How Much Does It Cost To Become A Real Estate Agent?

By
Real Estate Agent with BHG Real Estate - Kansas City Homes SP00229578 2007027091
http://actvra.in/4f47

This is a question I hear every now and then from people who have been downsized, laid off or had their hours cut. What does it take to get into real estate? How much does it cost? How much does it pay? To make it easy for people who are wondering about a career in real estate, this article will break it down so each individual can calculate the expenses to get started.

The initial real estate classes needed can be taken online or in a classroom setting. Most states will require 30 hours. If you opt for the classroom, you may find 2 hour classes twice a week for 8 weeks, an intense 3 or 4 day session, or online at your own pace. The classes may cost around $135 - 600.A real estate calculator will run you around $90 - 240.

Once you pass the final test for the classes, you will apply to take the State Licensing Exam. If you will be working in more than one state, take the exam in the state in which you reside first and then apply for the other states. Cost of the exam may be around $75 - 115. There may also be other fees associated with the license exam. An FBI background check: $64 - 95. License Application: $15 - 30. License Fee: $45 - 100. Fingerprinting: $30 - 65.

Do you notice that there are many little fees and charges? real estate This is indicative of your future budget. Many little charges and fees which accumulate monthly, quarterly and annually. Get in the habit of keeping good records for taxes.

Annual Fees for renewing license(s), membership in MLS, national and state association dues, and use of Centralized Showing Services come to around $900/year.

Advanced Designations such as SRES, ABR, GRI, CRS, etc will be an additional $100/designation (or so) + continuing education expenses for those particular designations.

Errors and Ommissions Insurance: will cost another few hundred per year. Your broker may include this in your office fee.

iBox leases and eKey access adds $25/year per iBox + $80/quarter for the eKey. These charges will vary according to how those services are set up in your area.

Yard Signs cost about $50 - 85/sign. Sign Riders run about $7 - 30/rider. Open House Signs run around $25 - 50. Pointers will cost about $7 - 35 each. Flyer Boxes will run from $24 - 50. Sign costs vary according to size and material. Stakes also vary in cost. Your broker will have an agreement with a company to give you the best price they can negotiate and you will be alerted to sales 3 or 4 times per year. You will need at least 2 Yard signs, 1 Open House sign, 2 riders, 2 Open House signs and 5 Pointers to get started. Add to your supply as you go along.

Business Cards can be bought for $40 - 80 / 1,000 cards.

Professional Business Photograph: $150 - 240. You'll get this on a disk or flash drive so that you can upload as needed to all the sites and flyers you will be using.

Name Badge: $15 - 55.

Literature Display Holders for inside the home: $10 - 50.

Business Card Holder for desk or table: $10 -30.

Business Card Carrying Case: $10- 100.

Day Planner/ Scheduler/ Calendar: Free - $99. Get one and use it as a back up in case of technical failure.

Booklet Binding Machine: ~ $300 and up. Your broker will probably have one of these in the office.

Flyers: Print your self for ~ $35/100 including paper and ink or professionaly printed @ .50 - 1./each.

Website: Most brokers will give you a website. You may also wish to have another website not affiliated with anyone else. Plan on $25 - 99/month for this. Or, find a service to host it for you, buy your URL, and hire someone to build a custom website for you. This can be done for under $1,000 if you make a deal with a college student or several thousand dollars to have a professional company do a totally custom designed site.

Blog: Free to several hundred per month, depending on what add-ons they sell you. active rain 

Leads: the classes you take once you find a broker will teach you how to get leads and what to do with them once you get them. Everyone and their brother will try to sell you leads. Most of these 'lead generators' are just going to cost you money and give you nothing in return but a big waste of your time. Learn how to say "Hmm, that sounds interesting. Let me check with my accountant and get back with you." OR "I'm sorry, I can't handle any more leads right now. I have all the business I can handle from my referrals."

Zillow and Trulia are now selling Zip Codes. They will send you leads through your email when someone makes a request for more information. These leads run a range from $30 - several hundred dollars per month. You can buy all or part of a Zip Code. They offer other paid services as well. There are agents who pay THOUSANDS of DOLLARS every month for leads. Be careful out there.

800 numbers will cost around $25 - 50 / month, depending on which company and what they do for you.

Recorded message phone numbers will cost $25 -75 / month. Your broker may offer this as part of their package to you.

Postcards: Cost from .40 - 2.00 / each. This depends on the size and thickness of the card. Some companies will mail for you; some you will order and mail yourself.

CELL PHONE with DATA: plan on spending about $100 - 150 per month. Talk to the other agents in your office to see who they are using. You may wish to add the laptop connect anywhere with your phone. Or you may want to see about family plans available.

Other costs of doing business:  Pens, Paper, Paper Clips, Stapler, Staple remover, Calendars, Football Schedules, Event Schedules, Christmas Cards, Thank You Cards, Newsletters, etc.

You will also find yourself involved in Community Groups, BNI Groups, Networking Groups, and other activities to build your community contacts who may refer business to you. This will require your time and sometimes monetary dues.

