Why Get Your Real Estate License?
Obtaining your real estate license is a challenging and rewarding experience that consists of more than just a few real estate courses, an exam, and meeting your state’s requirement for real estate licensure — it’s an investment in a career that lets you set your own schedule, be your own boss, build new relationships, and, of course, help guide people through one of the biggest financial decisions of their lives. Once you’ve decided to go down this path, the only question that remains is: “How do I become a licensed real estate agent?”
The short answer is, “it all depends on where you want to practice real estate.” When it comes to getting your real estate license, each state has its own rules and regulations. For instance, students looking to get a real estate license in Texas must complete 180 hours of state-approved Pre-Licensing education, whereas the state of California only requires 135 hours of Pre-Licensing education. Getting a real estate license in Florida, on the other hand, only requires 63 hours of Pre-Licensing.
Some states, Texas included, even require Post-Licensing education (also called Salesperson Apprentice Education or SAE), Post-Licensing mentorship, and Continuing Education. But before you start researching your state’s requirements and embarking on your real estate journey, there are some basic requirements that must be met across the board.
In general, those looking to obtain a real estate license must:
- Be a legal resident of the United States.
- Be 18 years of age (19 years of age in the State of Nebraska).
- Hold a high school diploma or its equivalent.
- Complete the state’s Pre-Licensing education requirements (and Continuing Education in some).
- Pass the issuing state’s real estate exam.
The Next Steps
Determine Your State’s Real Estate License Requirements:
If you meet the basic requirements of licensure, then the next step is to determine exactly what your state’s requirements are. All states require a minimum hour amount of Pre-Licensing coursework and you’ll be required to pass a state-issued exam. At The CE Shop, our platform is engineered to support our students from their start to their first sale, and then well into their career thereafter. After all, we’re not successful unless you are.
Tackle Your Real Estate Pre-Licensing Education Requirements & Pass the Test:
When it comes to getting your real estate license and satisfying the state’s requirements for licensure, there are many options. Some choose to enroll in a traditional classroom-based program at their local real estate school, university, or technical school, whereas others find that online programs better suit their lifestyle. Whatever the case might be, completing your Pre-Licensing is only half the battle. You still need to apply to take your state’s salesperson exam - which might include things like a background check, fingerprints, and fees - and then pass the exam. Each state is different, so be sure to check with your state’s regulatory body for more specific requirements.
Find a Broker & Start Selling Real Estate
At this point, you’ve completed the Pre-Licensing education and passed your exam, but that doesn’t necessarily mean you can start selling real estate. As a licensee, you’re licensed to sell real estate on behalf of a broker but not as an independent entity, so it’s important to do your research on local brokers and choose the one that fits you.
The Cost of Getting Started in Real Estate
You’ve likely heard that starting a career in real estate is like starting your own business, and it’s true - real estate agents are constantly investing in their own businesses. Of course, everybody’s method is slightly different. Some choose to spend more on marketing and others opt to spend more on career development courses. Regardless, here are some general expenses you should plan for when starting a new career in real estate:
Getting Your Real Estate License
Costs vary from state to state, but relative to other industries, real estate has a relatively low barrier to entry. Expect to spend anywhere from $150-$750 for quality Pre-Licensing education. Then there’s your state’s exam and licensing fee. In Texas, for example, a new sales agent must pay around $54 to take the exam and $350 for the new license.
Estimated cost: $350+
A Real Estate Agent’s Operational Expenses:
Running a business requires the basics. Simple things like pens, paper, planners, and printer ink can add up. Depending on the broker you choose to partner with, office essentials are sometimes included, but you’ll likely pay a percentage of your commission back to the brokerage to cover these items. Other operational expenses include things like your phone, your computer, closing gifts, staging, and any online tools you subscribe to.
Estimated cost: It depends. Just start simple and purchase as you need.
Real Estate Brokerage Fees
As mentioned earlier, when you first get your real estate license you’re not licensed to just start selling real estate. Rather, you’re licensed to sell on behalf of a broker. Typically the brokerage firm will take a percentage of your commission, and in return, you’ll be provided with things like Errors and Omissions insurance, office space, and in some cases, brand recognition. Whether you choose to go with a large national brokerage firm or a boutique firm, each commission structure is different. When starting out, most agents choose a brokerage that offers more resources but is more expensive.
Estimated cost: Up to 50 percent of your total commission (which is generally 7 percent of a home’s selling price).
Real Estate Agent Memberships
The term REALTOR® is actually a trademark indicating that a person is a member of the National Association of REALTORS®. Not every agent chooses to join NAR, and not every member is an agent, but those who join must take an online course on ethics and pass an exam, with a refresher every three years. To apply, aspiring members must pay a $395 application fee (to cover the cost of examination), followed by a $205 certification fee, and a $95 annual fee thereafter.
Estimated cost: $695 initially, $95 per year thereafter. (Optional)
As a real estate agent, you’ll need access to reliable transportation. If you own a vehicle, be sure to budget for things like fuel, regular maintenance, and regular cleaning. You don’t have to own a luxury vehicle to impress clients, just keep whatever you have clean and well-maintained.
Estimated cost: In 2016, REALTORS® estimated that they individually spent $1,380 on transportation.
Marketing Your Brand
Like any business, getting the word out about your brand is key to getting off the ground. Plan to purchase items such as business cards, marketing flyers, and yard signs. Depending on their size and construction material, yard signs typically range from $50-85 and it’s recommended that you start with at least two yard signs, two riders, two “open house” signs, and five pointers. You may also want to consider spending a small amount of money setting up a social media ad campaign.
Estimated cost: $420 for the signs, $50 for business cards, $35 for flyers (if printed at home).
Career Development & Self Improvement
Continuing Education and career development are part of becoming a successful real estate agent. While it’s often required for agents to maintain their license, many choose to take classes to improve the service they offer their clients. Approximately 49 percent of agents spend over $500 per year on Continuing Education and training. Of course, costs vary from state to state, and the industry is always changing. Stay up to date with market trends by regularly visiting our Agent Essentials page.
Estimated cost: $500 per year.
The Earning Potential of Getting a Real Estate License
The median household income in the U.S. is around $56,000, which for some is enough to meet basic needs and enjoy a few luxuries, but is it enough to thrive? That’s up to you. The great thing about a career in real estate is that the more you put into it, the more you get out of it. There’s no limit to how much you can make.
The United States Department of Housing and Urban Development (HUD) establishes a 6 percent commission to sell houses, which is then split between the buyer’s agent and the seller’s agent. That leaves you with roughly 3 percent of the sale price, which with a median U.S. home price of $227,000 equates to a $6,810 commission before brokerage costs and taxes. Sell 10 homes at the median home price and you’ve grossed $68,810 for the year, which is well above the national average.
Whether you’re just starting out or you’re switching from another industry, becoming a real estate agent has a relatively low barrier to entry with unlimited earning potential. Ready to finally start making moves toward a career in real estate? Our online courses are available when you’re ready to take charge of your future. -by the CE Shop