Should an investor get a real estate license? Episode #270

Todd: Hello! Welcome to Todd Miller TV. Joined here today with Oana again and we’re gonna talk about investors who have a Real Estate License. So, There’s some advice on the internet and people talk about this a lot like “if I’m an investor/well tell me some of the advantages if you’re an investor and you have a Real Estate License. Like what are some advantages of that?

Oana: So if you’re an investor and you have a Real Estate License then hopefully you have some market knowledge hopefully you have some contract knowledge.

Todd: Okay.

Oana: And you’re able to purchase properties, know the value of them, know the sort of repairs and improvements that will increase your return on your investment versus repairs and improvements that have no value. Really. They’re pretty but they have no value.

Todd: Okay, good! What about, what if you’re a realtor and you’re realtor in the market place and you’re an investor? But you’re full time job.

Oana: Okay.

Todd: That’s probably an advantage, right?

Oana: Sure, absolutely because you’re spending your time searching up properties, visiting properties, evaluating them for whatever your goal is. Whether it’s to flip them or to rent them.

Todd: Okay. So what abut the investor whose wife goes and gets a Real Estate License so that she can write up the deals and earn the commission? So what are the drawbacks to that potentially?

Oana: Okay. So if you are an investor or if you are related to an investor or have a sort of a relationship with an investor, then you have to disclose that when you make an offer with a property.

Todd: Okay.

Oana: So if you’re a spouse, if you’re a parent, if you have a financial relationship with that person, so let’s say for example that you’re an investor and your agent has/you have another joint business together. Not this one but a different joint business together, you’re still financial relationship with that person. So you still have to disclose that. So any sort of outside relationship that you have beyond that transaction that probably would need to be disclosed. It doesn’t make a whole lot of difference as far as how a seller views that. But it is legally required that you disclose that.

Todd: Okay. What about form a market knowledge point of view? You know the wife maybe has a job, maybe a stay at home mom, it’s just basically using the license to facilitate and you know, try to get the commission, do you think there’s be any drawbacks to that?

Oana: Well, you know as long as the investor knows what he is doing, then that’s fine. He’s simply using that license to get the commission, and that’s fine. If he’s depending on her having market knowledge but virtue of having a license, that is a not an appropriate way to view a license. A license is not the same thing as market knowledge.

Todd: Okay. What about the investor who’s let’s say from California who comes to Las Vegas, calls you on your listing and says “You’re the listing agent and I wanna by the property. I wanna use you because you are the listing agent, but I want you to pay me the commission as a referral/whole commission as a referral fee.” But they want you to handle everything.

Oana: Well, every agent has to make their own business decision.

Todd: Okay.

Oana: Form my perspective, that’s/that doesn’t make any sense for a lot of reasons. Number one, I need to do the work. Number two, I have the liability.

Todd: Okay.

Oana: And number three, why would I not to have a buyer that I’m actually going to keep the money on. It doesn’t make a lot of sense. Wee see it more actually with investors saying “Hey, can I have part of the commission as a referral fee?” If they’re a Real Estate licensee, then that is something that we can do. If they’re not a Real Estate licensee, the no Referral fees.

Todd: What about when they use the line “Well, but you wanna sell it, don’t you? So this way you’ll sell it ’cause I’m buying it and you’ll sell it which is what you’re supposed to do.”

Oana: Correct. Well, so 2 things: one, my properties all sell. So.

Todd: And that’s because you take salable listings. You’re actually the agent who just picks random listings hoping they’ll sell. You only take the listing if you know you can sell it.

Oana: Right.

Todd: Okay.

Oana: Right. So listing sell. And two, as far as I just left my (—-)a lot.

Todd: That’s okay. We’re talking about the investor who wants the whole commission.

Oana: I’ (—-)

Todd: Okay. Well that’s good. We’ll just end it right there then. Okay so in summary, what would you say the/for the investor who’s thinking about getting the license? What would you say/what advice would you give to them before they actually go do this?

Oana: They’re welcome to get their license and that’s great! It doesn’t/If the only thing that license is going to do for them is it’s going to give them access to the commission. Okay? It’s not going to impart them with market knowledge. It’s not going to get them anything else besides their commission. Now if they’re also going to the board of realtors, then that gives them MLS access, which is useful because obviously the MLS is the fastest way to get information about properties. Other websites have a lag time. So the MLS is the most up-to-date information.

Todd: Okay. I think a good analogy is Just because you went to Law School, doesn’t mean you want to represent yourself may court. ‘Cause you may not actually have court experience and understand all the rules.

Oana: That’s a good analogy.

Todd: And if you’re an investor buying an investment property, you’re gonna get anyone to represent yourself and write the offer up and do all that your stuff and all the paperwork and making sure you’ve/you’re compliant and you’re doing everything correctly, right?

Oana: Right. And then you have all the liability too. The other thing that I’m going to say is that if when an investor wants me to represent them, the thing that they need to understand is that for me to represent both the buyer and the seller, there is inherent conflict. No one can serve 2 masters.

Todd: Okay.

Ona: So, at no point are bot the buyer and the seller going to be happy. There’s going to always be that perception that somebody got the better deal that somehow I was more loyal to one side than the other. So, I always like it when people come to me and say “Hey represent me on your listing.” I tell them “You know, I totally appreciate that. Let me have somebody on my team to represent you. That way you have full presentation and you know that you’re dealing with somebody that is loyal to you and only to you.” You know, Particularly when it comes to bank owned properties, this is how I make my living, and I obviously have a lot of properties with these banks and it’s just an inherent loyalty with a client that gives you a lot of business. As supposed to a client that you’re only going to do one transaction with.

Todd: Okay, good. All good information. Well thank you very much.

Oana: You’re welcome.

Todd: Alright. So anyway, that’s my update for today and hope to see you on another video. Thanks.