Is a Referral License Right For You?

Scott Costello All, Blog, Featured 5 Comments

NJARIf you are not aware, I have a Real Estate License and pretty much just use if for the MLS Access.  Even just for that purpose it was worth the $1200 a year to keep it active.  The ability to get comps when ever I wanted was key in my world of limited time.  Even if I had a great relationship with an investor friendly real estate agent to run comps for me, it would be a pain in the butt.  Besides, you learn a lot by being able to run your own comps and run different scenarios from the MLS as you think of them.

Other Plans For My License

I had other plans to make sure I got the most use out of my license.  It would allow me to make my own offers on REO’s or listed properties.  I could look at any listed house by just calling up the listing agent and getting the lock box codes.  Getting referral fees for sending leads to other agents or even list a few properties myself.  There are lots of different ways you can leverage your license to help you make or save more money.  All of which I never got around to doing.

My Partner

My investing partner is currently in the process of getting his license.  In fact he just finished the classes and is scheduling the test.  He doesn’t have a full time job like I do, so he is going to be working as a Sales Agent as well as leveraging his license to help out our investing.  The good news is that this means he won’t have to get a job outside of the housing industry and split his attention.  I’m all for this move by him.

On the other hand this makes it redundant for me to have my license, since I’ll be able to have MLS access through him.   The only problem is that I don’t want to just drop my license after all the work I put into getting it.  Though I don’t want to just shell out $1200+ a year just to maintain it, when it will not really be needed.  As an licensed agent I am also required to take continuing education classes each year and I have not.  So what can I do? Referral Agent!

Referral Status

As a real estate agent you can have your license as being “Active”, “Inactive” or “Referral”.  The problem with an inactive license is…

N.J.S.A. 45:15-9 provides that Real Estate licenses can be inactive for 2 years after the expiration date of the last license issued. To reinstate your license, your application must be completed by a currently licensed Real Estate Employing Broker.

So after 2 years, I’ll either have to reactive my license and pay all fees and take all classes needed or lose my license.  On the other hand if I transfer my license to a Referral State, I can keep my license and reactive it when the time comes for a small fee.   However there are limitations for being in referral status, I can only refer properties to my broker (you get paid for referrals) and nothing else.  I can not list, make offers or even get MLS access.

An additional benefit, for those of us with limited time, is that as a referral agent I will not have to take the continuing education classes.   I have not taken any to this point, and must complete 12 hours of class time in the next 3 weeks or stand to pay a $200 fine or even get my license revoked.   I don’t have the time for that right now.  So I am going to be putting my license in a referral state for the foreseeable future.  Has anyone else gone this route?
* real estate license rules and regulations differ from state to state, my statements above come from this site.

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Scott Costello

Scott is a part time wholesaler, but full time real estate investing addict! As his family grows and his free time shrinks,He has been slowing building his wholesaling business over the past 7 years in between life events.Drive, dedication and never giving up are his strengths.
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Comments 5

  1. i’ve been dreading the CE stuff but pushed through and only have 2 courses left to finish. you can do online, which is painfully slow, but i multi-task and eventually it’ll be done. it’s worth the inconvenience now rather than later.

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      Author

      I was up against the timeline for the CE, and with my next round of fees due and my partner just getting his license I thought it best to go referral for now. Gives me the opportunity to reactivate when I’m ready. Although I will have to take the classes at that point anyway.

  2. Good to know that I’m not the only one who thought of this …. I’m talking with three different companies about getting my license through them and coming to work for them after I get it, and I’m also being mentored by a local wholesaler with a long buyer list. I’ve been back into real estate for about a week now …. so far I’ve sent out a whopping ONE yellow letter but it’s on a $1.8M mansion near downtown Seattle that’s falling apart and is owned by a little old lady. I need to do a deal within the next 90 days or I’m sunk. Whether it’s wholesaling a contract or selling a house, I need to do a deal by then or I’ll be broke.

  3. I am about to put my license in referral status
    At this point I did one deal since last June and Although I dont want to give up my license and all the hard work I put into getting it. I am at a complete stand still

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      Author

      I really didn’t take advantage of my license as much as I could have and the continuing education classes were tough to keep up with. I kept having to take off of my full time job just to take these classes. Not worth it, so I ended up just letting my license expire.

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