If you’re a new real estate investor, you might be wondering if you also have to become a real estate agent in order to buy and sell real estate or pay cash for homes. The good news is you don’t. Let’s examine some of the differences:
Agents need to be licensed; investors do not.
Real estate agents need to be licensed by the state that they do business in. They have to take a real estate exam and then, depending on the state, keep up with their real estate education by attending additional real estate classes for CLE credits. Real estate investors do not need a real estate license to buy and sell real estate. The only time you need to get a real estate license is when you intend to represent someone other than yourself in the purchase and sale of the property.
Agents earn commissions; investors earn checks.
Obviously both real estate agents and real estate investors earn their living through real estate. The difference is how they earn their money.
Agents earn their money via real estate commissions—in effect, a fee earned for representing the buyer or seller. Agents earn 1–5% commission off every sale they are involved in. Real estate investors can be paid many different ways—by flipping the house to a new buyer for a higher price than they bought it for (less repairs,) by renting the property as a landlord, or by “wholesaling the property” and assigning the deal to another investor for a fee. The number of ways a real estate investor can get paid is many and varied.
Investors are called investors because they’re excellent at finding creative ways to turn real estate into paychecks for themselves!
Agents work for large brand-name brokerage houses; investors can call their business whatever they like and are answerable to no one but themselves.
Real estate agents work under real estate brokers that pay cash for houses. Once an agent has completed their exams and is licensed by the state, they can’t just start going out to find clients. They have to find a brokerage house to work under in order to hang their shingle out. Not investors. They are their own bosses. They make their own rules for their business and can market their business in any way they want. Real estate agents also have to share a portion of their commission check with their brokerage house and often pay a monthly “desk rental” among other fees.
Bottom line: you don’t have to be a real estate agent in order to be an investor. I happen to be both because it gives me more options in terms of how I can earn my paycheck, but you don’t have to get licensed as an agent to be a real estate investor.