Should Investors Obtain a Real Estate License?

Whether real estate investors should get a license or not is debatable. There are arguments both in favor of and against the idea. Many investors start without a license. Some of them obtain it after working in the industry for several years. For many people, the biggest motivation to get a license is that it gives them access to MLS. It also allows them to work more closely on short sales.

The risks are relatively lower when you remain an unlicensed agent. Once you obtain a license, you will be judged by a different standard and you need to follow certain norms. If you are an investor buying a property, you will perhaps just want to remain as an anonymous individual. The risk mainly arises when you find yourself involved in representing the seller(s) in a short sale, although you want to buy the listing. Since you have to follow some fiduciary responsibilities, it is imperative that you act in your best interests. The seller should do the same. This will make the deal less complicated.

Advertising

You will probably have to include your logos and disclosures in your emails. You will also need to follow legal guidelines set by the government. This might cause your mail to land in the trash. If the recipient thinks that you are just another realtor trying to promote their listings, your efforts fail to produce the desired results.

On the other hand, if you are an unlicensed person, you can employ simpler marketing strategies that tend to get better results. That said, there are still ways to advertise your service, even if you are a licensed buyer of properties. However, you will have to ensure that your message complies with the legal regulations.

Alternative solutions

A license will get you access to MLS. However, you don't necessarily have to obtain a license just to have access to MLS. If you are lucky enough, you can connect with a generous realtor who will provide you access to the service through their portal.

If you are trying to list homes, there are several brokerage firms that charge a low fee for adding your listing to the MLS. There are also agents who will readily represent your listing for a fee.

Having a license certainly helps your business and it will not be a hindrance on any of your deals; however, your license can be a burden when you prefer anonymity. On the plus side, if you really want, you can hire another real estate agent as your listing or buyers agent.

In order to figure out whether you need a license or not, you should have a thorough understanding of your business model.  You should decide whether the licensing and accreditation will do more harm than good. Once you get a good understanding of the structure of your business model, weighing your options becomes easier.

Buy and work leads smarter, contact only the customers you want to engage, and enable your employees to be productive. Connect with your target audience with Live Connect today!

Should Real Estate Agents Discount Their Fee?

Do you really believe that your service is better than the service offered by your competitor? Have you got anything to prove that you can sell the property for a higher price or in less time? Can you prove that you can provide better value? If so, the value of your service exceeds the fee you charge.

Unless you are convinced that you are worth what you charge, you may find it difficult to defend your fee.

Prove it with concrete evidence

Agents will not have to reduce their fee if they can defend what they charge with solid proof. The service offered by an agent has many components and each one of these components has a value in dollars. When agents compare the value of their service to their fee, they will not have much difficulty convincing the client that they are worth what they charge.

Agents who want to earn like champions can't give away their fees. Still, many agents don't demand even a decent fee. They readily offer discounts to attract clients. Remember that when you adjust your fees, you are giving away your net profit.

Risks associated with being an agent

Consumers as well as agents often fail to realize that in the real estate industry, the agent assumes all the risk. The agents risk their time, energy, money and knowledge despite knowing that all that effort may lead to nothing. If the sale doesn't happen, the agent won’t get the fee. Note that the agent is not paid for showing the home or negotiating with potential buyers. The agent is paid only when the property is sold. And when agents assume all the risk, their commission should reflect the risk they bear.

An agent may show hundreds of homes in a year, but the actual number of sales may be much lower. As a result, agents have to amortize the cost of their service over relatively fewer transactions.

Expenses

In addition, in most cases, the agent doesn't receive 100 percent of the commission. That amount is usually split with a co-op agent. The agent's broker may also receive a certain percentage of the fee. The agent should also take into account other expenses associated with running a real estate agency.

Take tax liability into account

The agent has several tax liabilities as well. In fact, many agents pay over 50% of their net income after deducting the expenses to taxes. And when you calculate your real earnings after deducting all of these expenses, you will understand why you cannot adjust your fee.

Discounted fee equals inferior service

What is more, you cannot cut your fee without compromising on the quality of your service. It simply isn't possible to provide exceptional service for a discounted fee.

In fact, agents who charge lower commissions also offer somewhat inferior service. Most consumers who hire an agent who charges a lower fee do not realize that the quality of the service will be low. They expect great service for low fees. But this is not possible. In short, a seller who chooses a discount agent will unwittingly compromise their safety and their chances of getting the best possible price.

If you want to be a successful real estate agent, you should believe in the quality of your service and fee structure. You do not have to discount your fee just because some other agents do it. You need to tell yourself that you are worth every cent you charge.

Get your share of the $1.5 trillion in Adjustable Rate Mortgages scheduled to reset this year! Imagine having up to a 20% funding rate at a low, cost effective price per lead! With our ARM plus leads, you can. Get in touch with ARM Source today!