turned out I have only listed one house in a hundred, so much for my great theories.( I have been able to list houses for friends and aquaintences and have made some serious money)
But, I now buy a lot more houses than ever as a realtor(this was the blind luck part). I now instantly have credibility with realtors and lenders, and maybe more confidence, they tend to deal with me as an equal and not some lowballing investor. Also understanding what realtors are up against has enabled me to work better with realtors, and their problems come to me to troubleshoot, such as houses with title defects, houses that aren't listed because there to ugly, etc.
Another advantage of the license is access to MLS, in a large metropolitan area like Houston, it's the only way to go. Anytime I want, I can look at a large subdivision in MLS and find a house that can be bought wholesale (there's always flags if you know what to look for).
In Texas you have to disclose on the first meeting that your a Licensed Agent. At first I was worried about this, but this is really a non-issue. Think about it, if your business model is - Buyer your too stupid to know what your house is worth and I'm going to take advantage of you - I don't see how your ever going to buy enough houses to ever make any money on a regular basis or ever develop credibility with a Seller. My strategy is to say something like this when the issue comes up " This is what houses in excellent condition sell for retail, with enough time, so with the repairs and closing expenses you might net xx. I am a wholesale buyer and can close quickly". The sellers tend to trust me and even when there shopping for best dollar, I often get a chance to match it later on because they liked me and trusted me. I think the listing angle never worked because when your dealing with motivated sellers, they simply don't have the time to see if a listing will work.
Also depending on the Price range, in my experience some houses sell faster in MLS than others. On those houses I only have to pay half of the commission, because of my License.
Whew, I talk to much, Sorry.
[ Edited by firepro on Date 04/13/2004 ]