Do You Need a Real Estate License to Flip Houses?

Flipping houses offers a quick turnaround time, strong profit potential, and a real estate investing business model that you can work either full- or part-time. But do you need a real estate license to flip houses?

The short answer: no, you don’t need a license to flip houses. But you may want to get your real estate license anyway. 

House flipping TV shows, YouTube channels, and podcasts have remained popular for two decades now. As business plans go, house flipping makes sense intuitively to the average person. You buy a house, add value by renovating it, and sell it for a profit within a few quick months of ownership. 

A real estate license can help house flippers in several ways, from MLS access to saving money on Realtor commissions to keeping a pulse on your local real estate market and more. But it also comes with costs, and you need to understand both the pros and cons before diving in headfirst. 

Benefits of Flipping Houses With a Real Estate License

As you consider the possibility of getting your real estate agent license, keep the following advantages in mind.

Access to the MLS

In today’s world, anyone with a smartphone can hop on Zillow or Redfin and view homes listed for sale on the multiple listing service (MLS). 

Still, having direct access to the MLS has its perks. First, you get instant access to new listings, with no delay. You can set up alerts to hit your phone the second a new listing hits the market. 

You can also see “privileged” information not visible to the general public. These agent-eyes-only details include showing instructions, owner contact information, property access codes, and more. 

Many local MLS platforms also include deeper market data, trend analysis, and other tools for real estate professionals that you just won’t get on consumer-facing platforms like Trulia and Zillow. 

Direct MLS access isn’t a necessity, but it makes for a nice competitive advantage. 

Multiple Income Streams from Real Estate

Working as a Realtor can add another stream of income to keep you afloat as you scale your house flipping business. 

That can make the difference between quitting your day job this year versus waiting another year or two grinding it out at a job you don’t enjoy. You can potentially go full-time in real estate immediately, by combining income as a Realtor and flipper.

Networking

Real estate agents work closely with contractors, home inspectors, appraisers, wholesalers, and other investors — all people that you also want to network with as a house flipper. 

By working both angles, you can network faster, and build credibility in your local market. 

Reduced Closing Costs, Higher Profit Margins

As a licensed real estate agent, you can list your own properties for sale on the MLS. You can represent yourself, without paying a listing agent commission. 

You’ll still likely have to pay the buyer’s agent commission however. But after the NAR settlement agreement, you may also be able to negotiate a reduced purchase price by waiving the buyer’s agent commission — since you’ll represent yourself. 

The savings on Realtor commissions can potentially save you thousands of dollars on each house flip, boosting your bottom line and letting you consider deals that your competitors can’t do profitably. 

Familiarity with the Local Market

Yes, house flippers get to know their local market well. But real estate agents take that market familiarity to another level. 

They have a constant pulse on the temperature of the market. When demand slows (or surges), they see it instantly in the volume of showings, days on market, and negotiating power on each side of the transaction. 

Realtors also see firsthand what makes local buyers tick. Which amenities are hot right now? What do buyers want to see most when they tour homes? What are buyers’ highest priorities right now?

You just don’t have that firsthand experience with dozens or hundreds of buyers as a house flipper.

This real-time local market knowledge helps you choose and renovate properties for maximum buyer appeal — which in turn helps you move inventory faster and reduce carrying costs. 

Negotiating Edge

The better you know your market, the better you can negotiate.

That goes for both sides of the transaction. As a buyer, you can say “Look, the market is cooling. The average days on market in this neighborhood have grown every month for the last three months, showings are down, and demand has slowed. You can take your chances to sell the property to someone else and hope it goes sometime in the next four months — or you can sell to me and close within the next two weeks.”

The same goes for selling: you can command top dollar because you know the local market inside and out. 

When you work as a real estate salesperson, you come to understand the process of selling houses. That makes you not just better at selling, but also makes you a better buyer on the front end. 

Is a Real Estate License Worth It?

All those benefits sound great and all, but what are the costs and downsides? Is a real estate license worth it as a house flipper?

Keep these costs and drawbacks in mind as you explore whether to get your Realtor’s license.

The Process to Get a Real Estate License

To get your real estate agent license, you need to take a course, and then pass two exams: a federal real estate law exam and a state law exam. Most states require you to have a high school diploma or GED, and be at least 18 years old. 

The time requirements for course hours vary by state. In some states, such as Michigan and New Hampshire, courses require as little as 40 hours in the classroom. But coursework can take far longer as well, such as 168 hours in Colorado and 180 hours in Texas. 

