what are the fees to be a real estate agent?

By Elias Magers | 07.20.20 8:00 AM

The fees to be a real estate agent stack up. If you don’t pay attention, the costs and fees will get away from you and burn a whole through your debit card.
 
At first glance, they might look small. But, you see where your money really goes when you track the fees. This article is not made to discourage you. In fact, the article is meant to prepare you for your future real estate career.
 
At the end of this article, you will find 3 plans to help you afford the fees to be a real estate agent.
 
So, let’s get started. There is no better place to start than at the beginning. What is the cost of a real estate license?

How Much Does A Real Estate License Cost?

Total Estimation: $477 – $740
 
The cost of a real estate license varies from state-to-state. This estimation is the costs associated with a real estate license in California. So, let’s break down the total cost of a real estate license to see the smaller price tags. There are 4 main fees to look at:

#1. Real Estate School (Pre-Licensing Program)

Estimation: $150 – $400
 
Real estate school is a pre-licensing program that gives students the required educational material to take the real estate license exam. California has many pre-licensing programs. So, the cost of these programs vary. Online programs may cost less than in-person programs. But, they both come with different perks. To know which program to choose, ask yourself what you need to excel.

#2. Real Estate Exam Application Fee

Cost: $60
 
When you graduate from an accredited real estate school, you must apply to take the state exam. A real estate exam application fee is the cost to schedule your exam. In the state of California, this cost is $60. This fee will vary from state-to-state. So, check the Department of Real Estate’s website to know your state’s application fee.

#3. Live Scan Cost (Background Check)

Estimation: $22 – $35
 
One requirement for the State Exam is a fingerprint live scan, also known as a background check. People with a criminal history will have trouble passing the background check. Always be honest and clear when asked about your criminal history. As the saying goes, honesty is the best policy.

#4. Real Estate License Fee

Cost: $245
 
The real estate license fee is the final payment to get your license. This final fee may seem hefty, but the cost of a real estate license pales in comparison to the money you will make as an agent. After this payment, you will have your license in your pocket for whenever you want to use it.
what are the fees to be a real estate agent?

Cost of Working as a Real Estate Agent

Total Estimation: $600 – $900/year
 
Real estate agents have annual costs they pay to keep their active status. The fees to work as a real estate agent come from 2 main sources: brokerages and membership dues. These costs give you tools, resources, and, with some brokerages, training. Here is a breakdown of the annual fees to be a real estate agent:

#5. Brokerage Desk Fees

Estimation: $100/year
 
Brokerage fees, also known as desk fees, are the costs to hang your license at a brokerage. The reason why brokerages charge fees is because they give resources, tools, and training to agents. This includes insurance, legal resources, office supplies, internet, training, leads, and even coffee. Desk fees can vary based on your location. They can become more costly in populated areas.

#6. Local Real Estate Board

Estimation: $450 – $800/year
 
A big part of your annual fees will go to your local real estate board. So, you might be wondering, “what is the purpose of the local real estate board?” This is where you get access to tools, resources, and other perks to do your job well.
 
This includes membership into the National Association of REALTORS® and your state’s association of REALTORS®. You will also have access to the Multiple Listing Service (MLS). Finally, you get invitations to holiday parties and social events to expand your network. Your local real estate board connects you with the world of agents.

#7. National Association of REALTORS® (NAR)

Estimation: $185 ($150/year + $35 Entry Fee)
 
The National Association of REALTORS® (NAR) is the countrywide network of agents that connects them on real estate matters. When you join the NAR you will adopt the designation of REALTOR®. This shows clients that you are committed to a code of ethics and a higher standard of professionalism.

#8. Multiple Listing Service (MLS)

Estimation: $400/year
 
The Multiple Listing Service (MLS) is a data driven database to learn about properties. This service has shared information from agents and brokerages about real estate property. So, it’s a vital resource when learning about new homes.
fees to be a real estate agent

Real Estate Business Expenses

Total Estimation: $6,830 – $12,880/year
 
Calculating the costs and fees of your business expenses will vary from agent-to-agent. Nobody will know how much you should spend on your business better than you. So, to calculate your total expenses, you should create a business plan. This will help you identify how much of your budget you should spend on where. The costs and fees calculated in this section are derived from the average agent’s expenditures.

#9. Advertising Your Services

Estimation: $1,750 – $3,500/year
 
Advertisements come in different shapes and forms. They can be ads on social media, newspapers, and search results. Advertisements are effective. They can boost your leads with speed and ease. Because of that, they can be expensive. Weigh your options and understand your market, because they can be a worthwhile investment when used right.

#10. Website Hosting and Maintenance

Estimation: $180 – $3,480/year
 
From starting your website to the occasional maintenance cost, your website can come with a hefty price tag. Not all websites need complexities. You will realize the more intricate your site is, the more expensive it is. Some agents can do a lot with little. Before you make a website, know what you want and build around this.

#11. Business Cards

Estimation: $500
 
Business cards are how people remember your services after a meeting. The classic card stock is cheaper in comparison to a ritzy gloss stock. So, when it comes to deciding on business cards, know the message you want to send. Business cards help people remember you, so the style, design, and integrity of the card should compliment you.

#12. Travel Expenses

Estimation: $2,000+/year
 
One unspoken fee to becoming a real estate agent is the travel. Agents drive a lot. So, they will have to afford car insurance, gas, and car maintenance. If they don’t own a car, then they have public transit expenses. Additionally, there are plane tickets or other modes of transportation for national events, if applicable.

