Disadvantages to getting a realtors license???? - Posted by SCook85

Posted by Rob FL on January 10, 2001 at 08:14:48:

To be honest, I don’t really know. I get a reasonable response on my advertising already, but I may toy with the issue now that it has come up.

I usually just bury the disclosure in my mailers where it probably isn’t noticed. On my bandit signs and car signs the disclosure is in smaller letters, so people probably can’t read it unless they actually get within 3 or 4 feet of the signs.

As for newspaper ads, I don’t do much advertising except when I am trying to sell. As long as the price and terms are good, the phone rings off the hook.

Hope that helps.

Disadvantages to getting a realtors license??? - Posted by SCook85

Posted by SCook85 on January 08, 2001 at 18:02:37:

Can someone shed some light on the disadvantages of getting a realtors license. I’m aware of the disadvantage of having to disclose your role as a licensed agent, but I don’t view that as a great disadvantage. I have been weighing the advantages and the disadvantage of having to disclose and I feel that the advantages far outweigh the disadvantages.

Am I missing some disadvantages???


Re: Disadvantages to getting a realtors license - Posted by Bruce Reeves

Posted by Bruce Reeves on January 09, 2001 at 21:00:39:

I am a broker. Got my buddy on the commercial side to sponsor me for two years so I could qualify for broker’s license. I use my license for a soft lead approach. I advertise to list homes for sale for 3.9%. Listing does not take much time but makes for good vacation money. Also it gives me an opportunity to sit in the living room with the client to find out about their status. I have a current listing that may want to hear more about the L/O I mentioned when we were signing the listing agreement. So for me it offers a more traditional first approach that I am more comfortable with. Of course having the MLS on the home computer is very convenient. Paying about $1500/yr for MLS and dues is certainly a disadvantage, but one listing takes care of that.

The Costs… - Posted by dewCO

Posted by dewCO on January 09, 2001 at 14:56:08:

both in getting the license, E&O insurance, paying for MLS and board dues. The biggest could be that it attracts a lawsuit. In your position, which I assume allows you easy access to the MLS I can’t think of one ADvantage. I wouldn’t bother, why are you even thinking about it. Take a vacatino instead of spending your time on this. Or, if you don’t want to do that, send me on a vacation for you!!!

Re: Disadvantages to getting a realtors license - Posted by sal

Posted by sal on January 09, 2001 at 10:52:31:

steve as you know i am a licensed agent and the advantage is that as an agent when i sell a house i can charge any amount of commision on the sale. this is legal in md. and is fully disclosed on the hud 1. flipping problem now over.

Disadvantages… - Posted by JPiper

Posted by JPiper on January 09, 2001 at 24:35:55:


A few years back I closed a real estate brokerage office that I had operated for a number of years, fired all the agents (to include my wife), and terminated my brokers licenses in two states. It was not a particularly easy decision, because I think there are valid arguments on both sides of the issue.

I think the argument for a license basically revolves around MLS access. While I understand that you do a lot of deals through the MLS, in my case I used the MLS primarily for comps. I?ve never viewed the MLS as a primary source for deals?.in fact, in my opinion it is way down the list as a source for deals. In my opinion the best deals are almost always outside the system. Notwithstanding my view of the MLS though, I think this is the primary advantage.

I think a secondary advantage of a license is the ability to receive a commission. My personal opinion is that this commission is really chump change. As you may know, my wife is a real estate agent. However, her license is really there primarily for the MLS access?not the commission. When I make offers on a listed property I don?t do it through my wife?.I do it through the listing agent. We forego any commission. We think this wins allegiance from agents/brokers. We don?t generally list properties?but if I were to list a property I would probably do it through an agent other than my wife?.again, to win some type of allegiance.

As to disadvantages?.I think they tend to fall within a couple of areas: One is disclosure, the other is liability.

Disclosure of your licensed status in an offer is not much of a disadvantage?.it never was to me. But understand that disclosure must be made in other areas as well. For example, all advertising by licensees must make disclosure of licensed status. This would include things like newspaper ads, radio and TV, business cards, postcards, flyers, direct mail, etc etc etc. If you are an agent working for a broker, then if your ad, card, flyer etc discloses your phone number, then it must also disclose your brokers name and number. Have fun with this one. As an agent it?s always possible that people calling your ad are going to call your real estate office?.not that any agents are ever going to steal your leads?.LOL.

Run an ?I Buy Houses? ad in the newspaper? It must contain a disclosure of licensed status. If you print your phone number, your broker?s number better be there too, along with the company name. How about that ?I Buy Houses? printed across your van??? Advertising to the public must contain disclosure of license status.

By the way, I?m only answering these based on the states? law I?m familiar with. There may be differences between state law?.I would suggest that you read yours closely.

There is a good chance that your brokerage company has a policy manual. In some states the state law may require a policy manual. Better read that as well prior to hanging your license somewhere?.because the chances are that there will be policies that you won?t like?and may be large disadvantages to your dealings.

