In their first two years in the business, many new real estate agents resign. The majority of new agents are unprepared for the realities of establishing a business, which is a pretty good explanation for this.
When you work as a realtor, you are doing precisely that. When you work for yourself, you are responsible for covering initial fees and business expenses.
It’s understandable why some aspiring real estate agents lose hope when the lengthy lead time until you start earning is taken into account.
It’s critical to anticipate the costs involved so that you are not caught off guard. Knowing the expenses will help you plan and give you the motivation to get through the early years.
To become licensed, you should budget $1,000. To help you understand not only the total cost but also where the money is spent, let’s split this down.
Estimated Cost: $50 to $150
Before you may apply for a license, all states demand that you complete a specific amount of real estate education. The total cost, however, is determined by your state and the real estate school you pick.
The needed number of hours also varies greatly. In Missouri, for instance, you just need 48 hours, whereas, in Texas, you need 180 hours. The kind of courses you take is the other consideration. The main difference between in-person and online learning is how much each school charges.
Online pre-license classes are considerably less expensive, as you would have guessed. They are also more practical because they can be taken anywhere and are simpler to fit into your existing schedule because they are self-paced.
The real estate board in your state must approve the institution you chose for credit acceptance; otherwise, they may not accept your credits.
We advise shopping for a package that includes exam study materials. You’ll pay a little bit extra for them, but when test time comes around, you’ll be prepared and confident.
Estimated Cost: $50 to $100
This tax is decided by your state. For instance, some jurisdictions permit you to take the test online through a recognized third party, while others demand that you appear in person on a specific date in a recognized testing facility.
Keep in mind that you can retake the test for a fee if you don’t pass the first time. Spending money on exam preparation is therefore worthwhile.
Estimated Cost: $50 to $100
States frequently hire outside companies to conduct background checks and fingerprinting. The application procedure could also be more costly and time-consuming if you’re seeking for a license in a state other than the one in which you now reside.
Estimated Cost: $100 to $200
This is also determined by the state and varies greatly. For instance, Florida only levies roughly $90, whereas Texas levies about $200.
Estimated Cost: $100 to $1000+ where required
A temporary license is given in a few states for the first year. Then, in order to obtain your permanent license, you must finish further post-licensing or “first renewal” schooling.
The price will change according to the local requirements and how you choose to finish the hours, much like with your pre-licensing education.
Real estate brokers often estimate an additional cost of $1500 per year for keeping your license in great condition. Throughout your career, these costs will persist.
Estimated Cost: $600+ a year
Without working for an authorized broker, you cannot maintain a current real estate license. The price of “hanging” your license on a broker is, unfortunately, the most difficult to estimate before you sign a brokerage agreement.
Brokers are paid for their sponsorship either by collecting a portion of their sales commissions, by charging a monthly “desk charge,” or by doing both at once.
Estimated Cost: $600 a year (or less)
You must have errors & omissions insurance, also referred to as liability or malpractice insurance, for your real estate practice. E&O insurance is often paid for by your broker. Depending on your risk and region, E&O insurance for real estate enterprises typically costs $55 per month on average.
Estimated Cost: $300+ per renewal
Depending on the state, you may not have to worry about this for two to five years if you reside in one that does not have unique first-year renewal criteria. But regardless of where you live, your state regulator will have continuing education requirements and license renewal fees.
According to the 2019 member report, the average NAR member completes 11 transactions each year. However, the majority of new agents do a lot fewer assignments, and it can take some time before you get paid for the first time.
Even while you might get lucky, seasoned real estate brokers frequently suggest expecting at least six months of work before you make a transaction.
Even then, payment won’t come until after closing. For instance, the average time for a residential closure is 47 days, but it may take three or four months. The real estate industry is a marathon, not a sprint.
Therefore, you must think about how you will cover your living and business expenses as you expand your network.
Starting a career in real estate requires both investment and patience. Resource allocation must be prudent. Online real estate education is really wise for this reason.
The course material can be completed at your own pace. If you want to complete your requirements as quickly as possible or fit them in while making money at your day job, that will give you an advantage. Best of luck, and happy hunting!