Gabbi knew that real estate was the right career from the start. She is now dual licensed in both Kentucky and Ohio. She had her first sale within a month of getting licensed and hit her first million in volume within her first 6 months. She will have her real estate license for the rest of her life. Call her anytime if you have questions about becoming a real estate agent. She loves to share her passion for real estate with others!
Costs To be A Real Estate Agent
I am not a financial advisor. I am a young realtor who just finished up her first two years in the industry and here are the expenses you can expect.
Items to consider:
- Education
- FBI Background Check
- PSI Exam
- Application Fee
- MLS Dues
- NARS Dues
- Taxes
- Car Fuel
- Photography
- Marketing
- Headshots
- Rent/Bills
Education
Depending on what state you live in, your cost for education can vary. In Ohio, it costs about $1200.00 to complete your pre-licensing course but in Kentucky it can be as low as $395.00. Make sure to check with your state Real Estate Commission to find out how much your pre-licensing education should cost. When you are interviewing different brokerages, ask the manager if they ever pay for the agent’s education. If they don’t, ask if they have any coupon codes or recommendations on schooling. This can save you a lot of money and put you in a school that your broker already knows and trusts.
FBI Background check
This is a requirement in most states and it usually costs between $60-$80. You will need to get an FBI background check after you complete your pre-licensing course and before you take your PSI in-person exam.
PSI Exam
This exam usually costs between $100-$150 depending on the state. If you fail your PSI exam you will be able to take it as many times as you need to pass. Here is the catch, you have to pay a new exam fee every time you re-take it. That can get costly quickly so make sure you study up! For our national exam prep course click here for PerryPrep+.
Application
Now that you’ve passed your course and exam, it is time to apply, which carries an application fee. This can range between $50-$120 depending on the state you live in. This is a one-time fee. Make sure to call the commission in your state after you’ve sent in your application to check on the status. If you are missing a signature or spelled something wrong, you will want to correct it as soon as possible.
MLS Dues
Once you become an agent, you will pay for access to the Multiple Listing Service. It is the portal where agents upload houses that are for sale or for rent in the area. You must pay dues to each MLS you belong to.
NARS Dues
The National Association of Realtors is another bill you’ll have to pay. It costs $150.00 per member per year. NAR is a great resource for agents. First off, it gives a new agent credibility. You technically can’t call yourself a Realtor without belonging to the National Association of Realtors.
Taxes
As an agent, you are an independent contractor. Your taxes are not separated from your income when you get your commission check. I suggest immediately calculating what you would owe in taxes with each paycheck and put that in a separate savings account. It’s usually 30% of your take-home pay. Then, when tax season comes around the next year you will be more than prepared.
Car Fuel
Be prepared to pay $80-$100 in fuel each month. I drive a lot. I drive to and from the office each day, to showings after work, then to park or gym, and then home. It adds up quickly. Try to make a habit of keeping your car clean. Your car is going to play a huge role in your business so you should take care of it. Never be in a position where you are running late to a showing because you forgot to fill up your tank. Stay one step ahead and try to fill up when you have a quarter tank left.
Photography
Depending on who you work for, you may have to pay for pictures out of pocket. This can range from $150 to-500 per listing. If there is a ton of square footage, be prepared to pay more. This is the driving factor that gets people through the door to possibly make an offer on the property. You want these pictures to make your listing stand out. With Covid, I also opted to do the “virtual tour” option as well. This allows families from out of town to get a good idea of what the property looks like.
Marketing
If your brokerage provides marketing, take advantage of it! This is a great tool to keep you top of mind in your sphere. If your brokerage does not provide marketing, take a percentage out of each paycheck and put it back into your business. Send mailers or postcards to your sphere of influence and make it fun!
Headshots
Make sure to pay a photographer for professional headshots. You will use these photos for years on all your social media and mailers. Make sure to look professional and try to get the photos taken outside.
Rent/Bills
Because you are an independent contractor and your home office is paid for by your mortgage, you may, in some situations be eligible for tax deductions. You can also sometimes write off your wifi and phone bill because they contribute to your business. Make sure that you find a tax specialist to file your first year in taxes because their experience filing for independent contractors can save you a lot of money.
It may sound like a lot but the trick is to prepare and then over-prepare. That way you never have your back against a wall. Save a couple of months of income before you jump into real estate, so you can pay your bills and not have to worry about credit card debt. The bottom line is you must spend money to make money and if you love what you do, then it’s all worth it.
About the Author
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