Now, back to the disclosure. Disclosure in advertising REDUCES the number of calls. I guarantee it. I can?t tell you the reason why, but it does. I?ve run the same ads with disclosure and without?.and the results differ dramatically. Further confirmation of this comes from those agents who periodically advertise without disclosure (illegally), I suppose with the belief that there call volume goes up?.and it does. They?re out there?I run across them all the time when I call ads.

The other major problem area is that of LIABILITY. That license is like a license to be sued. Attorneys know that licensees probably carry E&O Insurance?..and therefore the agent/broker becomes a target. At one time it was believed that the most highly sued group of people in California were real estate agents?.that still might be. I?ve spend tens of thousands of dollars on E&O insurance to protect myself and agents against that liability. I used to say that having a license was kind of like having a legal gun to your temple. I?ve spent further thousands of dollars defending myself and agents against what were always proved to be rather frivolous suits by ill-informed attorneys. Only in America. Winning a successful countersuit by the way doesn?t get you your legal fees back. Everyone loses.

Then there is the liability that stems from the expectation that licensees must be held to a ?higher standard?. Could a licensee be held liable if he properly disclosed his status to a seller, did not list the property, instead bought it at a severe discount, and then immediately resold at a profit??? Well I know of a case where a licensee was sued for exactly this?and lost. The doctrine that would believe that agents have a ?higher? duty, and therefore must not take ?unfair advantage? stemming from their ?superior knowledge?. I?m not saying licensees cannot buy properties for resale?.but don?t ever believe that a case can?t be made by an aggressive lawyer who decides to go after you (and your insurance company). The insurance company may require you to turn this case over to them, and they may well settle rather than fight?.whether you like that tactic or not.

In one state I was licensed in there were provisions in the license law pertaining to foreclosures that were tantamount to tying one hand behind your back when dealing with foreclosures.

As a broker I wasted COUNTLESS hours and dollars complying with state laws, being audited by the state periodically for compliance with the laws, setting up procedures to comply with the law, to include a policy manual, etc etc etc. And we haven?t even spoken about operating escrow accounts in one state, trust accounts in another state?.and the requirements regarding these.

Steve, let?s just say I have never regretting giving up my licenses. Licensing will reduce freedom, not increase it. In fact, periodically I try to get my wife to give her license up?.so far unsuccessfully. But again, there are arguments on both sides, and you should start by carefully reviewing the license act in Maryland.


Re: Disadvantages ??? - Posted by cwc

Posted by cwc on January 08, 2001 at 22:16:42:

I think one of the big advantages is Instant credatablity (when associated with a good firm).
Another advantage is in some situations is it will get your foot in sellers doors that would not open to a investor. Another if you are listing property is the oppertunity to purchase when a quick sell is more important than geting full price.
The bigest and maby the only real disvantage I see is increased accountability.
If you find a good broker to work under I think it will be worth your time invested. Any good broker will expect something out of the relationship.

Disadvantages to getting a realtors license??? - Posted by Rob FL

Posted by Rob FL on January 08, 2001 at 21:39:53:

I’ve been investing as a broker now for several years. I do agree that if all you are is a salesperson, that it might be tough unless you find a good broker to work under. Probably someone who is a friend or owns a small office would be best. Personally, I don’t have anybody working under me as a broker, unless you count my wife who is my “office manager”.

Disadvantages of having a license include:

  1. Disclosure. Easy to get around. I just bury the disclosure in my addendum. As long as it is there, what does it matter. Nobody seems to care, at least that I have noticed. I never make a big deal about it at all.

  2. Annual dues. I pay about $100 every other year for state licensing fees, and about $800 a year for my Realtor/MLS dues. 1 deal pays for all that and more.

  3. There is alot of education to get started. In Florida they require a 45 hour salesman pre-license class, 45 hour salesman post-license class. And then 60 pre and 60 post for a broker. But once that is all over and done with, all they require is 14 hours of continuing ed every other year. I do all my continuing ed through correspondence (i.e. via mail). No big deal.

  4. Courts might consider you an “expert” if you ever get sued. Of course if things actually go to trial, you have already lost even if you end up winning.

As for advantanges. They are everywhere. I just sent out 2 offers tonight on ones that got listed today. I scan through the MLS every evening about 5:30. As soon as they get listed, I make offers on them. Any investor that is relying on some Realtor to let them know about a property, won’t find out about it until tomorrow, and by then they may be too late. I do have a few select investors that I work with and help out. Most work in areas of town that I don’t, but if they do want to make offers on something I am interested in, I will give them first shot. It’s a great side income that fits naturally in to what I already do.

As for HUDs and VAs I bid on those and don’t take a commision at all. All non-licensed investors have to bid through a broker and thus have to pay a commission. Not me. I can bid that much higher than they can.

At least in my area, I would guess about 75% of the major residential investors are licensed and have MLS access.

A few more… - Posted by GlennAL

Posted by GlennAL on January 08, 2001 at 20:39:57:


I know my wife hates the continuing education classes she has to take. Just a little wasted time for some of the classes. I hate it too, because she always comes back telling me how bad it is with all the lawsuits and what she can’t do any more.

Just always causes very negative thoughts and concerns that may be real or not. Probably depends on the instructor, and I’m sure you can sort through all that.

