|
|
|
| Please use the feedback page for all website and agent comments and review the forum rules before posting. |
|
|
|
| You are not authorized to post a reply.
|
|
|
|
| Author |
Messages |
|
buyer08
Posts:16
 |
| 09/11/2008 4:05 PM |
 Alert
|
Call me a pessimist, but I just do not trust buyers' agents. Don't get me wrong. . . my husband and I (who have been casually looking at properties for about 9 months. . .want to buy eventually but in no rush) have met some very nice and informative agents.
But we have a hard time trusting that any of them are really aligned with OUR interests. After all, we want lowest purchase price possible - and for them, the higher the purchase price, the more money they make. It is an inherent and irreconcilable conflict of interest in my view.
My parents always told me, if you want something done right, do it yourself. So since we are in no rush, I was thinking about getting a real estate license and possibly, maybe even a broker's license too down the road. (I am an attorney by profession. . .although I do not practice in real estate law). Any opinions on the potential advantages of this?? If someone has a real estate and broker's license. . .and finds and closes their own sale, do all the commissions come off the purchase price? Thanks! |
|
|
|
|
|
|
Eugene
Posts:302
|
| 09/11/2008 4:20 PM |
Alert
|
Someone correct me if I'm wrong...
Getting a real estate license is not difficult or expensive if you have a college degree. It will cost you under $1000. But a real estate license is not sufficient to close your own sale. For that, you need a broker's license. And you can't get that unless you have two years of full-time experience working as an agent with an existing broker or in a related field.
The benefits are 1) you may get a better deal representing yourself, 2) you save on commissions. Getting a better deal is not a given. Even working with an existing agent, you're the one calling the shots, deciding how much to offer, etc. Unless your agent withholds information from you, representing yourself does not give you an advantage.
Saving on commissions is a valid point. But you can also save a lot on commissions by using a discount online broker.
You don't need a real estate license to do your own research. |
|
|
|
|
Brian
Posts:2614
|
| 09/11/2008 4:34 PM |
Alert
|
If you have a 4 year college degree, you don't need experience to get your broker's license.
If not, with a sales license, you can always join a broker who will only charge you a nominal fee for the "supervisory" work.
Definitely do it if you're not in a hurry, if only for the experience. It's easy and cheap to take classes at the local community college. Plus it's fun to be around young people.
Don't support those expensive real estate schools. I hate diploma mills because they charge a lot for subprime education.
http://www.dre.ca.gov/exm_broker_exper.html
Four-year Degree
1. An applicant with a four-year degree from an accredited college may be exempt from the two-year salesperson experience requirement. This may be verified by submitting either a copy of the diploma or transcript showing the degree earned. Regardless of the degree, the applicant must show evidence (transcripts) of having completed the eight required college-level courses at the time of filing the application. The eight required courses, which is considered the equivalent of a minor in Real Estate, may be part of the degree requirements or they may be completed separately from the degree course work.
Courses completed or degrees earned through foreign institutions of higher learning must be evaluated by a foreign credentials evaluation service approved by DRE. See Examination Applicant Foreign Education Information (RE 223) available on the DRE Web site for further information.
http://www.dre.ca.gov/exm_home.html
|
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 4:34 PM |
Alert
|
As an attorney you should know that if you do indeed get a license, you will be held to a higher standard if anyone involved in a transaction is unhappy and wants to sue for damages. Getting a license increases your personal liability, IMO.
Also, unless you intend to sell full time, who in the world would want to work with you if you just dabble in real estate now and then?
Finally, why do you think you need a license to get a price reduction equivalent to have the buyer's broker's share? What about making an offer, telling the seller that since you are representing yourself (unlicensed), your offer reflects the fact that the seller will not have to pay the buyers side of the commission. You can easily structure your offer such that the same amount of money will end up in the buyers pocket whether they sell to you with a price reduced about 2.5 - 3% or pay a broker that much.
Also, if you offer 2.5-3% less to reflect the savings to the seller on buyers commission, you'll pay less in property taxes down the line since taxes are a function of purchase price.
FINALLY: if you do get a license and get the buyers half of the commission, that is taxable income: and don't forget you also get to pay the full 15% self employment tax. Why would you want to to do that??
Yeah: If you want something done right, you might be better off doing it yourself, but you certainly don't need a license. |
|
|
|
|
Eugene
Posts:302
|
| 09/11/2008 4:36 PM |
Alert
|
Okay, correcting myself. You don't need a degree for a salesperson license, and you can use proof of your college degree in lieu of experience when applying for a broker license.