Agent Tours: You will be marketing your listings to other agents working in your area who may have buyers for your properties. If you have an Agent Tour Day in your area, you will need to plan for the cost of food and drinks on tour days. Also plan to spend time and money notifying and inviting all the agents. Do this by email, in person, by phone and by flyer. If a person hears the same message 3 times in one week from 3 different mediums, they are more likely to show up.

Gas, car maintenance, and good auto insurance to cover transporting buyers around: Variable.

That's about it for expenses. How much can you make as a real estate agent?

money symbol Income depends on sales and broker charges. Most people starting out go with a big name brokerage in their area for the exposure and training. Those brokers tend to keep a larger percentage of the commission on each sale than the smaller brokerages. The bigger brokers also offer more training than the smaller ones. Some of the training you get in the beginning is not really what you want or need. But I digress. 

Keeping in mind that there is no usual commission because we don't want to violate the federal antitrust laws: here are some examples of possible income for a real estate agent.

A.  If an agent sold $1,000,000 worth of real estate over the course of a year and the commission was 6% on each transaction and the agent represented only one side (buyer or seller) on each transaction, the amount of commission would be $60,000 total. The commission goes to the Broker. The Broker would then pay the agent according to their agreement. Suppose their agreement was 75% for the agent; that would mean the agent would get $22,500. Don't forget that real estate agents are Independent Contractors so are responsible for paying their own INCOME TAXES. Real estate agents are not employees so you will need to plan on paying for your own HEALTH INSURANCE.

$22,500 - 28% for Income Taxes = 16,200. Minus $6,000 for Health Insurance = 12,200 left for living, retirement, marketing and advertising expenses.

B.  If an agent sold $600,000 worth of real estate (4 houses at $150,000/house), that would be an annual income of $13,500 before taxes, insurance and expenses.

C.  Suppose an agent sold $5,000,000 of real estate at a commission rate of 5%. Suppose that agent did not split the commission with another agent representing the buyer. That would be $250,000. Suppose the agent and their broker have an agreement which says the agent gets 95% of the commission. That agent would claim $237,500 of Income that year.

Income Potential is tremendous for a real estate agent; in reality, many agents cannot survive on the income they produce from their real estate business. This is why you see so many people get their real estate license and then leave the business within 5 years. It's also the reason you see real estate agents take jobs outside of their real estate business.

Live Laugh Play Love Learn  ......... Selling A House Is Like Making An Omelet ......
Maria Morton, Realtor
. Leading Edge Society 2010  

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♫ ♪ m. 816-560-3758  o. 816-410-5499 ♫ Prudential Kansas City Realty 435 Nichols Rd, Kansas City, MO 64112  .*Information obtained from Heartland MLS is deemed reliable but not guaranteed. **This is an eclectic blog combining a little business with pleasure; please consult a licensed professional before making life altering decisions. Maria Morton, Realtor©, SRES is a Kansas City Real Estate Agent licensed in MO & KS and affiliated with Prudential Kansas City Realty 816.410.5499.o Opinions expressed are not necessarily those of anyone other than Maria Morton Copyright © 2011 *How Much Does It Cost To Become A Real Estate Agent*

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Maria Morton of Better Homes & Gardens Real Estate is a licensed Real Estate Agent in KS & MO. 816-560-3758 Mobile 816-410-5499 Office 816-410-6302 eFax 435 Nichols Road Ste. 300 Kansas City, MO 64112   Maria Morton Copyright © 2008-2014 

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Re-Blogged 10 times:

Re-Blogged By Re-Blogged At
  1. Cheryl Ritchie 09/19/2011 04:08 AM
  2. Barbara Tattersall 09/19/2011 06:51 AM
  3. Beth Atalay 09/19/2011 11:50 AM
  4. Rebecca Melancon 09/19/2011 12:49 PM
  5. Nancy Milton Holtzscher 09/19/2011 06:01 PM
  6. David Popoff 09/20/2011 08:49 AM
  7. House Sale Advisors Lancaster and Lebanon Counties PA 09/20/2011 06:17 PM
  8. Michael Blue 09/20/2011 06:43 PM
  9. Karen Crowson 09/21/2011 12:03 AM
  10. Bill Dean 08/22/2012 08:50 AM
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Rainmaker
233,375
Michael Blue
Home Smart Realty West - Encinitas, CA
REALTOR - 760-889-8877, Encinitas/Carlsbad

nice list, should pass it on to the featured agent post today about discounting commissions!!!

Sep 20, 2011 06:41 PM #86
Rainer
427,298
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

8000 new agents in Florida so far this year. Maybe they need to see this post before the switch in occupation..

Sep 20, 2011 07:01 PM #87
Rainmaker
1,286,163
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

The people making the money in real estate are the ones selling us crap!  I think this is the profit model of some big firms.  They no longer make it on the split, but on what they can sell the agents.

Sep 20, 2011 07:23 PM #88
Rainmaker
499,364
Jan Green
Scottsdale, Phoenix, Cave Creek, Carefree, Fountain Hills - Scottsdale, AZ
RE/MAX Excalibur Scottsdale REALTOR®, GREEN

Great post.  You really spent time gathering all of the fees associated with our business.  And god forbid you change companies and have to start all over again with signs, cards, etc!  Best of luck!

