And on this episode, we’re going to talk about the age old question. Do you need to be licensed as a realtor to wholesale and to flip properties?
𝐉𝐨𝐢𝐧 𝐎𝐮𝐫 𝐏𝐫𝐢𝐯𝐚𝐭𝐞 𝐅𝐚𝐜𝐞𝐛𝐨𝐨𝐤 𝐆𝐫𝐨𝐮𝐩
What’s up guys, welcome back to this channel. My name is Justin Colby. And on this channel, I talk all things real estate, entrepreneurship and business. In this video, we’re going to be talking about an age old question when it comes to real estate and investing in properties. Specifically, when it comes to wholesaling properties. And that is, do you need to be licensed as a realtor? Now I want you to stay to the very end so you can get my actual opinion. But I’m going to talk through the pros and the cons of being licensed as a real estate investor to see if it makes sense for you. But again, stay till the very end for my shocking what I don’t believe you think I’m going to answer answer at the end of this video. Alright, so there’s many different opinions. And I think the larger public opinion on this specific question would be that you do not need to be licensed, I think he would ask most gurus, including myself, or most active real estate investors, you do not need to be licensed to wholesale properties, or flip properties. Now let’s talk a couple pros and cons when it comes to this topic. Because at the end of the day, there are definitely some high pros to be licensed in, there are some cons, the first pro that you could obviously think of is this idea of generating leads that are not monetizable in terms of flipping homes, whether you’re going to wholesale it wholesale it rehab it or even keep it in your portfolio, you’re going to be a marketing business driving a ton of leads, and a small percentage, I’m talking anywhere from two to three, maybe 4% of all of those leads, you’re actually going to be able to monetize. So the first argument to being licensed would be to monetize from the leads that you actually paid for. Now, let me tell you a little con behind that. depending upon how you built your business. You don’t want to necessarily be a realtor. The question is, should you be a licensed Realtor? If you’re going to be wholesaling or investing in real estate? That’s the question. So if you’re going to get licensed and your argument to get licensed is, oh, well, now I can monetize all of my leads, because I can either go out and give them a cash offer. Or I can list the property. While it sounds good in theory, and even is good in practice. The reality is, you don’t want to necessarily be a listing agent. Otherwise, you simply would just go get your license and be a listing agent. Although that is a big Pro. And I even admit that is a big Pro, you need to watch out about what you’re trying to build, what kind of business are you trying to build. Because if you dive too deep into that, then essentially because you’re really only going to be able to convert to three or maybe 4% max of the leads that you bring in as investment properties, then the rest of your time is spent taking on listings. And in my opinion, that’s not why you’re watching this video. And that’s not what you’re trying to build as a real estate investor. If you already like that point, as my video director has just told me, I want you to smash the like button right down here, as well as if you haven’t yet, make sure to subscribe to my channel.
Another pro that comes with having your license is the fact that you can actually refer leads out as I just mentioned, you might not want to build a business that’s built on taking listings and dealing with buyers and being an agent. You’re an investor. That’s what we’re talking about. So a pro that comes along with having your licenses you can legally refer listings out or refer buyers out and legally get paid through your license meaning a referral fee as a licensed Realtor, per my understanding of the letter of realtor law. That is the only way to legally get paid from realtor to realtor. Now, as someone who is not licensed. I can tell you this. I’ve had plenty of referral agreements with realtors that I referred a lead out to whether it be a listing or a buyer that when they close the transaction based around their commission, whether they made 2% two and a half percent my referral agreement was roughly 50% of that shocker, right? Well, that’s because if I was licensed, I would have required a 50% referral agreement based around their commission, which typically to be paid through escrow or HUD. Now, as someone who’s not licensed, I actually had to build or draft a referral agreement or sometimes a marketing agreement, that ultimately, after they were able to get paid, I submitted to them a referral or marketing agreement that they were able to pay me sometimes it happens through escrow, sometimes it does not. But ultimately, I do end up monetizing each one of my leads, no matter what, however, to the My understanding the letter of the law, as a realtor states that you have to be licensed to do. So. Now, here’s the elephant in the room, right? What I’m kind of playing is a fine line. There’s a lot of realtors that believe I’m doing realtor work as a non licensed investor, I can understand that. And yes, there are actual laws, that state, you need to have your license if you were to do X, Y, and Z. While that might be the case, and there are fines supposedly being given out, I have always stayed very transparent with everything that I’m doing and where my intentions are. And I actually have the funds in the ability to fund properties. And so ultimately, as long as I, in my opinion, as an unlicensed realtor in disclosing everything, and putting things on paper, then I don’t find any reason why you can’t get a referral agreement, or a marketing agreement with your realtors. Now some people would say a big con to having your licensed would be you have to play by the rules, or you have to play by the MLS rules or the realtor rules or, you know, stick to the guidelines or, you know, however they want to phrase it right. The reality is you should always be doing good work, being honest, being transparent, in disclosing. And though I am not a realtor myself, I still make sure I’m always doing what is best for both parties. I’m always making sure I’m transparent and disclosing everything that needs to be disclosed. And in in essence, I’m always no matter what whether I’m licensed or not doing what needs to be done to make the transaction viable and legal. And so in that case, I would tell you, it’s not a con, because you have to play by the MLS rules or play by the board of realtor rules. You should be doing good business anyways, you should always be doing business that you can stick your name behind that you believe is the right business to be doing that is playing by the legal rules of the letter of the law, you shouldn’t be lying to people, you shouldn’t be mischievious, you shouldn’t be doing things that you would even have to question. If you are doing those things, I would tell you to stop immediately licensed or not. And do good business.
