Profile picture for MarkThomasA

Limited Brokers License MN

I'm a first time cash buyer looking to at working class/renting neighborhoods (i.e. North East Minneapolis & the North end of St. Paul) with high foreclosure rates and REO houses that have been on the market for awhile.  I've already identified several likely REO properties in the area and will soon be contacting some bank RE agents for showings.  I've been thinking about paying the $300 dollars and getting a  Minnesota's Limited Brokers License, but haven't been able to find much information about it besides what's on the gov't licensure page.  If I'm acting as my own buyers agent will the banks listing agents be willing to split the commission with me?  I understand they traditionally will split their commission with a buyers agent and I don't really understand why I wouldn't do this if I can save 2-3% on the purchase price.  Will it make my bid really unattractive or get it ignored if I try and get put in as the buyers agent with a share of the commission?  Between the over-saturated market, the length of time some of the properties have been listed, and being a cash buyer I'm hoping for some bargaining power.  I'd love to hear from anyone with personal experience in Minnesota, but any thoughts would be appreciated.
  • May 06 2013 - Minneapolis
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Answers (9)

Profile picture for user37702532
I have read above but have question. I am in process of buying property my self. can limited license help to get commission to my self ? I have 4 rental properties which I own under LLC and used license agent to buy. But buying property thinking getting commission my self because I am doing all work. 

Can limited license allow me to present my self for purchasing my new home ?
Can limited license allow me to present my self for selling my current home ?
  • November 10 2014
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@ Amy,

No, that requires a standard salespersons license placed with a broker.   After a couple of years you can do broker training and then do your own sales for buyers and seller after you complete all the education and pass the test but you must have your license listed as active for those two years which means placed with a broker

You are only licensed to do business when your license is with a broker.   You can only be paid a commission by the broker your license is with.

Anything else is against the law
  • April 17 2014
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Profile picture for AmyRanae
So. Just to be clear, I'm a licensed agent. BUT. I don't want to be with a broker/I'd like to just broker myself. Does a limited broker license allow me to broker my own sales then? I don't think I'm experienced enough to be a full blown broker yet/I don't have time to sit through another class, but I really feel like I'm not getting my needs met where I am right now and I'm a DIY kinda girl...
  • April 17 2014
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In Minnesota  a real estate license is required by anyone engaging in selling/buying real estate for another for a fee.  Individuals Selling  FSBO and buying another home without a salesperson I(two legs) in one calendar year were exempt as long as they were only doing for themselves and no others (called the principal). Anyone buying or selling a 3rd property, even for just themselves, was required to get a license.   Many investors ignored this law although it was in place to protect the public as real estate professionals are considered "Wolves" and the public "Sheep".

The limited broker license does not allow a person to act on behalf of another rather they must be a principal (BUYER or SELLER) of the transaction but they are allowed to participate in several transactions per year.

Regarding your question about the commission the Owner of a Foreclosed property has a contract with the Listing broker to pay a certain commission.   You cannot interfere with that contract.  The limited broker license does not entitle you to any commission.  That is not the purpose of the license.  

Getting a full blown license and placing it with a broker looks like a good idea but many lenders prohibit Buyers from being agents at the same time.  I buy investment property and use a couple of agents I like.  Also paying for NAR/MAR and Local Dues, MLS Dues and Lockbox access in addition to State license  fee eats your savings.

You would be better off to seek out an agency and find a full time agent to work on your behalf with full Fiduciary (LC-DORA)

I used to be with an agency in Forest Lake but I got tired of snow

  • April 17 2014
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Profile picture for AmyRanae
can a limited broker represent a buyer or seller? If I'm an agent and not-yet eligible for a full brokers license but would like to work for myself, can I do that? I want to represent buyers and sellers as a limited broker...I the mn requirements page is vague. 
  • April 17 2014
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Oh hey Shoreview Wud up!? Hahaha

1) You don't need to over-think this. I will confess I have zero experience on the practical uses of a limited brokers license. I am sure there is a practical use from an investor standpoint, but it has nothing to do with saving on a commission. I experimented with investing myself a couple years ago and wrote hundreds of offers...I know banks just won't do it. I won't do it, and I doubt many other realtors would do it. You can use it against me to negotiate a better price, but if you tell me you want a commission to buy your own house? I will tell you to go kick sand. 

2) From a commission standpoint investors get a RE license to save commission on the sell side NOT buy side. They list their own houses. If I were you though I would just focus on getting great deals. Look at the RTO and CD market and not only will you save on commission but also not have to worry about 3% seller paids. That is how investors are working with smaller margins right now, but you need to have the refinance on the back end already set up.  
  • May 10 2013
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Hi Mark -

One addition I can offer to Christophers solid advice is that in many short sales or REO's the lenders/sellers will either try to lower the commission payout or not payout at all if the buyer is an agent/broker representing themselves...


SUGGESTION
If the properties are cheap (under $100K) Partner up with a good young and eager agent and let them earn their commission...

If the homes are more $ then you can afford to hire an agent on an hourly basis and pay them along the way... when the deal closes your agent (broker) can pay you a rebate as a principle to the transaction. (Probably going to need to find an independent brokerage and I'd suggest offering a closing bonus to your agent so they have have incentive to see the deal close) 

Good Luck!
  • May 09 2013
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Profile picture for MarkThomasA
Thanks for the response!  Nice to hear from another local (I'm from Shoreview originally).  I have some follow ups though, because I don't think I articulated my question well.  To your first points, which really gets to the heart of what I'm asking.

"…listing agents will not pay out a commission to a buyer,"  and "As to REO's most banks actually require the buyer to be represented."

It's my understanding (and please correct me if I'm wrong) that the bank/lender, as the seller of the REO, pays around a 6% commission which is split between the listing broker and the sellers agent.  If the buyer comes to the table represented by a buyers broker the buyers brokerage will get a share of the brokerage commission being paid by the seller/bank.

Which brings me to the second part.  It's my understanding I would be represented by a broker.  Myself.  Otherwise a limited BROKERS license would have no purpose, because as you pointed out a normal buyer can ‘use the commission as a negotiation tool, but you don't need a license for that." Am I incorrect on my understanding of that?  Isn't the point that I would be a licensed broker limited only by the need to personally own the property (the only limitation of the license) I was buying or selling?

To restate my the last part of my question from my original post.  If the above is correct, would asking for a share of the brokerage commission as a buyers broker make my offers/bids less competitive than other bids even of a lower value??? Would the listing agent ignore my offers??? Ect.

Best of luck in what I'm sure will be a busy couple of years for you.
  • May 08 2013
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As to your main question listing agents will not pay out a commission to a buyer. From a traditional sale standpoint you can certainly use the commission as a negotiation tool, but you don't need a license for that. 

As to REO's most banks actually require the buyer to be represented. I think it is just a liability thing. The listing agent almost never will do it, so someone from the office helps you. 

My overall opinion is that it just is not that big of a deal for cash buyers, because every serious investor I know utilizes a buyer' agent to help with the transaction. The banks don't see commission as a issue when listing homes. 

Also, you somewhat pointed to the market. I won't write a novel on what is happening right now, but bottom line you will find out soon enough the market is going crazy right now. For the good deals be prepared to write offers same day and be in competition with 20 other investors. IF the homes are sitting it is because they are overpriced.

And if all you have been doing is utilizing Zillow and other online websites you have an innacurate picture of the market. That is because the status changes on a property do not get reflected on these websites. If you plan on purchasing off the MLS I suggest you hire a realtor for that simple fact. You can also pay some realtors to be added as an assistant. That gains you access. Usually we are happy with you just paying our MLS fees for the year. 
  • May 07 2013
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