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Real Estate Agents

How Much Does It Cost to Become a Real Estate Agent

Starting out in real estate might feel overwhelming with all the fees and expenses involved in your real estate education. There are costs like licensing and broker fees, along with expenses for marketing and membership dues - it can seem like a never-ending list. This is because, in a traditional brokerage, you're seen as an independent contractor responsible for covering these real estate expenses. The good news is that many of these costs are tax-deductible, meaning you can get some of your money back.

So, how much does it actually cost to be a real estate agent? Let's go through the typical expenses and see what you might have to pay

Finding How Much It Costs to Become a Real Estate Agent

1. Cost to Get a Real Estate License

Getting a real estate license involves spending approximately $525-$1,325, covering education and various fees. The initial step is enrolling in the necessary education at an accredited real estate school to qualify as a real estate agent. Following that, you need to successfully pass the real estate exam. Once you've completed these requirements, you can apply for your real estate license. Let's break down the expected expenses for each stage.

2. Pre-licensing Classes and Training

Embarking on a real estate agent journey involves tackling the first expense: the pre-licensing course. The cost hinges on factors like course duration and whether it's in-person or online. Generally, budget at least $150, though certain courses can surpass $400.

In-person classes come with a heftier price tag compared to their online counterparts. This is because in-person sessions involve building overheads and instructor fees, increasing the overall cost. On the flip side, online on-demand classes cut costs by eliminating live instructors and allowing students to learn from home.

This budget-friendly approach is how online real estate schools keep prices reasonable, ensuring that, regardless of the delivery method, the content aligns with state requirements. However, it's vital to recognize that the course fee is just a fraction of the total expenses tied to becoming a real estate agent. Various other steps in the process also involve additional fees.

3. Background Check and Fingerprinting Cost

In most states, if not all, getting a real estate license involves undergoing a background check and fingerprinting. This is a relatively affordable step in becoming a real estate agent.

Real estate agents handle confidential information and often enter people's homes, earning instant trust. That's why, on a federal level, all real estate agents are required to undergo a background check and fingerprinting.

Usually, the combined cost of a background check and fingerprinting is around $100 or less. While there may be slight variations in some states, this fee is considered one of the more reasonable costs associated with becoming a real estate agent, regardless of the state.

4. Real Estate Exam Fee

After finishing the pre-licensing courses, students move on to applying or registering for the state and national licensing exams. The total cost for both sections depends on the specific state requirements.

This stage stands out as a significant expense on the path to becoming a real estate agent. Failing to pass this crucial exam means no real estate license.

The fees linked to the licensing exam cover the application, with costs differing across states but typically falling between $25 and $50. It's important to clarify that this fee is solely for the application to take the exam.

Moreover, there's an additional fee for the actual exam, ranging from $25 to $150 depending on the state. For students facing the challenge of not passing the exam on the initial attempt, the option to retake the test is available. However, this involves paying the exam fee once again, making it a potentially costly endeavor.

5. MLS and Realtor Fee

This is the final stage in getting your license (although not the last expense for your new business!). Your brokerage will guide you through the process of joining the local Multiple Listing Service (MLS) and the REALTOR® association.

Starting at the local level, your REALTOR® association is the initial link to state and national associations. Typically, joining your local group automatically includes membership at both state and national levels. The joining cost varies by association, but you can anticipate an upfront payment of approximately $785-$1,050. This covers entrance fees for the local, state, and national associations, along with ongoing annual dues for all three organizations.

After the initial payment, you'll continue to pay annual dues to your local association, with portions allocated to the state and national groups. The annual dues are prorated based on when you join during the year.

Additional Expenses:

1. Real Estate Broker Fees

The anticipated overall expense for real estate broker fees ranges from $25 to $500 or more per month. Real estate agents are exclusively authorized to represent a broker, necessitating the identification of a suitable brokerage. Generally, the managing broker shoulders the business expenses related to daily operations. It's common for agents to contribute a percentage of their commission to the broker to address these costs.

2. Real Estate Membership Dues

The anticipated annual cost for real estate membership fees is $200 or more. Membership dues are applicable to various real estate associations, including the National Association of REALTORS® (NAR), state and local real estate boards, and the local Multiple Listing Service, to maintain active association membership.

3. Advertising Cost

Establishing a visible presence as a real estate agent is crucial for building credibility and attracting potential clients. This involves not only making people aware of your profession but also providing information about your affiliated firm and presenting a professional image.

Investing in advertising and marketing is essential to achieve this. Beyond traditional tools like business cards, real estate agents commonly utilize car magnets, decals, and prominent billboards or signs on local businesses. These methods serve as effective ways to enhance visibility and recognition in the community.

Digital platforms such as realtor.com and zillow.com offer opportunities for real estate agents to invest in lead generation within their service areas. This ensures that the leads received are more likely to be serious buyers, though it comes at a cost.

While word of mouth remains important, strategic advertising is indispensable in today's competitive market. Although some brokers may assist new agents by providing solid leads, this is not guaranteed, making marketing expenses an unavoidable aspect of being a real estate agent.

Overall a complete marketing strategy may require a new real estate agent to allocate upwards of $1,000 annually. This investment is crucial for establishing a strong professional presence and attracting potential clients in a competitive industry.

4. Transportation

The transportation expense category stands out as the most significant cost component in the real estate agent's operational budget. The nature of this profession involves frequent meetings with clients, attendance at open houses, collaboration with partners, property inspections, and participation in professional events. To navigate these demands effectively, agents must have a dependable vehicle while being prepared to cover costs such as gas, insurance, maintenance, and repairs.

Based on the 2019 NAR® member profile, real estate agents typically incur a median annual expense of $1,290 for vehicle-related expenditures. NAR® further estimates that agents may accumulate a minimum of 3,300 business-related miles per year, although the actual mileage could surpass this projection.

5. Technology

You will be accountable for acquiring essential tools such as your own computer, phone, CRM, and other necessary technologies. Consider including the expenses for maintaining your website domain as part of your tech budget. Additionally, factor in the costs for Real Estate Marketing Tools, as they play a crucial role in expanding your online business presence. According to the 2019 NAR® member profile, the median annual technology expenses for agents are $480. Keep in mind that the costs may exceed this figure, particularly if you need to invest in a new laptop, which can range from $400 to $2,800.

6. Health Insurance

Keep in mind that, as a real estate agent, you are classified as self-employed, even when affiliated with a brokerage. It's important to note that many brokerages may not provide health insurance coverage. Therefore, you will need to explore options for your own plan through the healthcare marketplace. Alternatively, if you have a partner, consider utilizing their insurance coverage.

Closing Thoughts

Becoming a real estate agent is an investment in yourself and your future. Yes, there are costs involved, but each one is a stepping stone toward a rewarding career. So, gear up, budget wisely, and get ready to dive into the dynamic world of real estate. You've got this!


1. Is Becoming a Real Estate Agent a Smart Career Move?

Absolutely, especially if you're skilled at selling properties. The job has its challenges, but the financial rewards can be pretty sweet. Keep in mind, the real estate world offers a variety of opportunities, giving you plenty of options to explore.

Rahul Agrawal

Co-founder and Chief Business Officer at Styldod

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