be transparent, disclose everything and have good intentions, proper intentions with the ability to execute, and you should be fine. So when people give me the argument, I don’t want to get licensed because I don’t want to play by the rules or I don’t want to have to be limited to what I can or cannot do the reality. And I have many friends who flip hundreds of homes and wholesale hundreds of homes that are licensed realtors, they have zero problems being licensed, and being a wholesaler or flipping investor. So I tell you, I don’t like the argument that that is a con. Now less. And with the big finish. Most of you guys are kind of curious on my personal opinion, in the fact that I actually am not licensed. Many of you might be asking, Justin, why aren’t you licensed? Why don’t you go get your license? And what is your opinion on this? seems obvious, doesn’t it? Doesn’t it seem obvious that I’m not licensed? So my opinion would likely be don’t get licensed? You can play in the gray areas you don’t have to play by the rule of the law? Well, that’s actually not my answer. The reality is my manager Anthony, here is my manager, he runs the entire company, Anthony’s here is licensed and for all of the things that I spoke about previously on this video, such as taking a listing or turning a lead from a cash offer into a listing or, you know representing a buyer or any of the ways that we can bring money into our business. Anthony has the ability to and for that reason, I don’t have to necessarily get licensed. Another reason that people would mention You should get licensed because we rehab flip. We don’t wholesale everything we actually do rehab flip. And people will say, Well, why don’t you get licensed so you can build in that commission into the profits of your flip? Well, my answer is pretty darn similar. My manager, Anthony is licensed and he lists all of our flips. In Guess what, he gives me a drastic discount, essentially, making sure his broker takes a small little fee, and everything else is built into the profit. Why is that? Well, because Anthony actually gets a percentage of all profits that comes through the door. So he’s not worried about whether he’s going to make his commission, he likes to see huge numbers come through the door, and flips do that for him. Ultimately, you want to build a real estate investing business, not a real estate brokerage, or just even being a real tour. So for that, in for the purposes of this video, I would tell you build the investment business. And ultimately, here comes the big answer. I would suggest there are more pros to being licensed than there are cons. Quite honestly, I don’t find many cons to being licensed. So if someone had a gun to my head, which they don’t, I don’t think I would tell you to go get licensed, there are just more opportunities and more pros to being licensed than there are cons. So that is my answer. I know for some of you, that might sound like a shock, you might even still be asking yourself, well, Justin, why don’t you get licensed? Here’s my answer. Because it’s 90 hours of school to go get licensed. It’s not some little thing that I can just go whip up on the internet and take a test without going through the schooling. I don’t want to go through 90 hours of school, one of my best friends and managers and someone who literally runs my company, Anthony is licensed. I don’t want to so that is why I don’t so take it for what it is. Hopefully this helps you can build a business where you don’t have to get licensed. However, again, my ultimate suggestion would be getting your license gives you more pros than it gives cons I would suggest you go get licensed if you’re thinking about it. I don’t know why anyone would want to go through 90 hours of school but if that’s your decision, do it. Hopefully like this video. If you liked this video, smash the like button hit the subscribe button. And if you are interested in me helping you in your business, whether it’s just getting started or maybe scaling and growing your profits go to the science of flipping calm. There’s a simple form. Part of my team will reach out to you to see if I can be of help and hold your hand through this the science of flipping calm otherwise, see you guys in the next video. Peace.