Do You Need a Real Estate License to Flip Houses?

Flipping houses is a very popular investment strategy these days. More people are flipping houses than they have in the past 10 years (138,410 in 2017 to be exact). People who are new to flipping have a lot of questions. Chief among them is whether or not a real estate agent is necessary.

Do you need a real estate agent? No. Is it a really, really good idea to have one? Yes. Here are some reasons why it makes sense to have a trusted real estate agent when you’re flipping houses.

Top Reasons Why Flippers Want a Real Estate Agent

Help Finding Homes to Flip As a house flipper, you wear a lot of hats. It really helps to have professional partners that can handle some of the important tasks, like finding homes to flip.

Sure, you’ll still do a lot of searching on your own, but an agent that’s an expert at real estate investing can do a lot of the work for you and might hear of a deal that isn’t going to be listed. They can also hunt down information if you find a property you’re interested in on your own.

Valuations Accurate valuations for purchase and potential sales price are a critical piece of the flipping puzzle. If you’re off on either one it can cost you thousands in profit. It’s much easier to determine accurate valuations when you have access to all the recent sales data, understand the local market and have a good idea of where it’s headed.

An experienced real estate agent can provide you with all of this valuable valuation information. They can do a market analysis to help you decide if a home will be a money maker, and the information can be used to negotiate the best purchase price possible.

Professional Connections Flipping a house involves a lot of people from inspectors to photographers to contractors galore. Real estate agents have a lot of professional connections that a house flipper can leverage. It will save you time and stress knowing that the service providers are already vetted.

Much Bigger Pool of Buyers (and Money) Selling Through an Agent When you’re finally ready to sell your flip, having an agent definitely pays off. You’ll have to pay the commission, but in many cases, an agent‘s services negate the cost.

A recent study from Collateral Analytics compared FSBO sales prices to those of homeowners that used a realtor. It found that on average FSBO homes sell for 6% less compared to similar homes sold through an agent. That’s the same as paying a commission (or maybe more), and you have to do all the work yourself. Knowing how to price the home right and negotiate the contract makes a real difference.

Not having the MLS listing and marketing expertise of an agent can also cost you a lot of time. And in the house flipping world time is money. A yard sign alone isn’t enough to draw in a large pool of potential buyers, and effective online marketing isn’t as easy as it looks. Not to mention, you’ll have to pay out of pocket for the signage and ads.

You’re better off letting a real estate agent handle everything for you.

Legal Protection Trying to sell a home on your own opens you up to a lot of liability. If something isn’t handled correctly when you have an agent their broker takes on the responsibility, not you. As an FSBO you’re the one held responsible if real estate laws are broken. Even something minor could lead to a major lawsuit.

It Won’t Cost You Any Money on the Purchase Using a real estate agent to purchase a property also has its benefits. For one, you won’t have to pay for their services. Commissions are paid by the seller. Your agent can help keep the close on track and do a lot of the legwork for you while you’re working on other flips or finding your next one.

The Other Option - Get Your Own Real Estate License

If house flipping is something you see yourself doing more than once a year, being your own real estate agent could be the best option. Taking the required real estate courses and passing the exam can be done in just a few months if you have time to make it a focus.

Once you have your license it doesn’t take much to maintain it. As long as you find a broker, you can start working as an agent and earning commissions on the homes you buy and sell.

Krista Doyle
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