Sep 20, 2011 07:41 PM #89
Anonymous
Anonymous

Wowee. Seems you have to be a millionnaire before becoming a real estate agent!

Sep 20, 2011 07:54 PM #90
Rainmaker
1,518,066
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Excellent breakdown, especially of all of the expenses it takes to remain an agent.

Sep 20, 2011 08:44 PM #91
Rainmaker
346,908
John Juarez
Prudential California Realty - Fremont, CA
CDPE, ePRO, SRES, GRI, PMN

Your list was long and detailed but I don’t think that you mentioned the expense of the IMPRESSIVE FOUR DOOR VEHICLE that every Realtor is supposed to have in order to drive potential buyers around.

Sep 20, 2011 11:17 PM #92
Ambassador
674,995
Karen Crowson
Alain Pinel Realtors, Pleasanton, CA - Livermore, CA
Livermore Wine Country Homes

Wow, what a comprehensive list you've compiled here. Everyone should read and share this with their clients. Will definitely re-blog.

Sep 20, 2011 11:59 PM #93
Rainmaker
919,311
Jane Peters
Power Brokers Int'l - Los Angeles, CA
Connecting you to the L.A. real estate scene

Oh, so that is where all my money went.  I was wondering.  This is a great.  I shall have to carry this list around with me and show them when people say we are overpaid.

Sep 21, 2011 01:00 AM #94
Rainmaker
540,418
Maria Morton
BHG Real Estate - Kansas City Homes - Kansas City, MO
Kansas City Real Estate 816-560-3758

lol John, you would laugh if you saw my car! It is old but it is paid for and gets us from point A to point B.

Sep 21, 2011 08:05 AM #95
Rainer
79,548
Cookie Hooper
True Blue Realty - Arvada, CO
Real Estate Sales & Property Management

Wow, Marie! 

Thanks for explaining why I feel so broke! Money just walks out the office door, doesn't it?

Sep 21, 2011 01:17 PM #96
Rainer
14,062
Kathleen Sheridan
WEICHERT, REALTORS ® - McCarthy Associates - Philadelphia, PA

So, in summary, all of your money plus your life, but the rewards are great. It take great discipline to refrain from spending on things with insufficient ROI. 

Sep 21, 2011 03:06 PM #97
Ambassador
832,373
Kathy Schowe
California Lifestyle Realty - La Quinta, CA
La Quinta, California 760-333-8886
Great job researching the costs and breaking down just how hard we have to work to make any serious money!! Kathy
Sep 22, 2011 11:05 AM #98
Rainmaker
635,440
Dawn A Fabiszak
Keller Williams Real Estate ( Denver metro area, Colorado - Aurora, CO
The Dawn of a New Real Estate Experience!

Maria ~ what an informative post.  I have never really sat down and figured this out.  Although I got my license 18 years ago.

Sep 26, 2011 07:06 PM #99
Rainmaker
289,564
Kasey & John Boles - Jon Gosche Real Estate
Jon Gosche Real Estate, Boise ID - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

Very thorough!  I've had people ask me these questions before and I have a pretty good list, but this pretty much has it all covered - Kasey

Oct 02, 2011 11:17 PM #100
Rainmaker
620,846
David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

Once again another great post, thanks for putting it all together, I am fwd it.

Oct 24, 2011 09:24 AM #101
Rainmaker
131,925
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com
I was with you until you got to the taxes. I don't know of anyone who only makes $22,500 per year and is in a 28% tax bracket. I'm pretty sure they would fall in the category of the 50% of Americans who pay zero in taxes. However, it was a great rundown of expenses which will most likely help run off all the wannabe's. It is definitely a huge financial and time commitment that is not for the faint of heart.
Mar 03, 2012 06:31 PM #102
Rainmaker
249,419
Bill Dean
Worth Clark Realty St. Louis, Mo. - Fenton, MO
William Dean - Broker, Salesperson

Maria,

Fantastic post!  I have stumbled on it almost a year after you wrote it, but the info is timeless!  I often get clients who tell me they want to get a real estate license.  "it's such a fun and EASY job!"  I am also re-blogging and intend to give you credit for the the fantastic number-crunching you did!  Thanks

Aug 22, 2012 08:44 AM #103
Rainmaker
9,922
Kathy Lakowitz
New Rochelle, NY

I'm the perfect example to this article.  Was laid off a year ago and forced into starting my new career in real estate.  Lucky for me, I spent 13 yrs. working for Staples so all the supplies mentioned in the article, I already had and even better, I bought everything on clearance for .50 cents or $1,00. At one time I bought a computer for $100, off the sale price.  Briefly, I did have sticker shock at all the fees I paid during my first year.

Mar 07, 2014 06:46 PM #104
Rainmaker
540,418
Maria Morton
BHG Real Estate - Kansas City Homes - Kansas City, MO
Kansas City Real Estate 816-560-3758

Kathy, I'm sorry to hear that you were forced into a real estate career. Hopefully, you will find some joy in representing your clients. 

Mar 07, 2014 08:51 PM #105
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Rainmaker
540,418

Maria Morton

Kansas City Real Estate 816-560-3758
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