#13. Open House Expenses

Estimation: $1,000 – $2,000/year
 
Open house expenses include signs, drinks, snacks, and other nice amenities. This budget category can be wide or small depending on what scene you want to set for open house visitors. Consider the cost of signs, though. Signage can burn a hole in your budget because of their unexpected price.

#14. Office Expenses

Estimation: $2,400/year
 
If you turn your house into your private office, then expect to pay office expenses. These vary from the internet bill to folder dividers depending on your office (and organization skills.) Some agents can avoid the recurring office expenses by working from their brokerage. Offices and work areas are sometimes provided to agents through their desk fee payments.
fees to be a real estate agent

Real Estate License Renewal

Total Estimation: $317
 
The final slew of fees to be a real estate agent is your license renewal. If you wish to renew your real estate license, you will have to enroll in a continuing education course and pay the license renewal fee.
 
How much does it cost to renew your real estate license? In the state of California, it can cost around $317, depending on the continuing education course.
 
How often do you have to renew your real estate license? Every 4 years you have to renew your license. This is because practices change in real estate. So, to keep agents current with industry, they must renew their license.

#15. Continuing Education Course

Estimation: $72
 
A real estate agent continuing education course is required to renew your license. The curriculum requirements are 45-hours of studying and you must pass the online quizzes and final exams. CA Realty Training offers an online continuing education course that you can complete in as little as 6 days. Other programs vary in their accessibility, cost, and program.

#16. License Renewal Fee

Cost: $245
 
To renew your license, you must provide proof of completing the continuing education course and pay the $245 fee in California. Afterwards, you don’t have to think about renewal for another 4-years. If you are late to the renewing, you could have your license suspended and the fee will increase.

How Much Does it Cost to be a Real Estate Agent?

Total Estimation: $1,077 – $1,640

Without the business expenses, the immediate fees to be a real estate agent can be as low as $1,077 and as high as $1,640. Depending on your location, this estimate could be lower or higher (by a small margin).
 
Here is the breakdown of this cost:
  • Real estate school (pre-licensing program): $477 – $740
  • State Exam application: $60
  • Live scan (background check) fee: $22 – $35
  • Real estate license fee: $245
  • Brokerage desk fees: $100
  • Real estate board fees: $450 – $800
The cost of entry in real estate is a challenge for some people. Jobs don’t expect you to pay a couple thousand dollars to work.
 
But, the reality of this price tag is that it pales to how much money you can earn as an agent. That goes for all the fees to be a real estate agent, including the business expenses. When you become an agent, you invest in your education and you invest in your own business. So, we put together a few strategies on how you can finance these entry fees to be a real estate agent.

How to Finance the Fees to be a Real Estate Agent

There are several ways you can finance the costs and fees to become a real estate agent. One reassurance is that these costs and fees are tax deductible. These fees will also pay for themselves within the first transaction you make. Additionally, you can supplement your income with a part-time job or you can save up the money working another job. Here are the way you can afford the fees to be a real estate agent:

#1. The Fees to Be a Real Estate Agent are Tax Deductible

As a real estate agent, you run your own business. You are an independent contractor. In other words, you are the CEO of yourself. So, the expenses you accrue to help you do business become business expenses.
 
Oftentimes, you can offset the fees and costs to be a real estate agent during tax season. Your business expenses become tax write-offs. They do not exist as expenses you financed once and forgot.
 
So, what qualifies these tax write-offs? They can be your pre-licensing education, brokerage fees, and business expenses.

#2. Closing Your First Transaction

The money you earn from your first commission check will make up for the money spent to become an agent. According to Zillow.com, the average home price in California for 2020 was $578,267. An agent, who earns a 3% commission, will make $17,348.
 
The first transaction will finance the entry costs and then some. You can also put that money towards the business expenses that you start to accrue. The more real estate deals you close, the more your finances snowball.
 

#3. Supplementing Your Income with a Part-Time Job

Supplementing your income with a part-time job is a common way people become real estate agents. People who work as a part-time real estate agent have a guarantee of income. When you are a full-time agent, your only income stream is your ability to close deals. So, you can lessen the burden and the entry costs with another job.
 
The downfall of this is the time investment. As a part-time agent, you will have to focus on the quality of your hours over the quantity of your hours. In other words, you have to make the most of your time.

#4. Save the Money Before Becoming an Agent

Now that you know the cost to be a real estate agent, you can make a savings goal. Anytime you make money, you can tuck away a bit as a nest egg. This will let you “go all in” on your education and career.
 
But, if you plan on working full-time, you should save money before pursing a real estate license. The recommended amount to save is at least 3-months worth of living expenses in addition to finance the fees to be a real estate agent. This will give you a healthy cushion that will finance your lifestyle in case you do not find a deal right away.
 
To learn about the best things to do before you get a real estate license, click here.

Final Thoughts on the Fees to Be a Real Estate Agent

Money is a big conversation topic. The entry cost to be a real estate agent is high and the expenses don’t stop after you get your license. From the outside looking in, it can seem the cards are stacked against you. The best thing to do is take it slow and be smart.
 
How you manage your money will determine your success. You can make this job work–even as a part-time agent. Be honest with yourself and make a business plan.
 
Now that you know the fees to be a real estate agent, the only thing left to do is to become one.

Every week, we release in-depth videos to help viewers become successful real estate agents on our CA Realty Training YouTube Channel. Also, if you enjoyed reading this article, we would love if you could share it with a friend who you think would get something out of it.
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