To answer the question of do you need a real estate license to flip houses, please know that anyone can flip houses, but having a license is very useful! We’ve heard of many celebrities buying houses just to flip them and sell them for a profit (they even discuss it on the Kardashian show). They don’t have a license, but they might be working with someone who does. Getting a license as a regular person has advantages like getting the best deals on your own personal house flipping process and bouncing from one project to another as you earn a living! Not only can they earn a living buying and selling other people’s properties, but they also get access to where to go, who to work with, and where to look while they’re working on their own. But since it requires a good portion of investment of your self-funding, getting a license and becoming a property flipper can also be a risky business.
It is an investment that doesn’t always reap rewards, so you really need some hands-on experience that being a licensed real estate agent can benefit from.
Do You Need A Real Estate License To Flip Houses: 5 Tips That Can Help!
What does it mean to flip houses?
The process of property flipping or house flipping is a mix between identifying and buying a property, fixing it up and selling it for a profit (hopefully).
House flippers who’ve obtained a real estate license can find a lucrative way to earn money in real estate—if it’s done right.
House flippers can work at nontraditional hours—nights and weekends when clients are available and some real estate agents even manage a construction site that typically starts at 7 a.m. and knocks off at 3 p.m.
Many people get into real estate, becoming a part of the house flipping career path, to earn a part-time income in the ways mentioned above and they even earn commissions on real estate deals during off-hours. So if you have a license or can find a way to forge forward until the point where you need one, you can seriously start a real estate career that is the best for your lifestyle.
5 tips to become a smart house flipper:
1. Get your real estate license
Do you need a real estate license to flip houses? Yes, get it as it prepares you.
Especially when you begin a flipping career, getting your real estate license comes with many opportunities and even opens you up more throughout the process. Studying for a real estate license test lays a great foundation to speak in real estate terms because you’ll get familiarized with the vocabulary, and forms that are needed to identify, buy, flip, and sell a home.
Sure you can learn on the job as well and some might say you don’t need your real estate license to become a house flipper as you’ll pick up the details on the way. In the end, it comes down to confidence. And a paper does that.
“Most states have several disclosure forms required by law,” says Bill Gallagher. He is a Charlotte, NC real estate agent who not only practices but has even educated youngsters on pre-and post-licensing courses for 25 years.
“The national exam gives flippers confidence that they’ve mastered the material. Everyone thinks that real estate is easy,” Gallagher says. “It’s the opposite. Having knowledge of what can go wrong—all the liability issues—can really help reduce your risk.”
So if you have free time to learn everything while you’re working you don’t need to go and get a license now but learning at a school gives you information on disclosure forms, financing details, zoning challenges, and Home Owners Association regulations and laws. Mastering this material is critical information for buying and selling homes.
2. Look out for brokerage support
Real estate brokers are mines for invaluable advice according to Gallagher.
“Say to the broker, ‘Help me. Lead me. Guide me” and you’ll learn the business and get support.”
Not only do brokerages come with support to newbie house flippers, but they also become a slew of agents who can bring buyers.
“Exposure is key,” Gallagher says. “Many brokers say, ‘Let’s try to sell it in the firm first.’” That could mean, allowing agents to bring clients during a “coming soon” period before the property officially is on the market. This coming soon ad also could mean you’ll have advance notice of properties and future clients coming to market, which could be your next flip.
3. Access the MLS
NC real estate agent Bill Gallagher points out that the MLS status data “is accurate and verifiable as opposed to other places that aren’t reliable 100% of the time.
For Multiple Listing Service (MLS) access, you need to show that you are a real estate agent and a member of a national, state, and local real estate association. If you don’t meet these criterias, they’ll not only ask you to pay sometimes as much as $1,000—to list your property on the service, but their fees will eat into profit as you flip more and more houses.
4. Purchase a property that you can renovate within the budget
Most people are familiar with this attractive process after watching property flippers on reality T.V. with a license and access to the MLS, you will be able to find deals on homes that you can fix-up.
One of the key components of this stage is also familiarizing yourself with the practical know-how such as:
- Getting financing for this property or will you be asked to pay the total price up front?
- Getting a mortgage, or do you have the money for monthly payments that you can reasonably afford after you add the cash costs you’ll need to renovate?
- Questioning if you can pool in with other real estate investors or do it on your own?
- Understanding the property value trends in the areas.
When it comes to renovating, staying on the budget will help you make more money after flipping for a profit.
5. Sell and earn a commission
Many don’t realize that being a real estate license for property flippers means you can represent your own property; so you don’t have to pay an agent who shows up with a buyer a 2% to 3% commission
You can either save the money or pay yourself a listing commission depending on if you have a license.
In addition, certain benefits come from acting as your own listing agent.
For example, according to the National Association of Realtors in May 2018, the median price of a home was $252,800, so if you act as your own listing agent meaning you’ll save $5,055 to $7,583, which could be the difference between making a profit, breaking even, or losing money while flipping homes!