Real estate can be a lucrative industry. In many areas there is a lot of money to be made. However, before you decide to take the leap into real estate it is important to know what costs are associated with becoming an agent and retaining your license.
Obtaining a Real Estate License
The first cost you will have if you decide to pursue a real estate license is the cost of the course. You can take classes at a campus or online. The price is different depending on location, but you can expect to spend at least $1,000 for the course. After completing the course, you will have to pay for the exam, fingerprints, and a background check.
As an agent, you will have fees to local and state agencies. The multiple listings service in your area will charge you a fee for access to their service, which will allow you to see all of the current listings and allow you to add your own listings. There will also likely be a fee from your local realtor association. The fees can add up to several hundred dollars per year.
Real estate agents are required to get continuing education in order to remain licensed. Continuing education credits vary based on state, but the cost will likely range between one and two hundred dollars per year.
Agency Fees and Marketing Costs
Each real estate agency has a different structure for fees. They may be listed as an office fee or desk fee and can range from fifty dollars to thousands of dollars per month. Some of the bigger firms also have a per-agent, monthly fee across the board. In essence, you are paying for the ability to work for that firm using their name and market presence. There are also small local real estate firms that have their own fee structures. Beyond the fees, agents are usually required to split a part of each commission with the broker and/or firm.
Marketing costs can also vary widely based on the structure of the agency. Some agencies require the agent to pay for all of his or her marketing costs such as yard signs. Other agencies include marketing costs as part of their fee structure.
On average, we spend $3,000.00 per year in fees and that does not include marketing costs. It is important to note that this money, along with any marketing fees, can be written off at tax time. It is also important to remember that one average sale can make an agent enough money to cover these costs.
There is a lot to consider when you are thinking about getting into real estate. It is expensive to get started and the first commissions may take months to come in. The best advice I can give is to carefully consider which agency you want to work for and find out their fee structure. Try to have some money saved because it takes time, often months, before the first deal gets closed.
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