The Science of Flipping - Why You Should Get Your Realtor License

Episode Date: December 7, 2020

One of the most commonly asked questions in the real estate investor community is should you get your realtor's license? Well there are some things to think about both positive and negative, so let's talk about it!

What is up, everybody? Welcome back to the Science of Flipping podcast. I am your host, Justin Colby. And today we are going to talk about the main question, should you get licensed or not? What are the pros and cons? I have been asking myself this for the better part of 13 years. Now listen, if you have not gone over to the YouTube channel and started checking out my videos, I drop a video today, all things real estate, business, and entrepreneurship. Go subscribe at youtube.com forward slash Justin Colby or simply put in my name, Justin Colby, into YouTube. Now, let's get to it. The question is, should you get licensed or not?

What are the pros and cons? Now, I am still currently, after 13 years, not licensed. And the question is, well, why should I get licensed? Well, for one, could I get some side hustle money by potentially buying my own deal and getting a commission in it, listing or buying a couple deals a year for friends and family member. Absolutely. I could absolutely do that and come into a couple dollars. But the reality is this, I have zero interest in doing it. And because I have zero interest in doing it, being a listing agent, being a buyer's agent, I'm just not going to be good at it.

I'm not going to put my heart and soul into it. And my friends and my family deserve the very best from me, right? Or from anyone who they're looking to buy a home from or list their home from. And so again, it wouldn't be my highest use of time, I wouldn't be highly engaged, I'd almost feel obligated to them, just doesn't really align with what I'm trying to achieve in business and life. And so for that one reason, I've, that's one reason I have not gotten licensed. Another reason is you have to play by a certain rule set, right? You are a licensed realtor. They view you as professionals. And not that I am not professional, don't get me wrong, or don't

twist my words. But, you know, when you are not licensed, you get to walk a little line on the you get to walk the fine line, right? On what is, you know, the gray areas, so to speak, I have nothing to lose. As long as I do good business, there's no loss of, or being fined by a board. There's no control, right? Like I'm not really great with having the man over me, right? And so as a realtor or as an investor, I get to buy cash. I get to close quick. I get to do subject twos. I get to do all these things that I'm not saying realtors cannot do. That is not what I'm saying, but I don't have to worry about an authority figure over me. Right. And you know, in the early years of this space and when short sales were

really big, batting 08, 2009, 2010, listen, there were things that you could do as an investor that realtors couldn't do if you were licensed. And so nowadays things have changed greatly. I do know that there are states like Illinois and I believe Ohio, basically, if you want to wholesale or do any real estate transactions at all, you have to be licensed. Now I get that from hearsay. I do not know that to be absolute fact, but for me, I like to walk the gray line. I don't need the income as a licensed realtor. Now, what I will tell you is I do the, my manager who has been running my company now for almost six years now, Anthony, he is licensed. We just recently got him licensed. And because I

do see the value, I do see the value in wholetailing, in having a reduced or no fee listing on my rehabs, you know, putting in an offer in on a property on the MLS and getting a commission, which he would receive. And then we have a split on that as he is buying it on behalf of my company. Right. Um, I do absolutely see the value of that. And so I got him licensed because I didn't see the downside to it. Um was very, very inexpensive, if you will. I believe it was just under $400, I think, to actually get the license and testing. And I think when all said and done, I was into it for roughly a thousand bucks or so to pay for it for him. But it immediately paid off as we immediately, the second he was licensed,

we wholetailed the property, we listed it on the MLS and we made something like $38,000 where we would have just wholesaled that said property. I think we were going to make something like $15,000. So for me, it immediately paid off. I saw the value. Now, if you want to make your decision based around that, based around you can see more value on exit strategy, you can see more opportunity by having a license, by networking with other agents, I absolutely would tell you that's a big pro, right? Because within that space, you can talk to other agents saying, hey, I'm looking to buy. I need to buy more flips. Yes, I'm licensed. And here's the reality, whether it's right or wrong, you know, people and people in the industry and people of the public tend to look as licensed

realtors as professional. They are the experts, regardless if they are or not. I can tell you, I know more than almost, you know, some mass percentage of realtors. I'd say 95 to 97% of realtors here in Phoenix. I know more and I'm quote unquote, not a professional because I'm not a licensed realtor. You know, the reality is I've just done way more deals than 99% of the agents here in Maricopa County. And so I just simply know more. So it's a little skewed. I don't necessarily, you know, subscribe to that opinion that they're the professionals, they passed a test. So they're held to a higher authority. That's fine. It is what it is. I can respect it. And I do respect agents. I do a lot of business with agents on all sides, right? And so

if you are an agent, I'm pro agent, right? And so if you are an agent, I'm pro agent. Right. And so if you are thinking about getting your license or not, I would tend to say as a moment in time, it doesn't hurt you. I don't see a downside or whatever downside that used to be, you know, the playing in the gray area and kind of being the wild, wild west and just kind of rolling the dice. The reality is I just don't see that to be a big needle mover. I think if you're looking to get a license, I would urge you to just do it. It's on your brain. Go ahead and take the test, get the license, be done with it. Because I do think there's massive upside between networking with other agents coming across to homeowners as yes, I'm buying your property, but I also, full disclosure, I'm a licensed realtor. I think the public has a higher view of that. I believe they do tend to look at you more as a professional. I have some good friends

who are making a killing wholesaling, but they are licensed realtors. I just don't see a downside as a moment in time. Obviously, you will gain access to the MLS, which is a huge advantage. I just see more advantages to being a realtor than I see any disadvantages. So if you are considering it, go ahead. Now, I would tell you, I'm also not going to push people into it and highly suggest it. I think it is just a personal opinion. It's subjective to what you want your business to look like, what you're trying to do. If you feel like it's a good fit for what you're trying to achieve, awesome. If not, if it's not necessarily in alignment with that, then I would skip it.

I don't see myself personally getting licensed. I'm actually talking to a good friend about potentially even starting a brokerage, but I would be an owner founder, not even a licensed realtor. We would have a licensed broker, broker the, the company as well as be an agent within it. And, uh, I would be an owner and in charge of hiring and recruiting and training. Uh, although I would never necessarily get my license. I'll never say never. Let's just call it what it is. I don't see myself getting it anytime soon that, so hopefully this helps. I would, I would encourage you guys, if you are

thinking about it, if it's on top of your head, go ahead and take it. Um, and I do see more upside to have it than any downside that you may have. And just go run the business the way you want to run the business. Hopefully this helps. Again, there's plenty of free content over at the science of flipping and my YouTube channel, Justin Colby. And I look forward to talking to you guys on the next podcast. Peace.