Wondering what expenses to expect as a new real estate agent?
When you first get your real estate license it may seem like everyone has their hand in your wallet. There are fees for your licensing course, study guides, real estate exam, broker startup fees, and the list goes on. As a new real estate agent, you do have to think of this as starting a new business, and with every new business, there are start-up costs and monthly expenses!
Cost to Get a Real Estate License
In order to get your real estate license, you’ll have to enroll in a pre-licensing course. There may be additional costs for study guides, books, cram courses, as well as any state licensing fees. These average costs associated with real estate licensing are:
- $300 Pre-licensing Course
- $35 Study Guides
- $150 State Exam
- $40 Background Check
Estimated Total Expense: $525
Real Estate Broker Fees
One of the major factors to consider when determining your income potential is the commission split with your brokerage. The commission split can vary depending on the brokerage, typically ranging from a 90/10 split to a 50/50 split. Additionally, brokers have several fees such as monthly fees, start-up fees, post-license class fees, and errors and omissions insurance.
For example, if you sold a $300,000 home with a 70/30 split, the broker would get $2,700 and you would receive $6,300.
Estimated Totals: $350 start-up + $125 / monthly
Monthly Operational Costs for New Agents
These are just the basics of what you’ll need to run your new real estate business on a monthly basis. The costs can vary from state to state, so we are just sharing the average expenses.
- Lockbox key (to show homes) - $15 to $25 per month
- Business Cards - $5-10+ per month
- Board of Realtors - $50 per month (although most boards want you to pay quarterly or annually)
- MLS Access - $30 per month
- Gas - $25 to $75 per month
- Client coffee / lunches - $25 to $150 per month
Estimated expense: $140 to $165 monthly
Other Expenses for Real Estate Agents
Many of the following expenses are optional and can vary dramatically by how you’ve decided to promote yourself and build your new business. Here are some examples:
Listings
- Real Estate Signs for your listings - $50 to $100 per sign
- Lockboxes for your listings - typically $100 per lockbox
- Listing Photographer / Videographer — $100 to $500 per listing
- Printing listing flyers - about $50 per listing
- Food for open houses and agent caravans — $50-$250 per listing
- Paid advertising to promote your listing (social media, classifieds, etc) - $25 to $500 per listing
Marketing / Online Lead Generation
- Website Hosting - $50 per month
- IDX fees for a website MLS search - $70 per month
- Website Creation - $500+
- Online marketing (Facebook ads or Google Pay-per-click) - $500 to $2,000+ per month
- Featured Agent on 3rd party websites (i.e. Zillow, Realtor, HomeSnap, etc) - $100 to $500 per month
Other Marketing Expenses
- Mailing Postcards
- Custom branded marketing collateral (i.e. coffee cups, pens, t-shirts)
- Social Media content creation tools
- Social Media scheduling apps
- Pop-by Gifts for your sphere of influence
- CRM (Customer Relationship Management) systems
- FSBO and Expired Listing Leads
- Thank you notes
- Hosting Workshops for potential home buyers or sellers
- Sponsoring events or local sports teams
Continuing Education
Throughout your real estate career, you’ll need to take classes to stay up-to-date on the latest laws, contract changes, and marketing techniques. You can also earn special designations that help define your niche in the market.
Estimated cost: $50 to $300+ per year
The Good News…
As a real estate agent, you are considered an independent contractor. Because of that, many of the real estate costs referenced above are considered business expenses and can be tax write-offs. Make sure you keep all the receipts and consult with your CPA about any other possible write-offs that might be available to you as a new agent, such as your car lease or home office.
Caption: Real Estate Agent Expenses. Image source: Sanaulac.vn
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