Real Estate Salesperson License
BTW it says "Members of the California State Bar are statutorily exempt from the college-level course requirements. Evidence of admission to practice Law in California must be furnished, such as a photocopy of both sides of a California State Bar membership card." If you're an attorney, you may not need to take any courses, just take an exam ($25), pay the fingerprint fee ($51) and get a license ($120).
Someone on this site mentioned that he/she was taking courses for the degree at an online university. |
|
|
|
|
Mike18
Posts:12
|
| 09/11/2008 4:37 PM |
Alert
|
I think, since you are a lawyer, you can skip the two years experience requirement and just take the broker's exam. My education waived my experience requirement, I bought a book for $30 to help me study and took the broker's test yeserday actually. If you don't mind putting in a few hours of studying, I think it's well worth your time.
I can think of one downside - especially in times like these. Sure, you can go online and see the same deals as most people. There are, however, some deals which don't hit the market which a very select few agents may hear of. If you're new to the field, and don't have many contacts, you may miss on deals like this. |
|
|
|
|
Eugene
Posts:302
|
| 09/11/2008 4:40 PM |
Alert
|
FINALLY: if you do get a license and get the buyers half of the commission, that is taxable income: and don't forget you also get to pay the full 15% self employment tax. Why would you want to to do that??
If you're representing yourself in a real estate transaction, you can probably arrange paperwork that says that you're working for free. |
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 4:47 PM |
Alert
|
[quote]Posted By Eugene on 09/11/2008 4:40 PM
[i]FINALLY: if you do get a license and get the buyers half of the commission, that is taxable income: and don't forget you also get to pay the full 15% self employment tax. Why would you want to to do that??[/i]
If you're representing yourself in a real estate transaction, you can probably arrange paperwork that says that you're working for free.[/quote]
don't mess with the IRS, man. If you earn a commission, you'll get a 1099. How do you then explain to the taxman that you worked for free. Bad idea.
You don't need a license to work for free.
If you get a license, you will have to get insurance (not too cheap) or hang your salesperson's license with a broker who has insurance. That cuts into your take by quite a bit right there.
Are you a trial attorney? Neither am I, but I have represented myself in unlimited civil court (and done quite well, thank you very much) and I didn't need to be a member of the state bar or even be qualified to sit for the exam.
Bottomline: you don't need a license to represent yourself. |
|
|
|
|
buyer08
Posts:16
|
| 09/11/2008 4:49 PM |
Alert
|
| Thank you all so much for the information. Airplanehead - the ONLY reason I would consider getting my own license/s would be for our own personal knowledge and benefit. I agree that it would not be wise to "dabble" in real estate - and I do not desire or intend on having another career on the side. |
|
|
|
|
Eugene
Posts:302
|
| 09/11/2008 4:51 PM |
Alert
|
don't mess with the IRS, man. If you earn a commission, you'll get a 1099. How do you then explain to the taxman that you worked for free. Bad idea.
Fine, put a 0.5% commission, then.
I think it's silly to pay taxes on the commission that you essentially pay to yourself.
|
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 5:00 PM |
Alert
|
[quote]Posted By buyer08 on 09/11/2008 4:49 PM
Thank you all so much for the information. Airplanehead - the ONLY reason I would consider getting my own license/s would be for our own personal knowledge and benefit. I agree that it would not be wise to "dabble" in real estate - and I do not desire or intend on having another career on the side. [/quote]
I hear you: You did however, state you wanted the license to save money on commissions--that's more than seeking enlightenment. Not that there is anything wrong with wanting to save money, but I'll bet you you'll end up spending more money by having to service a license. Do you think that having a license will get you some inside info that might save money? That's not too probable. Half the battle with dealing in real estate is getting the inside scoop and having a license doesn't automatically make you an insider.
But you don't have to have a license to educate yourself. Maintaining a license is not as cheap as you think and I am pretty sure you WILL have to have insurance if you represent yourself as a licensee (anyone know for sure)? Why would you want to pay E&O premiums just to make you officially informed and educated? Again, it is probable that having a license will not necessary help you get better deals, but it can increase your liability. Sit down with a paper and pencil and do the math. That'll give you a really good idea of where the true economies lie.
good luck! |
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 5:08 PM |
Alert
|
[quote]Posted By Eugene on 09/11/2008 4:51 PM
[i] don't mess with the IRS, man. If you earn a commission, you'll get a 1099. How do you then explain to the taxman that you worked for free. Bad idea. [/i]
Fine, put a 0.5% commission, then.
I think it's silly to pay taxes on the commission that you essentially pay to yourself.
[/quote]
agreed. but that's the law. much easier to avoiding generating that 1099.
