Flipping houses has gotten increasingly more difficult as the market changes. One certain way to accelerate the success of your properties is to become a licensed real estate agent. Being a real estate agent gives you extra benefits. How can you become a licensed real estate agent and how does it benefit your flipping business?
Center Street Lending investigates.
Benefits of the License
• Saving costs: When you are capable of managing your sales and contracts, you save money on closing costs. You will join a network of fellow real estate agents who have buyers looking for homes in your area, which also adds to your insider knowledge.
• Housing search: Ever feel like there are people who must know about houses going immediately on the market? Why do they get to withhold this information? As a licensed real estate agent, you receive alerts as new homes come fresh on the market. You then can access local multiple listing service. Plus, as a licensed agent you can develop a network with other agents who could reach out to you when they have potential homes coming onto the market.
• Education: You will be more skilled in evaluating houses and judging investments on renovations and improvements. An adequate education will keep you ahead in comparable sales in your market. As an agent, you’ll also be required to complete continuing education, which will add value to your business.
Ok, I want to get licensed. How do I do it?
Getting a real estate license involves three steps:
• Pre-license Education: Requirements vary state to state. Before you can take the licensing exam, most states provide online or textbook resources. Most courses be completed in a few months. California requires 135 credit hours but Texas requires 180 hours and Florida only 63.
Topics covered include listing and selling property,escrow procedures, property valuation, the law of agency, counseling buyers, and more. Basic math education is included, such as calculating commissions, price per square foot, real estate taxes, etc.
Licenses normally are good for two to four years and continuing education is required before renewal, with hours varying by state.
• License Exam: Once you’ve completed the education requirements, you are eligible to take the state licensing exam. Exam times vary from 1.5 to 3.5 hours, again depending upon the state. Most require you to correctly answer 70% to 75% of the questions correctly.
If you’ve been involved in the real estate business for a while, you’ve probably heard horror stories about the exams. Most include 100-150 multiple choice questions on national and state real estate laws and practices. Passage rates are relatively low (California 54%, Florida 44% and Texas 61%), but a motivated learner who has taken the course work seriously and complete the practice tests has a pretty good chance of passing. It’s a good idea to take the test as quickly as you can after finishing the course work so the material remains fresh in your mind.
• Submit your license application: After you’ve completed the exam, you submit your results to the state licensing board, along with any applicable fees and other requirements (some state require finger prints, proof of residency, proof right to work, etc.). You likely will need to be affiliated with a local real estate broker. With a few years of experience, you can apply for your own broker license.
Once you have your license, you can check for reciprocity agreements with other states (i.e., Florida has one with Georgia), or states make it easier to get a license if you have a valid license in another state.
The total cost of obtaining your license will vary by state, but generally can be completed for $400 to $1,000. This is a smart investment now that you can earn it back with fees you save on just one one house sale, not to mention the savings you might get through early access to properties.