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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:
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:
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:
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.
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.
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.
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.
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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