While you’ll find that costs vary depending on a number of factors, here are the basic charges you can expect to pay upfront.
The current hot market may have you thinking about launching your real estate career. But while you may be excited to get started, you’ll find that there are some hoops to jump through before you can formally enter the real estate business. Besides the time and energy you’ll spend to become a real estate agent, you’ll spend a fair amount of money as well.
So how much should you expect to pay to get your real estate license?
Unfortunately, it’s hard to come up with a firm number for this. That’s because there are a wide variety of charges associated with the licensure process; they can vary widely from state to state, and even from one market to another.
Generally speaking, you’ll find that in larger markets with higher earning potential, the costs associated with practicing real estate are higher as well.
Generally speaking, you’ll find that in larger markets with higher earning potential, the costs associated with practicing real estate are higher as well.
Pre License Real Estate Courses Costs
In order to learn the skills you’ll need to become a real estate professional, you’ll start with a real estate license training course. Here’s where you’ll see a great deal of variability in costs— from a few hundred dollars to $500 or more. That’s because there are so many different ways of learning the material; from self-guided, at-home courses to classroom experiences taught by accomplished real estate agents and brokers.
In addition, you may find different rates depending on where you are getting your real estate course material. If a brokerage is teaching the course, they may be motivated to offer it for less because they are using it as a recruitment tool to bring in new agents. A private real estate school, on the other hand, may charge more since education is their primary source of income.
The main thing to keep in mind is to know yourself. If you’re a self-starter who has a fair amount of basic knowledge about real estate, you may be able to get the information you need (and save a little money) through a self-taught class. If you need more guidance or haven’t taken an exam in decades, you may feel better with a guided licensing course.
One other variable to keep in mind: check to see if the course you choose offers ongoing continuing education. As a real estate agent, you’ll need to take classes every year or two so that you can keep your real estate license up-to-date. Some course providers will give you your continuing education material at no or low cost when you obtain your initial real estate education through them.
Real Estate License Application Fees
The license application process includes the real estate exam fee, fingerprinting costs, and the real estate license fee itself. This can run anywhere from $100-$300 or more depending on the location. Remember, if you don’t pass the exam the first time, you’ll have to pay for subsequent retakes, so make sure you are thoroughly prepared.
Brokerage Onboarding Fees
In order to become a real estate agent, you have to be part of a brokerage. Different brokerages have different company cultures— some are small, independent, and nimble, while others are more formal and focused on upscale clientele.
When you join your brokerage, you’ll pay a variety of fees. These may be structured in different ways. Some brokerages charge thousands upfront; others charge a few hundred dollars upfront plus ongoing monthly fees. Some brokerages take a large percentage of your commission on every transaction in exchange for extensive professional services, while others charge only a flat transaction fee on each sale.
If you’re just starting out and don’t have much experience, you may want to consider a mentoring program within your brokerage. That, too, will take a chunk out of your commission. It’s a good idea to talk to at least three different brokerages to find out what they provide and how they structure their fees before you make your decision about where to hang your license.
If you’re just starting out and don’t have much experience, you may want to consider a mentoring program within your brokerage.
Real Estate Professional Organization Membership Costs
In general, you’ll need to join three professional organizations as a real estate agent — the National Association of REALTORS (NAR), your state association, and your local association. Some associations charge separate fees for each membership.
In 2020, NAR’s dues were $150. In some areas, you can roll all three memberships into one payment, which will probably run you about $800 per year total.
Electronic Lock and Multiple Listing Service (MLS) Fees
If you want to list houses for sale and show them to buyers, you’ll need to become a member in a local multiple listing service (MLS) and a membership with an electronic lockbox provider like Sentrilock. In some areas, you’ll be able to roll these costs into the payment to your professional organizations; in others, you’ll be charged monthly or quarterly.
In large markets, you may have more than one MLS to choose from. This offers you some flexibility in terms of the fees you pay. But if you’re serving more than one market, you may end up having to pay fees to multiple MLS networks.
Marketing Costs
Depending on the package you get from your brokerage, you may have most or all of your initial marketing costs paid on your behalf. Some brokerages provide a box of business cards and some generic signage to get you started, others offer little or no marketing support. As you become more established in your area, you may want to consider your own branding and marketing materials. In that case, using the brokerage materials may be fine at first.
One thing you’ll find is that you’re suddenly on everyone’s list for marketing plans and schemes. Each one will promise you a magic bullet in exchange for a monthly fee. This is where working with a mentor or as a junior part of a real estate team can help. You’ll be able to figure out a lot of the basics of running your business while having leads funneled to you through your professional network. In exchange, you’ll pay a portion of your commission to the mentor or team leader, saving you money on upfront marketing costs.
As you become more established in your area, you may want to consider your own branding and marketing materials.