Even if you paid yourself .5% commission, if you buy a $500,000 place, your commission is a whopping 2500 (netting probably only about 1700 once you pay taxes), plus all the hassle of the paperwork, license fees, continuing education requirements, insurance premiums, tax liability? WHY??? What a pain. |
|
|
|
|
Eugene
Posts:302
|
| 09/11/2008 5:39 PM |
Alert
|
Even if you paid yourself .5% commission, if you buy a $500,000 place, your commission is a whopping 2500 (netting probably only about 1700 once you pay taxes), plus all the hassle of the paperwork, license fees, continuing education requirements, insurance premiums, tax liability? WHY??? What a pain.
If you buy a $1,000,000 place, the choice is
a) going through a full service agent and paying $30,000 in commissions.
b) using a discount broker and paying $10,000.
c) representing yourself and paying $1500 to the IRS.
Exam + Broker license + fingerprints are $256. Being an attorney she's probably exempt from coursework requirements; if she isn't, all necessary courses can be taken online. I just found an online school (Allied Schools) that lets you take all necessary courses for $509, and you get a small refund if you return textbooks in perfect condition. Insurance may not be needed to represent yourself. |
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 5:49 PM |
Alert
|
[quote]Posted By airplanedad on 09/11/2008 5:08 PM
[quote]Posted By Eugene on 09/11/2008 4:51 PM
[i] don't mess with the IRS, man. If you earn a commission, you'll get a 1099. How do you then explain to the taxman that you worked for free. Bad idea. [/i]
Fine, put a 0.5% commission, then.
I think it's silly to pay taxes on the commission that you essentially pay to yourself.
[/quote]
agreed. but that's the law. much easier to avoiding generating that 1099.
Even if you paid yourself .5% commission, if you buy a $500,000 place, your commission is a whopping 2500 (netting probably only about 1700 once you pay taxes), plus all the hassle of the paperwork, license fees, continuing education requirements, insurance premiums, tax liability? WHY??? What a pain.[/quote]
ooops. let me refine my reply. It is not silly to pay taxes on the commission you essentially pay yourself.
This isn't tax advice, but:
If a CEO pays himself $1,000,000 to run a company, would you argue that is not taxable income? Plenty of CEOs try to do that and it's a big, big No No that could get them a nice long vacation at Club Fed. If you get any kind of cash for your services, it's most likely taxable once you touch it. If you are a small business owner who just keeps building and building the business but does not take out any kind of salary (maybe lives off rich parents), you don't have the same tax liability on what you build (unless it's a corp and then you have corp taxes). But, once you touch that money, it most likely taxable.. |
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 5:58 PM |
Alert
|
[quote]Posted By Eugene on 09/11/2008 5:39 PM
[i]Even if you paid yourself .5% commission, if you buy a $500,000 place, your commission is a whopping 2500 (netting probably only about 1700 once you pay taxes), plus all the hassle of the paperwork, license fees, continuing education requirements, insurance premiums, tax liability? WHY??? What a pain.[/i]
If you buy a $1,000,000 place, the choice is
a) going through a full service agent and paying $30,000 in commissions.
b) using a discount broker and paying $10,000.
c) representing yourself and paying $1500 to the IRS.
Exam + Broker license + fingerprints are $256. Being an attorney she's probably exempt from coursework requirements; if she isn't, all necessary courses can be taken online. I just found an online school (Allied Schools) that lets you take all necessary courses for $509, and you get a small refund if you return textbooks in perfect condition. Insurance may not be needed to represent yourself.[/quote]
there is an option d .
d. Offer $970,000 and tell the seller you are taking 30,000 of the full price because that is what the seller will save by avoiding paying both sides of the commission. So in fact, it's a full price offer. Seller walks away with the same amount of money in his pocket, you save 30,000 and don't have to pay taxes on it.
This is the best deal: you don't have to have pay the principle and interest on that 30,000 (over 30 years) AND the basis of your property will be reduced by 30,000 (saving you a $300+ year in property taxes per year times the number of years you hold the property) |
|
|
|
|
Count_Chocula
Posts:9
|
| 09/11/2008 6:12 PM |
Alert
|
> As a prospective buyer, should I get a real estate/broker's license?
No. That would be a waste of time and money.
Around 30% of real estate transactions in California take place without a buyer's agent. There is no law against buying property all by yourself. All you need to do is acquaint yourself with a few laws and know how to write a contract to purchase real property. There are several books available that take you through the process and provide sample contracts and forms. As an attorney, you should have no problems.
