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April 27, 2022 by Threshold Homes Leave a Comment

Is a Real Estate License Required to Flip?

I have said it before, flipping houses is a lot of learning on the job. Over time, you’ll cultivate timelines and workflows that work for you, and you’ll learn and make changes as needed. One thing I am asked about often is if a real estate license is required to flip.

While the answer is no, you can flip a home without a license, I will talk through some of the commonly talked about benefits, and weigh in with my official opinion on licensure.

Access to the MLS

Licensed real estate agents have access to the Multiple Listing Service (MLS). The MLS is a private database where real estate agents can access new listings as soon as possible. One of the greatest challenges with flipping houses is inventory, so having this extra access can come in handy.

While this is true, keep in mind this information is only useful if you can act on it quickly. The MLS is available to all agents everywhere, so if you’re not able to look at a property, analyze the potential, and submit an offer in a short timeline, you may miss out. 

Information on the MLS is also available to anyone who is not licensed through other sites like Redfin, Realtor, and Zillow. The MLS is quicker and offers more information, but if you aren’t able to jump on a listing immediately, the free alternatives will suit you just fine. 

Source of Income

Another benefit to getting your real estate license is adding a new source of income. This is something I took advantage of myself.

Flips can take several months, so having an additional source of income as an agent can be helpful. When I decided to leave my full-time career, I got my license as a cushion as I pursued flipping. 

Having your license also allows you to help others with their real estate needs. 

Networking Opportunities

Networking is huge as a house flipper. There are so many opportunities within real estate to learn and grow as you meet others. You will come in contact with other realtors, potentially other investors, appraisers, inspectors, and lenders. All people who have insight and knowledge in the industry.

It’s important to note that you can still network with people who have expertise without a license. Here are some ways you can (and should) network as a house flipper, that can be done without a real estate license:

  • Attending your local real estate investor meetings
  • Join real estate investment club
  • Contact investor-friendly agents
  • Meet and greet local contractors
  • Visit hardware and home improvement stores
  • Join Facebook groups/pages discussing flipping, real estate, and the like

Your network should include as many types of people in the industry as you can, and it will take time to make those connections. Work to get connected with fellow flippers (your competition), agents, investors, contractors, residents of ideal neighborhoods, etc. 

Discount on Sale of Your Flip

As an agent, you can get access to the MLS, so you won’t need to pay an agent to list your home. This can save you thousands of dollars.

Unfortunately, this is an area I find many flippers think about the wrong way. Many people mistakenly believe a flip is profitable when it actually isn’t based on lower closing costs. Calculating commissions with profits of a flip project is not a method I use or recommend.

For every project, I suggest separating out the commission even if you are licensed. The real estate commission and the project profit are two separate revenue streams. If the only profit realized from a flip is the commission the project wasn’t a successful flip.

To look at them together it will be difficult in the future to determine estimating and projecting if that commission is included. We always want the most accurate numbers of the project as possible. 

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Should You Get Your Real Estate License?

So let’s settle it, should you get your real estate license as a house flipper? It depends on your situation, goals, time, and circumstances. The time and effort required to get a license may or may not work for your situation. Especially if you’re just getting started.

While there are some tidbits of knowledge in the course and test, it will not guarantee success with a flip. In fact, there are several people I know who got their license to flip and overpaid for homes, over improved them, and over-priced them. All choices that led to a loss on the project!

Anytime you’re new at something, I suggest consulting with others who have more insight and knowledge to avoid this painful lesson.

You’ll learn the practical skills of real estate when you start working in it. Regardless of your license status. Should you decide to obtain your license, you’ll need to disclose that information anytime you’re engaging in real estate activities.

In my opinion, a real estate license is not necessary to flip houses. But, if becoming an agent is on your agenda, know that the knowledge you’ll gain will still require time to develop. If that’s something you want to add to your expertise now or in the future, it’s up to you!

That’s the beauty of this business. You get to decide what it looks like and what works for you. 

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