Real Estate Agent Expenses | What to Expect as a New Agent

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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!

Let’s look at some of the average expenses and fees as a new real estate agent, including:

• Real Estate Licensing Expenses
• Brokerage Fees
• Operations Costs
• Marketing Expenses
• Continuing Education

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, and as well as any state licensing fees. Here are the average costs associated with real estate licensing:

• $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 broker keeps a portion of the commission earned, which is frequently called a ‘commission split.’ The commission split can vary depending on the brokerage, typically ranging from a 90/10 split to a 50/50 split. So if you were with a brokerage with a 70/30 split (very common), the broker would keep 30% of the commission earned on the sale and you would receive the remaining 70%.

Quick example: If you sold a $300,000 home, that would typically generate about $9,000 in commission. If you had a 70/30 split, the broker would get $2,700 and you would receive $6,300.

In addition to the commission split, the broker also has several fees. This can range dramatically from one broker to another, with monthly fees ranging from $25 to $600 per month. There are also desk fees if you’d like a desk or office within the brokerage, as well as fees for training and coaching. Here are the averages:

• $125 monthly fee
• $150 start-up fee
• $200 post-license class
• $500 errors and omissions insurance

Estimated Totals:

$350 start-up + $125 / monthly

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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

Estimated cost: $1,000+ per year

Many of the following expenses are optional and can vary dramatically by how you’ve decided to promote yourself and build your new business. For example, if you are working exclusively with home buyers, then you don’t need to buy ‘for sale’ signs or have any of the other fees associated with listing a home.

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

You can typically purchase a pre-built website for about $100 to $500 monthly, but many agents want to own and fully customize their site and/or promote themselves on other popular home search websites.

• 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’ll have to take continuing education classes to meet your state licensing requirements. You can also earn special designations that help define your niche in the market. Most agents find the value of continuing education to be well worth the cost.

Estimated cost: $50 to $300+ per year

The Good News…

As a real estate agent, you are considered an independent contractor. You own your own business. 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 talk 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.

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