When you write your contact, you might include a cover letter that promotes the lack of a buyer's agent and the 3% savings to the seller. Your contract will spell out the specifics, but the cover letter will highlight it. The things you'll need to do is get your own inspectors and handle escrow and title. The process is all very simple; in fact, a monkey can do it. As an example, a family member of mine bought a condo without any buyer or seller agents and with the seller providing the financing; it worked out great and closed very fast.
You are absolutely right, the common process of buying real property is plastered with conflict of interest. A buyer's agent makes more money working under the 3% commission when you bid high. They will also rush you into purchase so they can collect the money and move on. If you feel you need a real estate agent, consider paying by the hour or paying a flat commission; unfortunately, you won't get much effort out of them, so use them for what you can and expect to do a lot on your own anyhow. |
|
|
|
|
airplanedad
Posts:133
|
| 09/11/2008 6:39 PM |
Alert
|
[quote]Posted By Eugene on 09/11/2008 5:39 PM
Insurance may not be needed to represent yourself.[/quote]
I am not so sure about this. The insurance is not to protect you (the buyer) it's to protect other parties in the transaction: namely, the seller and perhaps even the seller's agent. (and, you may have to carry insurance, or face penalties for not doing so -- kind of like being required to carry liability insurance to drive a car ) Anyone know? I am curious!!!
If you are a licensee, you could be held professionally liable for any damages that occur as a result of engaging in any stage of the transaction. Say you submit an offer that is accepted. When you perform your due diligence, you find some problems and want to cancel.
Say the seller says-hey, you knew about the problems from day one: If we would have known better, we would have gone with that other offer. Now that buyer is gone and we are in the lurch. Buddy, you sucker punched us. We were harmed. We lost $100,000. You are a licensee and SHOULD HAVE KNOW BETTER. We're suing.
This can happen even if you don't have a license, but as just JaneQPublic, you are not held to the same standard. |
|
|
|
|
mvpeezy
Posts:50
|
| 09/11/2008 11:01 PM |
Alert
|
Honestly, I don't do real estate but I do mortgage loans and have been licensed in the biz for 5+ years. I can honestly say I have never heard of a buyers agent trying to hold a price so that they get a little extra commission. Speaking for myself, I don't care if it is $100K loan or $1M+ I just do them for whatever gets the deal done. I obviously will need to make enough on the deal that the time spent makes it worth it to me but my motto is some money is better than none.
Seriously, if you are in the market for homes in the say 600K range, if you purchase one at 625K or 575K the net difference of commission to your agent is not worth any sort of monkey business to influence the price...you are talking about 3% of 50K which is $1500 minus whatever their broker's take is, which could be half of it more or less...again why would anyone try to alter the deal for a possible couple hundred bucks before taxes? They would be happy to close it at 575K or 525K or whatever it takes to make the deal close!
I know of several very honest agents who are legitimately in it to entirely for their clients best interests, I am sure they are not the only ones.
Many times when people try to save a buck on a transaction as large as a home purchase you can really regret it. It would be similar to getting bids for construction work and hiring the cheapest bid for every job. That would scare me...you are not going to get the same quality. Same thing goes for if you needed legal representation...cheaper lawyer might end up costing more in the long run.
Honestly I don't think it would be an issue find an agent you feel you can trust, if you feel like they are only in it for the commission then don't work with them but there are plenty that just want a client and are motivated to do the best job possible for them and be happy with whatever they made in the end. |
|
|
|
|
Caligirl43
Posts:148
|
| 09/12/2008 9:26 PM |
Alert
|
I know of several very honest agents who are legitimately in it to entirely for their clients best interests, I am sure they are not the only ones.
MVPeezy - If you could pass the names of these so called honest agents on to me I would be most appreciative, because after all the reading I've done on here the past several months I'm pretty convinced there are no honest agents out there. Let me know if you can get me those names. Thanks.
|
|
|
|
|
artist
Posts:114
|
| 09/13/2008 9:16 AM |
Alert
|
| IMHO My advive would be No do not bother to get your license. I would get yourself a great agent who works for a large company. State up front with your concerns are and what you are looking to do in a deal situation. I am a flipper and about 1/3 of my properties never make it to the MLS but are in house pocket listings. A small mom and pop agency will never get these type of listings. An agent can reduce their commissions to make a deal happen. Also the large agencies will be the ones listing the REO's which often go unlisted for months. But the biggest thing you want to find in a agent is a long track record in the area you are looking for. They can tell you the good and bad about the home AND its location. Many deals are no deals when you factor the neighborhood into the package. |
|
|
|
|
|
| You are not authorized to post a reply. |
|
|
|
|
|
|
.................
|