Do you need a real estate license to flip houses?

One of the many ways to make money in real estate is by flipping properties, which is the act of purchasing distressed properties, fixing them up and reselling them for a profit.

While you don’t need a real estate license to flip houses, having one comes with pros and cons.

Do you need a license to flip houses?

You don’t need a real estate license to flip houses. The coursework for a real estate license teaches agents about the laws, regulations and ethics that govern the real estate industry, not the business and economics behind being a successful flipper.

Pros of flipping houses with a real estate license

While a real estate license isn’t required to start flipping houses, having one can work to your benefit as a house flipper.

A license can make you more knowledgeable in real estate processes, and it grants you access to tools and resources that can make real estate investing easier and more profitable.

Real estate knowledge and experience

Becoming a real estate agent can help you become more knowledgeable about the real estate market, along with its processes and the important permits and regulations that pertain to flipping homes.

Having your real estate license ensures you’re educated on the steps to be successful when you’re buying and selling. A real estate license also prepares you for some of the surprises you may encounter after purchasing your fixer upper.

Access to the MLS

The multiple listing service (MLS) is a tool that real estate professionals use to share information with each other about all homes for sale in a given area.

This service also gives real estate investors useful information about investment properties and enables them to cast a wider net when trying to reach potential buyers. The MLS is not publicly available. You can access it only if you become a licensed real estate agent.

Added source of income

Even as a full-time business, house flipping can be an inconsistent source of income. You may need to supplement the money made from investment properties with additional income streams.

If you’re looking to get into flipping homes, it’s likely that you already have a strong passion for business and a dedicated mindset – traits that’ll take you far as a real estate agent. As long as you’re able to sell properties, you can make commissions as a real estate agent to supplement the profits you make from flipping homes.

No agent commissions

When you buy or sell a home through a real estate agent, you (or the seller) have to pay them a fee. Most agents don’t charge a flat rate; instead, they charge a percentage of the home’s selling value – also known as a commission fee.

By becoming your own real estate agent, you’ll bypass agent commission fees and retain more of the profit.

Extended network

House flippers need to have connections with contractors, inspectors, other investors and, of course, real estate agents to be successful. By becoming a real estate agent, you can expand on your network and build relationships with other real estate professionals.

More credibility

When it comes time to sell a flipped house, credibility is crucial. Because you’re a professional who understands the legal and financial side of buying and selling properties, prospective buyers are more likely to perceive you as knowledgeable and trustworthy. Buyer’s agents may also be more likely to present your fixer-upper to their clients if they see you’re a fellow real estate agent.

Cons of flipping houses with a real estate license

While there aren’t many cons that come with obtaining your license, there are still factors that you should consider before you start the process.

Costs of education and certification

The largest obstacle you might face when trying to become a certified real estate agent is the cost of education and certification. Laws and costs vary by state, but you can generally expect to pay the following fees:

• Pre-licensing courses and education: $300+
• License application fee: $80 – $400
• Fingerprints and background check: $100 – $125
• State exam: $40 – $100 per attempt
• Real estate license: $150

In total, you should set aside about $800 – $1,000 to cover the cost of classes and application fees. To get the most accurate amount, check your state’s requirements for becoming a licensed real estate agent.

Time commitment

Acquiring a real estate license can be a timely process. Depending on the route you take, the entire process can take about 2 – 6 months.

Each state has different education requirements, with most requiring a minimum number of hours of pre-licensing instruction time. The required time can range from 40 – 300 hours.

How to get a real estate license to flip houses

If you feel as if the pros outweigh the cons, take these steps to become a real estate agent before you start flipping houses.

• Take courses through an accredited program. Prior to applying for a real estate license, you must take state mandated pre-licensing courses through an accredited school or program.
• Apply for your license. Next, you’ll have to apply for your license. At this point, background checks and fingerprints may be run.
• Take the exam. If your application is accepted, you’ll have to take your state’s mandated real estate exam. This can be a difficult, time-consuming test, so be sure to prepare.
• Obtain your license. Once you’ve passed your test, you’ll be able to acquire your real estate license.

Receiving your license isn’t the end of the process. Depending on your state, you might have to obtain a certain number of credit hours of continuing education during each licensing cycle.

Tips for flipping houses without a real estate license

You can still be a successful house flipper without your real estate license. If you decide to move forward without getting a real estate certification, you should consider doing the following:

• Use a real estate agent. Using a real estate agent to help buy and sell your fixer-uppers can come in handy for a few reasons. Specifically, a real estate agent can get you access to MLS listings, help you assess the houses you’re looking to buy and facilitate both the buying and reselling processes.
• Consider a contractor’s license. If you decide to obtain your contractor’s license, you will be required to learn about any laws and permits you’ll need to work on your investment property.
• Try micro-flipping. Micro-flipping is a perfect start for someone who’s just getting into flipping homes. Instead of buying a property and renovating it before making the sell, micro-flippers use software to analyze data and find properties that they can buy below market price and sell quickly to another buyer. No renovating, no manual labor.

The bottom line: A real estate license can help you flip houses, but isn't necessary

Flipping homes is an exciting task to take on. And while a real estate license isn’t a requirement for flipping, having one might make your work a little easier.

Ready to start flipping houses? Start the mortgage approval process today with Rocket Mortgage^®.