Question Details

Sunny, Home Buyer in California

i want to get licenced to get the buyers' commission

Asked by Sunny, California Tue Oct 23, 2007

Hi,

I am planning on buying a condo in the Bay Area and I feel like I can pretty much pick a place on my own. I was wondering how difficult or do-able would it be to consider taking a real estate class and pass the licencing test so that I can become my own agent and cash the buyer's agent commission?
What difficulties aside from passing the test do you think I would encounter?

Thank you

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Answers

13
Getting hired, for one. There aren't many brokers that would let you hang you license so you can buy one property and keep the commission.

Other obstacles? Well, watch how quickly your commission gets eaten into when you have to pay your MLS dues, your Realtor dues, and many many other fees and dues.

There's more. You say you can 'pretty much pick out your own place'. Can you also pretty much handle the liability of handling a transaction? Because there is loads of potential liability in every word you say, every decision you make, every paper you sign....

And don't forget! You WILL have to hand over 50-70% of your commission to your broker.

And pay taxes on it.

And what are your plans after you get your condo? As a licensed agent you will still be required to take
continuing education, pay dues and fees, and show up to the office once in a while.

To avoid having to pay for classes and licensing (because yes! That costs money, too), you can always hire a 'buyer's agent' from one of those buyer rebate agencies. You'll have to do all the work yourself, and only get part of the commission, but doing the work is what you want anyway, right?

Honestly? You're better off hiring an experienced, serious agent who honors her chosen profession. One that can help you get the best deal so that you won't miss that 'commission'.
4 votes Thank Flag Link Tue Oct 23, 2007
Sunny, you just nailed the inherent problem with an agent or brokerage that ponies up a buyer rebate. You get what you pay for. Think this will be an agent that really has your best interest in mind, or will take the time to find you the right property (rather than trying to slam you into every place she shows you)? Most importantly, is this an agent that knows what she is doing? In my market, there are two types of agents who offer rebates: rookies and non-productive agents. Not exactly who I would choose to help me locate the best investment, negotiate the sale, navigate the escrow, provide professional contacts, etc. I would opt to use an agent that doesn't just want to make a one-time sale, but a life-long client. Best of luck, Sunny.
2 votes Thank Flag Link Wed Oct 24, 2007
Oh, yes! I agree Paul. That is exactly what I said, thinking you know what you are doing when really you don't. This is why even though I am a FSBO, 99% of people should NOT be FSBO! The only reason I am a FSBO is because I had to fire my agency for gross mistakes. If I could have found a good replacement agency, I would have.

Sonny, what state do you live in?
Ruth
Web Reference: http://www.oak-park-il.com
1 vote Thank Flag Link Wed Oct 24, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
You may save yourself more money by hiring an experienced buyer agent to represent you. If you are a new agent representing yourself, you are basically a FSBO, and subject to the same risks that a FSBO would be.

Also, as a Broker, I don't recognzie commisisons for new licensees on the sale of their property, for exactly this reason. I cannot invest time and energy into training someone so they can save $$ on one transaction and not contribute anything else back to the company. Training is an investment, and I choose to invest where there is an anticipated payback. We also have a company policy that prohibits agents from representing themselves. Aftter a minimum time period with the company, an agent can buy or sell and recieve a discount or commision.

You can go to a broker who will allow you to hang your license solely to get a commssion. Some will not train you, in which case you are worse off than a FSBO. A FSBO can call 5 agents in the area to come over and talk to them, you won't have that option as a licensee. Or, you could go to a broker who will train you. But, I would encourage you to be honest about your intentions and not hoodwind a broker into investing time, $$. and energy by thinking you were seriously interested in becoming a knowledgeable agent.
1 vote Thank Flag Link Wed Oct 24, 2007
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Hi Sunny. The others have already given you good information and I only want to add a few points. Aside from the expense of getting the license and having to split your commission with the brokerage where you hang your license, I think you also have to consider that it will take a while before you will actually get your license as you'll have to fulfill all the educational requirements first, then wait to get an exam date and then wait again until the licensing agency has processed your application and issued your license. I would estimate that you are looking at a minimum of 6 months (most likely closer to a year) before you get your license. I don't know how soon you were planning on buying, but I just thought I mention this.

There's also a potential problem with E & O insurance as many insurance providers will not cover the agent's personal real estate transactions. Unless you think you'll want to use your license after you purchased the condo, I personally think you'd probably be able to accomplish the same net savings by just negotiatiating a better price for the condo. Good luck to you.
Web Reference: http://www.theMLShub.com
1 vote Thank Flag Link Wed Oct 24, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
MVP'08
Contact
Yikes...real estate is an expensive hobby if you are going to do just one or two transactions. Let me break it down a bit...in California, you will have to take classes and pass a test to get your license. You will have to pay the state for your licensing fees and FBI background fingerprinting. You will have to pay fees to your local association and to your state and national assocations. You will have to pay local MLS usage fees. You will have to buy a lockbox. You will have to pay for errors and omissions insurance....all before you list or sell your first house. You will have to affiliate with a brokerage and split your commission with the company. You will have to pay transaction fees, pay for signs, etc. You will have to pay taxes on the earnings...

So hypothetically:
Classes - $300
State Lic / FBI - $200
Assoc Fees - $500 annually
MLS Fees - $400 annually
E&O Ins - $1000 anually
Lockbox - $100 ea
Total - First year $2,500 start up fees

Often firms require rookie agents to work with a mentor and give them a precentage of your commission on all of your first several transactions. You will end up spending countless hours on all these endeavors. Most firms will not want to bring you on, as they want professional Realtors on board as opposed to those just looking to make a quick buck and get out. Much luck to you as you evaluate your path...
Web Reference: http://www.erinattardi.com
1 vote Thank Flag Link Tue Oct 23, 2007
Erin Stumpf…, Real Estate Pro in Sacramento, CA
MVP'08
Contact
Sunny,
Take the time to meet a couple agents. Talk to them and see who will meet your needs. Its very important to use a real-estate professional. There is negotiating involved, inspections, disclosures etc. The list goes on and on. Me personally I go above and beyond my job duties. My clients are not only my clients, they become my friends for life. It all starts with trust.

