Longer Answer:
Retail real estate and investment real estate are two different businesses.
In retail real estate, you are representing clients who are buying or selling houses.
In investment real estate, you are buying and selling houses for yourself for some investment purpose.
In retail real estate, you need a license because the state regulates the industry to ensure you are a qualified fiduciary for your client.
In investment real estate, since you are working for yourself, your activity isn’t regulated in the same way.
Getting a real estate license is typically for the purposes of engaging in the retail real estate business.
Quick Flipping is buying and selling houses yourself for a profit which is the investment real estate business.
The reason I’m making these distinctions is two-fold:
1. Sellers who are selling you a distressed, off-market property at a discount are usually looking for an investor to work with, not a real estate agent. That’s why you don’t need a license. Many of these sellers don’t want a real estate agent to represent them on the retail market or they would’ve already gone that direction. They are looking for an investor buyer to quickly close on their house with cash in as-is condition.
2. Real estate agents, because they are regulated, have many disclosures they have to make in their marketing and upon first contact with a seller. This can make having the license a disadvantage if you’re an investor. Imagine you are wanting to talk to a seller about buying their house but you have to first disclose you are a real estate agent (a common requirement if you have a license). It can confuse the seller. They may think, “I wasn’t looking for a real estate agent. I thought you wanted to buy my house?” Then you have to explain. Or imagine a seller gets postcard from you expressing interest in buying their house but it has the typical real estate disclosures on it. What might they do? They might think, “I’m not looking for a real estate agent, I’m looking for an investor to buy this quickly so I don’t have to go through the trouble of putting it on the retail market. I’ll contact the other person who sent me a postcard who’s not an agent.” In this way having a license early on can become a disadvantage.
What if you’d really like a license to be able to collect commission checks on the side in addition to Quick Flipping? Here are 2 alternative ways to do it:
1. Have your spouse become a real estate agent. They can work on the retail side while you work on the investment side.
2. Wait to get your license until you have a team in place in your business and you are no longer communicating with sellers and buyers.
In summary, you don’t need a real estate license to begin Quick Flipping, and in fact, having it could actually be a disadvantage.
Quick Flipping and becoming a real estate agent are both great ways to make supplemental income for your family, it’s just important to understand the difference between the businesses.