Note that these courses teach you next to nothing about the day-to-day work and skills required to work as a real estate salesperson. The courses mostly cover laws and legal requirements governing real estate. I know firsthand — I’ve taken this course.

If you fail one or both of the exams, you can take them again, sometimes after a mandatory waiting period. You may also have to retake some or all of the coursework. 

Once you complete your coursework and pass both exams, most states require you to get fingerprinted and pass a background check. They (understandably) don’t want people with a history of financial fraud selling assets worth hundreds of thousands of dollars. 

You must then get hired by a licensed real estate broker in your state. Most brokers hire agents as commission-only contract workers, not salaried employees. The best brokerages teach you the actual skills you need to succeed as a real estate agent. 

Around 30 states require Realtors to buy an errors and omissions (E&O) insurance policy to maintain an active real estate license. 

Finally, you must apply to your state’s real estate board for an actual license to practice. 

Costs of Getting Licensed as a Realtor

None of the steps outlined above is free. 

To begin with, the course costs money. Fees vary depending on the state and length of the required coursework, from as little as $119 in Florida up to $980 in Texas. 

The exams too cost money. State boards typically charge between $40 and $100 for each time you take the exams. 

The fingerprint screening and background checks also cost money. Expect to pay between $100 and $130. 

Errors and omissions insurance costs money too, and not just in the first year. Policy premiums depend on the state, your location, and your history of claims. They can cost as little as a few hundred dollars to over $1,000 each year. 

Applying for your state license also costs money, in the vicinity of $60 to $250 in application fees.

Finally, each state requires continuing education as well. Plan on paying between $125 and $450 for continuing education, although not all states require it every year. Some states require it every few years. 

Other Downsides to Getting a Real Estate License

Licensed real estate agents must disclose their license when they make offers on properties, and when they offer properties for sale. That can put sellers and buyers alike on guard, before you’ve had a chance to make your pitch. 

As touched on above, real estate agents must work underneath a broker in order to keep their license active. Some brokers — particularly the ones who offer the best training and resources — expect actual results and volume from you. They don’t want to hire someone who just plans on listing their own flips and doing no real agent work. 

And of course you’ll incur ongoing costs and education requirements, not just the initial ones. Depending on your state, the E&O insurance and ongoing education requirements (and costs) could be substantial. 

So, is a real estate license worth it? 

It depends on how much you’ll actually use it. If you plan to truly work as a Realtor to gain expertise and earn another stream of income, it’s worth it. But if you just want MLS access and to save money on listing commissions, it may not be. 

Do You Need a License to Flip Houses?

In a word, no. Most house flippers do not have their real estate license. 

That said, a few states impose limitations on the number of houses you can sell each year without a license. For example, Michigan requires a real estate license if you sell more than five properties each year as a flipper or real estate wholesaler. Make sure you double check your state’s regulations before deciding whether or not to get licensed. 

A real estate license does come with plenty of advantages, especially if you plan to use it as a second income stream. Working as a real estate agent complements house flipping perfectly, regardless of which one you consider your full-time gig versus a side hustle. 

Now is the right time to mention another license that can come in handy as a house flipper: your contractor’s license. 

Consider a Contractor’s License

As a licensed general contractor — or plumber, or electrician, or HVAC specialist — you can pull your own permits for renovation projects. That goes for not just your own properties, but others as well. Pulling your own permits can save you money over having a general contractor do it for you. 

The skill set also comes in handy, of course. If you can do many of the repairs yourself, it saves you money on paying contractors. You can bring in subcontractors and specialists as needed to support you. 

As an experienced contractor, you can also estimate repair costs more accurately and avoid house flipping mistakes. When you’ve done renovation projects with your own hands, you know exactly what to expect. 

Managing the renovation project yourself also exposes you to less risk of theft, poor workmanship, and of course contractor default. You’re less likely to have projects go sideways on you when you personally work in the property every day alongside the hired help. 

All of those factors can combine for higher profit margins on your house flips, and lower risk of hiccups. 

And like getting your real estate license, getting your contractor’s license opens the door to adding another stream of income. You can work as a general contractor helping your colleagues flip houses as well, which can help not just your revenue but also your networking within your local market. 

What Can You Do with a Real Estate License?