Just stick with 20% down. Save the rest for a raining or invest it.

Call me if you need any more advice.

Raquel Zapata-Gonzalez
Licensed Real Estate Consultant
Cell: 813-294-7264
Fax: 813-655-1878
E-mail: rzapata@tampabay.rr.com
http://www.MajesticHomeRealty.com
0 votes Thank Flag Link Wed Oct 24, 2007
Sunny:
The reason I asked where you are from is because I received excellent service from BuySide Realty. https://www.buysiderealty.com/ They only service six states and Calif is one of them. However, I am in IL and we typically always use a home inspector and an attorney here. In Calif, I understand the agent is involved with some inspections. Be sure to read the posts here about Buyside and Redfin to get some of the warnings. I have used two different flat rate listing agencies to sell my home and both have some excellent value as well as severely lacking service in other areas. If I could combine the two it would be perfect.

http://www.trulia.com/voices/Tech_Tips/Buy_side_vs_Redfin_re…

As for your question about how much to finance verse put down, you will get mixed answers on that. (And do ask that as another question.) The most important person to ask about that is your personal accountant/financial adviser after he/she has reviewed all of you finances. The answer is part about maximizing your money's value and part of it has to do with your own personal values. Your great-grandfather would always tell you to pay cash and don't be in debt. Others will say, why use your own money?

http://www.trulia.com/voices/Home_Buying/Why_isn_t_it_a_good…
http://www.trulia.com/voices/Home_Buying/Which_is_wiser_more…
http://www.trulia.com/voices/Home_Buying/If_purchasing_a_hou…

Good luck,
Ruth
0 votes Thank Flag Link Wed Oct 24, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Thanks again for the advices.

I live in CA.

I actually had another question in mind... I figured I want to buy something around 650K and I have accumulated roughly half of the sum. I know that typically people put 20% down payment for the loan but I was wondering if it's smart to put much more like half of the sale price of the home and borrow less?
I am still fairly young and not too sure if I would want to stay in this house my whole life, but at least for another good 5-10years minimum..
0 votes Thank Flag Link Wed Oct 24, 2007
Thanks you guys... Those were really precious advices. I really appreciate it. I am a very DYI person so it just feels so fustrating to pass on having someone else handle my housing transaction. But like you guys said the money involved was too high compared to the money I would make. I wasn't aware that I would have to enlist with a broker.. Sorry for being a rookie, but I don't understand why I couldn't just be a sole proprietor and do the transaction myself?

I've checked up some of the rebates places, and following the advices you guys posted, it seems that this is the best option for me. The best quote I got so far was 1% of buyer's commission back... but honestly this lady just seems so random, she doesn't even really listen to my needs, doesn't analyze the markets to provide me with hard facts.
0 votes Thank Flag Link Wed Oct 24, 2007
Sunny:
I'm going to support you part way. I think you should try to get your license. And I say TRY NOT because you won't succeed, but because maybe you shouldn't actually get your license. The education will help you further understand everything involved. You will be better able to evaluate the property, financing and real estate agents. It will help you for the rest of your life. It might even turn out to be a career for you. Just be careful that you don't learn just enough to be dangerous. I think that is where you might be now. You think you know enough to do it on your own. But what you don't know that you don't know can hurt you. As someone else said, "unconscious ignorance".

I was searching for another post asked by a Realtor and couldn't find it. The closest I came was this post:
http://www.trulia.com/voices/Home_Selling/Can_an_agent_repre…

More importantly, would you become a lawyer just to defend yourself in a lawsuit? But if you were in a lawsuit, wouldn't you want to know what was going on? Wouldn't you want to educate yourself so that you are not taken advantage of?

Another couple of posts to read would be:
http://www.trulia.com/voices/Tech_Tips/Is_entry_into_becomin…
http://www.trulia.com/voices/Home_Buying/Are_the_barriers_to…

The money you save by not making mistakes will far outweigh any commission you could receive.
Good luck,
Ruth
0 votes Thank Flag Link Wed Oct 24, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Hi Sunny,
I think it depends on how much your time is worth. Passing the exam usually takes a month or so of studying and taking classes either on line or at a school. However passing the exam does not tell you all you need to know about real estate. You and alot of consumers out there, need to fully understand the liability you take on as a licensed professional. There is a lot more training especially in fully understanding the contract, TDS, FIRPTA etc, you should get before you attempt to represent yourself or anyone else.
To get this training you usually have to sign up with a broker who offers training to their agents. But then once again you will have to split your commission with broker.
Bottom line if you decide to get your license, make real estate a career
Web Reference: http://www.mikwmoresco.com
0 votes Thank Flag Link Wed Oct 24, 2007
You are just like many people today who, thanks to the internet, are able to do most of the research and find the perfect home on your own. But, you then must have an agent to put in an offer. I know it's frustrating but there are many reasons for this, many of which are sited below.

There are great companies that realize consumers are doing everything on their own and therefore, reward this by offering cash back rebates to buyers. Instead of getting nothing from your buyer's agent, you instead get up to 1% of the purchase price back in the form of a cash rebate (that's about 1/3 of the commission). It's a check delivered to you after closing. It's a great way to get rewarded for all of that hard work you do. I would suggest using Google or Craigslist to search for cash back rebates.
0 votes Thank Flag Link Wed Oct 24, 2007
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