Benefits Of A Real Estate License: Full Guide
No doubt, having a real estate license opens doors. The benefits far outweigh the costs in terms of both time and money. Few tactics can provide as much leverage as equity crowdfunding when expanding a real estate portfolio. However, if you’re serious about reaching your maximum potential, you can’t ignore the benefits of real estate license for investors.
The question “What are the benefits of having a real estate license?” is one that many investors ponder at some point. Having a leg up on the competition is not necessary, but it certainly helps. On the other hand, getting a license could take longer than most people think. Getting a license takes time and money, and not every new investor has either. So, why get a real estate license? You should get a license if you can utilize it to make transactions, build relationships, or save or make more money. Working with qualified individuals is an option, but having your own can save time and energy in many situations. Let’s go through the essential perks of having a real estate license.
Benefits of a real estate license
1. Access to real estate investment deals
A real estate license might put you ahead of the competition in the investment market. After becoming a licensed real estate agent, you’ll get a double advantage from access to the Multiple Listing Service (MLS). First, instead of waiting for a real estate professional to find and advise you about the best neighborhoods and newly listed properties, you may do so yourself.
Second, you can glean valuable information about every home and community by researching their pasts. MLS is an excellent resource because it provides data on recent and past sales prices, comparable homes, and more. The MLS is the best source of this data; while it may be accessible on prominent websites like Redfin, Trulia, and Zillow, the MLS will always be preferred. Using MLS information, you may learn which areas have a higher turnover rate, which property types are in the highest demand, and what kind of buyers should be targeted.
2. Networking opportunities
Networking is another real estate license benefit! There are invariably perks to expanding one’s network of fellow real estate agents. Obtaining a real estate license might pave the way to new opportunities, such as collaborating with more seasoned brokers and agents at an agency of your choosing. It’s possible to learn a lot from them and implement some of their time-saving suggestions. They may also be able to put you in touch with other specialists in the real estate industry, such as bankers, appraisers, surveyors, and lawyers, that you can trust with your assets.
Saving money on selling your real estate investment properties is possible through accumulating commissions. When you purchase a property, you’ll receive a commission.
Take the hypothetical case of a home purchase of $300,000, where the total commission is 6%. That’s a $9,000 split between your office and the listing agent. There is a $4,500 incentive up for grabs if you and your office can agree on a 50/50 commission split. As the listing agent, you can expect to earn a commission of $6,000 on the $400,000 sale of the home after deducting any fees charged by the buyer’s agent’s office and your broker’s cut. Even better, you sell the house and pocket the $12,000 fee without paying any commission to any other agent.
4. Control of your deals
Dealing with things on your own terms is a further benefit. More power is in your hands when you act as your own real estate agent. When you sell your own house, you get to decide on everything from the final sale price to the conditions of payment, including whether to offer seller financing or a lease-purchase option. The lender, appraiser, inspectors, closing attorneys, or escrow company will work directly with you, the seller.
5. Educational opportunities
Earning your real estate license grants you access to educational resources that will expand your industry knowledge. Even if you’re a seasoned investor, you won’t get a peek into the inner workings of a real estate office or the dynamics among the agents working there. You will learn a lot of helpful information in the compulsory real estate courses, such as how to write contracts, negotiate, the latest trends in property advertising, organize an open house, and much more. In the end, your chances of success as a real estate investor will improve if you know everything there is to know about being an agent.
6. Risk Minimization
After you pass the required tests and get your real estate license, you will start working as an agent for a broker. There will be more eyes on your real estate company, which can be a good thing in terms of security.
Steps to get a real estate license
An initial time and monetary commitment are involved in getting a real estate license, which varies from state to state. This is a rough overview of the steps necessary to become a real estate agent, while the specifics will vary by state.
Research Your State’s Requirements
There is no “national real estate license,” so you’ll need to satisfy the specific norms of each state where you plan to work. The Association of Real Estate License Law Officials (ARELLO) has a directory that you can use to find the state real estate office that is in charge of your area of expertise.