(Subheading Image: A real estate agent showing a pristine home)

As a licensed real estate professional, you can represent buyers and sellers in a property transaction — and earn a commission for your trouble. The industry standard remains 2.5-3% of the purchase price for each party’s Realtor. For a median home selling for $420,000, a 3% commission comes to $12,600. 

And, of course, having your real estate license as a house flipper means you can potentially keep those commissions for yourself, on your own properties. Real estate wholesalers find similar benefits from having their Realtor’s license. 

Licensed real estate agents also have direct access to the MLS. They’re the first to know when new properties hit the market, or properties go under contract or get taken off the market by frustrated would-be sellers. 

Direct MLS access also lets you see private listing information such as showing instructions and property owners’ full contact information. You also get data analytics and market trend information not visible to the general public. 

As a career option, real estate agents can become real estate brokers with teams of Realtors working under them. The licensing, education, and experience requirements are all more onerous however. 

Licensed real estate agents also have a leg up as property managers. Some states require a real estate license to work as a property manager, in fact. But even in states that don’t require it, licensed Realtors can post rental listings on the MLS, offer homes simultaneously for sale and for rent, represent sellers in lease-purchase agreements and transactions, and more. If you invest in rental properties, you can potentially launch your own property management business to manage your colleagues’ properties as well — again for a fee. 

How to Get a Real Estate License to Flip Houses

Follow these steps to get your real estate license as a house flipper.

1. Make sure you qualify. First, confirm you meet the basic requirements to become a real estate agent in your state. That includes the minimum age and education requirements, and the criminal record standards. 
2. Take the course. Next, enroll for the course required in your state. Different education companies offer competing courses, but ask about the exam pass rates before choosing a provider. 
3. Take the exams. After finishing your course work, you’ll need to pass both the national and state exams. 
4. Do the background checks. Get fingerprinted, take the mandatory background check.
5. Get hired by a real estate broker. A brokerage provisionally agrees to let you practice under their license, pending your agent license approval. 
6. Buy E&O insurance. Get an errors and omissions insurance policy if required in your state. 
7. Apply for the state license. Submit your application (and application fee) to the state board governing licenses. 

The order may vary slightly, depending on your state. For example, you may be able to apply for your license before getting hired by a broker or buying your E&O insurance policy. 

Once licensed and hired by a broker, you’ll get your MLS login access, and you can start practicing as an agent in your state. 

Final Word on Getting a Real Estate License as a House Flipper

Do you need a license to flip houses? Not in most cases — but that doesn’t make it useless, either. 

Having a real estate license can give you a competitive advantage over other flippers operating in your market. With direct access to the MLS, you can become the first to know when new properties hit the market. You can save money on Realtor commissions, and pad your profit margin.

Most of all, you can keep a better pulse on your local market, and earn additional income beyond your profits on house flips. Flip profits can come months apart after all, and flips don’t always yield as much profit as you expected. Commissions from working as a Realtor can stabilize your income and keep you in the game. 

Start by mapping out your own personal career goals. Could the combination of Realtor commissions and flipping profits enable you to quit your current job within the next few months? Perhaps you also want to earn money as a real estate wholesaler? 

Or maybe you want to become a landlord and earn some extra income managing other landlords’ rental properties as well? 

Real estate offers endless combinations of income sources, which often complement each other well. Plan your ideal career path within real estate, and decide whether a real estate license would help you achieve those goals faster. 

A real estate license comes with plenty of advantages for house flippers and wholesalers. Only you can decide whether those upsides outweigh costs and downsides. 

Frequently Asked Questions About Flipping & Licenses

When people first start considering a real estate license in tandem with a house flipping or wholesaling business, they often ask these questions. 

Do you need a real estate license as a landlord?

No, but you may need to register your rental units with the local housing authority. That often involves filling out a form each year — and of course paying an annual fee for each unit. 

Can I wholesale real estate without a license?

Yes, although a few states put limits on the number of properties you can sell each year without a real estate license. For example, in Michigan, wholesalers can sell up to five properties without a Realtor’s license.

Do you need a business license to flip houses?

No, anyone can buy and sell properties at any time. 

Do you need a general contractor’s license to flip houses?

No, but it can certainly help. From navigating the permit process to estimating repair costs to keeping tighter control over the quality of the work and theft, having a general contractor’s license can help you flip houses more profitably and with less risk. If you know what you’re doing, that is — make sure you don’t get in over your head on renovation projects.