Monthly/yearly fees are also another thing. Local dues, national dues. Yes the MLS has it’s advantages, but more and more info is also available on the web now.

Can you buy FHA/VA foreclosures when you are a realtor, seems like they use to have restrictions, not sure now. They always thought as a realtor, you had an advantage over the general public???

Any time you become an employee/contractor, which is basically what you are, you have to play by the rules in the brokers office. Or become a broker yourself.

Just a few thoughts,I would talk to some local realtors and get a feel. Scott Britton is also a realtor/investor, He can probably give you some good insight also.

Hope to see ya in Atlanta,


there are 2 disadvantages… - Posted by David Krulac

Posted by David Krulac on January 08, 2001 at 19:52:33:

  1. disclosure, some sellers will think that they are selling to cheap if the buyer is an agent.
  2. some brokers require all deals that agents do, both buy and sell MUST be brought through the brokerage so that the broker get a piece of the action.

Neither are insumountable. the first could cost a deal or two maybe not, most sellers won’t care and the second ask the question up front so that there are no surprise commissions later.
Good luck, Steve.

Hmmm, must be the season - Posted by ScottS

Posted by ScottS on January 08, 2001 at 19:34:43:


I have considered the very same thing lately mayself.

My negative has both been mentioned. Finding the right broker who understands your efforts. The Broker nipping the profits both mitigated by finding the right broker to work under, and becoming a broker as soon as possible. In my state that is 24 months where the primary income is earned from real estate (a down point for any part timer).

What are the positives you have identified?


Re: getting a realtors license??? - Posted by kelly

Posted by kelly on January 08, 2001 at 18:54:20:

If you are not a broker you have to work under one. The broker will take a chunk of any money you make (usually)even if it is your own deal. If you want to go down that path thats great, it just makes it difficult to do your own deals. Which is why I decided against it.


Re: Disadvantages… - Posted by Paige Sinclaire

Posted by Paige Sinclaire on January 09, 2001 at 03:30:33:


Thanks for such a detailed response! I literally was considering just last night to get a license. I somehow beleived it would help me in building rapport with the client however I see that is not necessarily true.

Disclosing your are real estate agent - Posted by osirus

Posted by osirus on January 09, 2001 at 01:19:30:

Are Florida’s real estate agent disclosure requirements as strict as described in JPiper’s post?. In other words in addition to disclosing you a agent in your purchase contract, you must dsiclose in all your advertisng including your newspaper ads, direct mailings, signs, brochure etc?

I probably should have been more specific. - Posted by SCook85

Posted by SCook85 on January 08, 2001 at 22:09:19:

Thanks for your reply, I was hoping to have an agent/investor respond. Most of what you mentioned I am very well aware of and those items don’t scare me. What worries me is that I have 2 local agents who have told me that when they were selling a home that they owned that the appraisals got scrutinized more because they were the agent and seller. One said that he had to order a second appraisal on an FHA deal, and the other said that he was forced to lower his price.

Have you ever heard about anything like this? This is my only hang up at this point. If I feel confident that this won’t happen, it is a done deal for me.


Re: Disadvantages to getting a license??? - Posted by Redline

Posted by Redline on January 08, 2001 at 22:00:39:

I agree totally. I work in a small office so the commissions are not a huge issue, but they do exist.

Secondly, the education/dues requirements are starting to get completely out of hand. Several states are considering really outrageous legislation that will require realtors to be liable for just about ANYTHING you can imagine in a real estate transaction - it’s very scary.

And last - yes when you tell some people (and you HAVE to) that you’re a realtor, automatically their shield goes up.

Also, in NJ you cannot become a member of an MLS system that your broker does not ALSO subscribe to - so make sure the office you work for has the MLS you’re looking for.


Re: there are 2 disadvantages… - Posted by andrew

Posted by andrew on January 08, 2001 at 23:27:50:

Actually , the reason the Brokers want all deals coming through them is not necessarily for the money aspect. It is because they are accountable to the state licensing boards for every real estate transaction you do. Therefore they want you to pass everything through them to cover their butts.
They also require you to have the e/o (errors and omissions)insurance to cover yourself in case you get sued.
that is only $15 - 50 per transaction depending on your brokers record and the ins co. Small price to pay to get yourself covered in case someone thinks you did them wrong.


Re: Disclosing your are real estate agent - Posted by Rob FL

Posted by Rob FL on January 09, 2001 at 07:53:58:

Yes. The requirements are the same. It still isn’t much of an issue though.

On bandit signs, newspaper ads, mailers, etc. I just simply put one word in them. “Broker.” No big deal.

Re: I probably should have been more specific. - Posted by Rob FL

Posted by Rob FL on January 09, 2001 at 07:51:09:

I haven’t had a problem with either of those issues. I know a lot of Realtor-investors and nobody has mentioned anything like this to me before.

Re: Disclosing your are real estate agent - Posted by osirus

Posted by osirus on January 09, 2001 at 12:43:37:

Do find that disclosing you are broker in your signs, flyers, direct mail etc gives you a lesser response than you would if you did not disclose your broker status?