As the housing market gets tighter, finding houses to flip becomes more challenging. One way to get the inside track to find properties is to become a licensed real estate agent. Being a real estate agent gives you extra benefits. Let's look a little deeper into how becoming a licensed real estate agent benefits your flipping business.
Benefits of the License
• Finding houses: As a licensed real estate agent, you will have access to the local multiple listing service and can get alerts when new homes come on the market. Also, 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. Especially valuable information will be when estate sales, divorces or such situations will present themselves, when sellers are motivated to get a quick cash price and close.
• Saving costs: If you can handle your own sales and contracts on the back end, you will save money on closing costs and commissions. Again, that network benefits you as you'll also know real estate agents who have buyers looking for homes in your area and with features you have included in your houses.
• Education: Never knock the knowledge you will gain in studying to become a real estate agent as it will help you in evaluating houses, deciding what improvements will pay off and keep you abreast of comparable sales in your market. As an agent, you'll also be required to complete continuing education, which will add value to your business.
Steps to Getting Licensed
Getting a real estate license involves three steps:
• Pre-license Education: Each state has different requirements on education before you can take the licensing exam, but most states also allow online or textbook education that can be completed on your own schedule. Required course hours vary by state, but most can be completed in a few months. For instance, California requires 135 credit hours, while Texas requires 180 hours and Florida only 63. You also could opt to take courses through a local community college or private school, but this might require a longer time period.
Topics covered include listing and selling property, property valuation, escrow procedures, counseling buyers, the law of agency and more. Some 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, money well spent since you can make that up with fees you save on one house sale, not to mention the savings you might get through early access to properties.
In the meantime, as you continue flipping houses, contact us about financing your purchases or remodeling costs.
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