You’re interested in becoming a Realtor. But, like all things, there are practical concerns. How much does it cost to become a real estate agent? How much is it going to cost to attend real estate school? How much does a Realtor license cost? Does it cost money to become a sales agent under a brokerage — or will they just take a cut of your commissions?
In this post, we’ll look at how much everything costs, from the initial pre-license course to the license application.
Becoming a Real Estate Agent
When we talk about becoming a licensed real estate agent, we’re talking about an entire process of discrete steps. To meet the licensing requirements of your state, you will usually have to:
- Complete a certain number of class hours in state-accredited courses.
- Take the real estate license exam.
- Find a sponsoring broker to get an active license.
Attending Real Estate School
If you’re wondering how much does it cost to become a real estate agent, one of the largest costs you’ll pay will be for your schooling.
Your educational requirements depend on where you’re trying to get your license. In Michigan, you need 40 hours of coursework. In California, you need more than 100 hours of coursework. Whatever the educational requirements for your state, you’ll need to complete them to become a real estate agent.
But even though there’s a lot of coursework involved, the cost isn’t too high. Real estate courses can range from $200 online preparatory classes to $1,000 in-person courses. These pre-licensing course classes may also include career preparation.
These courses may or may not include exam prep. And there are online courses available if you want to save money, but you’re going to have to be a self-motivated, driven individual.
Cost: $200 to $1,000.
Preparing for Your Real Estate Exam
As you attend real estate school, you should be prepping for your real estate exam. Much like the CPA (Certified Public Accounting) exam for accountants and the Bar exam for lawyers, the state exam is what actually certifies you to receive a real estate license.
Because the real estate exam is so important, many people pay for preparatory materials. These materials can range in price from $150 to $600. Each state has its own examination, so you will need to purchase a state-specific preparatory course.
Cost: $0* to $160.
Total: $200* to $1,160.
(*Though preparatory materials can range from $150 to $600, they are also optional. You may be able to pass the exam based on your prior real estate courses alone.)
Your Real Estate Exam
Once you’ve finished studying for your real estate exam, it’s time to take it. In most states, you can take a real estate exam at least a few times if you don’t pass at first. So, don’t worry if you fail to get your real estate license the first time; you can try again.
As with other costs, the real estate exam fee can vary. In Ohio the license costs $60 while in Colorado, it costs $45.
You will need to pay for the license exam again if you need to repeat it.
Cost: $45 to $60.
Total: $260 to $1,810.
Considering the Costs of Becoming a Real Estate Agent
For a field that’s so potentially lucrative, becoming a real estate agent doesn’t really cost that much.
This is because the lessons and exams simply ensure that you are knowledgeable enough to complete real estate transactions. Your real estate school will provide you with the knowledge you need to avoid making any technical mistakes.
But just getting a real estate license isn’t going to make you an excellent real estate agent.
Building a real estate career is something some people can do easily, while others will struggle more. The real estate industry has a low barrier to entry but demands that an individual be highly talented and highly motivated — things that a real estate education cannot teach.
The Hidden Costs of Being a Real Estate Agent
When you become a real estate agent, you become not only an independent contractor but a business owner. As a real estate professional, you are a business unto yourself. That engenders a variety of fees:
- Marketing costs, from business cards to billboards. You’re going to need to be aggressive about advertising to be a success.
- Digital marketing costs, including paid ads and social media campaigns. The online world is more important than ever.
- Real estate broker fees, such as desk fees. Your sponsoring broker will take a portion of your commission. But often, the brokerage will also ask for a desk fee. This fee is static and might be in addition to commission or in place of it.
- Realtor membership dues. This fee keeps you in the National Association of Realtors. It can change from time to time, but it usually costs around $200.
- Office expenses. A good Realtor will need to set up a workspace for themselves and buy technology such as tablets and computers.
- Travel expenses. Once you get your real estate license, you’re going to spend a lot of time on the road.
- MLS fees. The Multiple Listing Service that all real estate agents use costs about $50 per year.
You need to consider all the costs of becoming a real estate agent when calculating your income and expenses. Being a real estate agent is very affordable in terms of upfront costs — but there are lingering operational costs beyond the real estate license that you need to keep in mind.
Considering the Cut: Commissions and Your Employing Broker
If you’re wondering how much does it cost to become a real estate agent, there are multiple factors you need to consider. Apart from your expenses, you should think about the cut that your real estate brokerage takes from you. Once you become a Realtor, you will be working purely on commission.
This commission will be split between you and the real estate company you work for. These commissions are far more substantial than any exam fee or application fee; often, your broker gets half of what you earn.
It’s important to regularly compare other brokerages to ensure that you’re at the right broker for you.
Becoming a Real Estate Agent
A successful real estate agent is going to need excellent money management skills. An agent’s employing broker can give them more information about how they can best leverage their resources.
The first step a prospective agent should take is to find a pre-licensing education course near them or online. Once they’ve finished the course, they can then sign up for the real estate licensing exam.
FAQs on How Much Does it Cost to Become a Real Estate Agent?
What does a broker license cost?
Once you’ve become a real estate agent, you might set your sights on another type of real estate license — a broker license. The cost of a broker license isn’t very high. Depending on where you are, it will usually be between $200 to $300.
But to become a broker, you will need to meet much more stringent requirements than the typical real estate agent. These will vary depending on what state you are in.
How much time does it take to become a real estate agent?
It takes anywhere from 2 months to 6 months for an individual to get their real estate license.
Those who prepare in a classroom setting will usually take about four to six months. On the other hand, those who study online may be able to get through the coursework and pass the test within eight weeks.
But once you get your real estate license, you will still need to find a principal broker. Without a broker, you can’t take part in real estate transactions — even if you’ve paid your licensing fee and taken your licensing exam.
Do you need to take continuing education courses as a real estate salesperson?
Depending on where you live, it’s likely that you will need a certain amount of continuing education to maintain your salesperson license. Otherwise, you may not be considered active by the real estate commission.
If your license becomes inactive at any time, you may need to take the test and pay the license fee again.
Why does it cost so little to become a real estate professional?
While many wonder how much does it cost to become a real estate agent, few expect the cost to be relatively affordable compared to other professions.
However, a real estate license alone does not make a person a good Realtor. A Realtor is still going to need to find a sponsoring broker to make their license active — and they are going to have to start working hard to make deals immediately.
For that reason, it’s not that hard to get a real estate license. It does, however, take hard work to succeed in the field.
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