The conversation started something like this:”Hi! I met you at an event last year. I had been considering buying investment property and decided that I could save money by getting my real estate license. I just received my license from the Department of Real Estate and wondered what do I need to do now? I know that I have to pay $245 to the Department of Real Estate, but I wondered if there is a way to not have to to that.”
It was such an overwelming, under-informed question that I didn’t know where to start.”If you have not hung it with a broker, you need to do that. You can’t sell or purchase real estate as an agent expecting to receive a commission unless you are a broker or have your license hung with a broker. And no, you can’t get out of paying the Department of Real Estate licensing fees.”
His response was, “But if I hang my license with a broker, won’t I have to give him a percentage of my commission? Is there a way that I can do this without having to give up commission?”
“Yes, you will have to give up a portion of your commission and no, every brokerage will get their pound of flesh, one way or another.” (I didn’t quite say it that crudely, but there it is.) “Not only will you have to pay DRE fees and give up some of your commission, but most brokerages are members of the Sacramento Association of Realtors, whose fees include belonging to the California Association of Realtors and the National Association of Realtor. If your brokerage belongs, you are required to belong as well. The fees, depending on the time of year, will be several hundred dollars. Also, your brokerage will want you to pay for Errors and Omissions Insurance, which is several hundred dollars as well.”
“Yes, you will have to give up a portion of your commission and no, every brokerage will get their pound of flesh, one way or another.” (I didn’t quite say it that crudely, but there it is.) “Not only will you have to pay DRE fees and give up some of your commission, but most brokerages are members of the Sacramento Association of Realtors, whose fees include belonging to the California Association of Realtors and the National Association of Realtor. If your brokerage belongs, you are required to belong as well. The fees, depending on the time of year, will be several hundred dollars. Also, your brokerage will want you to pay for Errors and Omissions Insurance, which is several hundred dollars as well.”
He then asked “How hard is it going to be for me to learn what I need to know to represent myself?”
“Let’s see…after 15 years, I am still learning how to best represent my clients. I would never recommend that you try this on your own without lots of training…there is simply too many liability issues. What I suggest is, since the buyer does not pay the commission, and most agents are not going to discount their commission for a buyer, why don’t you find an agent that works the area you want to purchase in, let them represent you, and forget that you got your license?”
“Let’s see…after 15 years, I am still learning how to best represent my clients. I would never recommend that you try this on your own without lots of training…there is simply too many liability issues. What I suggest is, since the buyer does not pay the commission, and most agents are not going to discount their commission for a buyer, why don’t you find an agent that works the area you want to purchase in, let them represent you, and forget that you got your license?”
“Yea…maybe that is a good idea.”
This conversation lasted for 20 minutes, and went into many more things, but you get the gist!
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