Requirements vary by state and typically include the following:
- A necessary level of education (such as a high school diploma or GED)
- Instruction before obtaining a license, as well as ongoing obligations afterward (Prelicensing courses and post-licensing requirements)
- Subject tests and qualification for examinations
- Details on how to apply and any associated costs
- Checking identities using fingerprinting and background investigations
- Refresher Courses
- The steps to take to upgrade your license
- Disclose past criminal records
A license obtained in one state may be used in another without needing another exam, thanks to reciprocal licensing agreements across jurisdictions. There are nine states with which New York has a reciprocity agreement: Arkansas, Colorado, Connecticut, Georgia, Massachusetts, Mississippi, Oklahoma, Pennsylvania, and West Virginia.
Take a Prelicensing Course
All states require prospective candidates to complete a pre-licensing course at a recognized real estate licensing school before sitting for the real estate license exam. Depending on where you live, different educational requirements may be imposed. In California, applicants must take three separate real estate courses that add up to 135 hours of education. The duration of the courses varies by state, with New York and Georgia requiring 75 hours and Florida having 63 hours. Courses can be taken online, at real estate schools, or at local community colleges in most states.
Take the Licensing Exam
The steps involved in scheduling, registering, and paying for the licensure exam should be covered in class. The price of the test often ranges from $200 to $500. Each computerized exam has two parts: a national piece covering fundamental real estate concepts and practices throughout all 50 states and a state-specific section covering the real estate regulations in your state.
Each state determines its exam requirements, including the number of questions and length of time given. It would help if you had a passing score in both parts to pass the entire exam. You can repeat the exam for free if you don’t pass either portion the first time. The number of times you can repeat a test, the time you have to wait between attempts and the deadline for finishing all retakes vary by state.
Activate Your Real Estate Agent License
After you’ve passed the exam, submit an application to your state’s real estate regulating agency along with any necessary documentation and fees (often $200-$400). When your application is accepted, the state will send you a real estate license certificate, and your name will be included in a database of licensed professionals. Remember that you can’t start working as a real estate agent until you get your license from the state’s real estate authority.
Join a Real Estate Brokerage
The state requires that all real estate agents work under the supervision of a broker. The broker can keep an eye on the agents’ activities and ensure they follow all laws, rules, and professional standards. You probably won’t be paid by the hour. Alternatively, the brokerage may offer you a share of the commissions it earns from your real estate deals. In addition to commissions, your brokerage may charge you for things like desk fees, technology fees, business cards, marketing materials, and more. There are also recurring and one-time costs, like annual license renewal, recurrent education, lockbox fees, and Multiple Listing Service (MLS) membership dues. The monthly fee to join a brokerage might range from $250 to $500.
Bonus: Become A Realtor
If you take the plunge and get your real estate license, you might as well go all the way and get your Realtor designation. The education and training required to become a Realtor set them apart from other real estate agents. Realtors earn their credentials from the National Association of Realtors (NAR).
The NAR is the largest trade association in the country, and it offers its members a variety of resources to help them run successful businesses. In exchange for around $150 in annual dues, members of the National Association of Realtors get access to a resource known as the Realtors Property Resource (RPR). Information about real estate listings throughout the country is compiled from public records and available in this database. If you’re considering getting your real estate license, you should also consider how becoming a Realtor might help you reach your professional goals.
The Bottom Line
You’ll need more than just a desire to earn your real estate license to reap the rewards of having one. Obtaining a license to practice real estate is a challenging endeavor. The first step is to complete a real estate course in your area and get a passing grade. After doing so, you will be able to take the exam. If you don’t put in the time to prepare, even seasoned investors may struggle to pass the test. The next step is to locate a broker who agrees to hold your license temporarily.
And on top of that, there are things like application costs and yearly renewals to consider. It’s not easy to pass the licensing exams, but the payoff is usually worthwhile. Even though not all investors need a license, the benefits of having real estate license could have a significant effect on your business.