Depending on the Brokerage Business Model you choose, your annual license maintenance will run between $1,500 and $2,000 per year. Here's a breakdown, inclusive of Pre-Licensing Expenses:
Licensing School = $375.00 (includes 75-hour required course, all course materials, textbook, and school exam).
Independent vs. Affiliated Licensing School: Beware licensing schools owned by or affiliated with a specific brokerage and this affiliation is often deliberately hidden. These schools exist based on their ability to funnel new agents into the brokerage for financial gain, with little regard for what is best for the new agent. An Independent licensing school does not have ties to any particular brokerage, and encourages students to interview 3-4 different brokerages armed with a list of questions intended to help them discover their personal best fit. One size does not fit all when it comes to starting out in real estate. It is critical that you make a well-informed affiliation decision.
State Exam = $38.00 (per sitting)
Fingerprinting/Background Check = $66.05
Choose a Broker to Affiliate with after interviewing 3-4 Brokerage Options (Salespersons must work under an employing Broker).
Initial Licensing Fee to the State: $160.00
License Renewals: (every odd year on 7/1): $100.00
Local, State, and National Association of Realtors Annual Membership (Residential Agents Only): $500-$900 Annually (There will be differences to your annual fee based on the local board you choose. Membership at the local level covers your membership in the State and National Associations).
Multiple Listing Service (MLS) Membership: $500 +/- depending on the MLS you join, paid quarterly or annually. NOTE: Depending on the geographic area you chose to practice real estate in, you may need at least two MLS memberships to service the geographic area chosen. In most cases, you can start with one membership and expand as needed.
Post-Licensing Training: Ranges from $30 monthly to 20-25% of your first 3-5 sales to a Mentor. A combination of in-class and hands-on training is best. This means you'll likely need to pay a Mentor or Productivity Coach to work with you one-on-one to help you navigate through your first few transactions. This step is one that should not be dismissed, as it is crucial to learning the business in real-time. Licensing School has a strict curriculum prescribed by the Real Estate Commission that focuses on rules and regs terminology and law to determine aptitude. You will not learn how to negotiate, prospect for buyers and sellers, or navigate a transaction in prelicensing school and you desperately need this training.
Franchise Fees: 4-8% off the top of all commissions your earn.
Errors & Omissions Insurance (E&O): $30 per closed transaction through $2,500 per year, with a deductible, depending on the brokerage you choose. Note, E&O is required, but it does not cover breaking the law or fraud.
Marketing and Advertising: This could encompass anything from yard signs and flyers to business cards.
Yard Signs: each costs about $50-85 but varies depending on size and material. It is recommended that you start your career with at least two-yard signs, two riders, two open house signs, and five-pointers to be properly prepared.
Business Cards: can also cost you about $50 for 1,000 cards.
Flyers: 100 flyers can set you back $35 if you print at home. Many brokerages have programs that may or may not be more economical for this purpose.
Transportation: $1,200According to most REALTORS®, the largest expense throughout the year concerns vehicle expenses. In 2020, REALTORS® estimated that they spent about $1,200 on vehicle expenses. Don't forget gas prices, car repairs, and upkeep.
Operational Expenses: include anything that keeps your office running. Simple things like printer ink, paper, and utilities quickly add up and become a large factor in your budget. Median business expenses for Agents were estimated at around $5,330 in 2020. In that same year,
Personal Website: $60 on average per year.
Technology: a personal computer, printer, mobile phone, CRM Software (Customer Relationship Management), DocuSign, Zip Forms, Microsoft Office, Google Workplace Solutions, etc.
Career Development and Continuing Education (CE): $500 is what 49% of agents spend over on training and education. Continued learning and career development are an essential part of the real estate industry. Continuing education courses could cost anywhere from $50 and $1,000 and help keep you up-to-date on industry rules and regulations so your business can remain legitimate. Real estate conferences, which could cost $50 and upward, offer unique opportunities to network and keep up with the latest industry trends. For those agents looking to stay relevant, these costs are necessary.
Commission Splits: Range from 45% to 95%, depending on the business model. As a new agent don't make your brokerage decision based on a high split. You need training as a new agent, first and foremost. You will need to pay for that training in some way, shape, or form. Remember, 95% of Nothing = Nothing. Let's look at an example of how much a listing agent earns if the commission paid is 7%, with a 50% split with the brokerage that produces the buyer. Say the sales price is $200,000. The total commission is 7%. This would be a total commission of $14,000, of which $7,000 (50% usually, but not always) is retained by the listing brokerage. From that $7,000, as the listing agent, you would be paid on a split, which on average is around 60% for a first-year agent. This means that you would gross $4,200. After deducting federal and state taxes, which could amount to 30% or more, you would net about $2,940. You would also pay overhead and expenses, which could deplete another 20% of the gross, resulting in a net income of $2,100.
Miscellaneous Monthly Fees: Be careful of recurring monthly fees labeled "Administrative Fee," "Technology Fee," or "Transaction Processing Fees," etc. Not all Brokers have them, but you may find yourself with a monthly bill you weren't expecting.
Trainers, Mentors and Productivity Coach Fees: As mentioned above, these fees can max out at 25% per transaction to the Mentor. Do some research before you agree:
How many new licensees is the mentor coaching at the same time.
How available will the mentor be to me off-hours for urgent questions.
How many of those new mentored agents make it to year two and three in the business?
For a list of recommended questions to ask Brokers when interviewing, email Info@AgentNow.net