Becoming a real estate agent is an exciting career move, but it’s important to understand the costs involved before diving in. So, how much does it cost to become a real estate agent? The total investment can range anywhere from $6,600 to $10,200 or above, depending on various factors.
Keep reading to break down these expenses and see exactly where your money will go as you embark on your real estate journey.
7 Major Costs Associated with Becoming a Real Estate Agent
As an agent, your career is your business, meaning you’ll be in charge of budgeting, costs, startup expenses, marketing, and administrative costs that are associated with starting a business. The expenses below comprise how much it will cost to become a real estate agent.
Pre-licensing real estate class
One type of cost to become a real estate agent is associated with pre-licensing real estate classes. All real estate agents are obliged to attend a pre-licensing course designed to help them become familiar with the terminology and concepts in the real estate market.
For instance, before starting your pre-licensing course, you may not know the difference between ‘tenancy in common’ and ‘joint tenancy’ or understand how to compute acreage, but you’ll have a deep understanding of these concepts after finishing the course.
The cost of a pre-licensing real estate course generally ranges from $250 to $700, varying based on the state, the selected school, the required course hours, and whether the class is conducted online or in person.
While the class will offer suitable study materials, any extra materials you buy to help you learn like flashcards, textbooks, and real estate guides will lead to additional costs.
Real estate exam and licensing expenses
The cost to become a real estate agent also includes exams and acquiring a license. If you want to become a real estate agent, you must pay a predetermined application fee to take the exam and a separate fee to obtain a license. The exam fee will depend on the jurisdiction where you take the exam.
Obtaining a real estate license in the U.S. typically costs between $400 and over $1,000, depending on the state. Many people mistakenly believe that the only expenses involved are for the certification itself, but the process includes several additional costs, making it more complex than it seems.
You might also need to pay an additional cost for fingerprints and a criminal background check, as well as the expenses for renewing your real estate license annually, biennially, or every three years, in some states.
Real estate brokerage membership fees
After getting your real estate license, you need to join a local brokerage that will accept your license for operation. Apart from membership fees, you may need to pay a desk fee if you decide to have a designated desk area in the brokerage office.
Besides paying a desk fee, it’s also necessary to pay brokerage fees. Brokerage fees are usually subtracted from your commission split and cover administrative and advertising-related expenses like office supplies, social media marketing, signage, and brochures.
Real estate brokerage membership fees typically range from $200 to $500 per year on average. These costs may or may not include dues for the National Association of Realtors (NAR), state and local real estate boards, and membership fees for the local Multiple Listing Service (MLS).
Real estate membership dues
After becoming a real estate agent, it’s recommended to join the National Association of REALTORS®, which provides resources to help real estate agents increase their earning potential and improve their professional skills.
If your brokerage membership fees haven’t covered NAR membership already, you’ll need to pay separately. In 2024, the annual membership fee for the National Association of Realtors (NAR) is $156, with an additional $45 special assessment, which is about $200 in total.
Of course, this membership is completely up to you as not all agents become members of the National Association of REALTORS®. If you don’t want to become a member, you may want to become a member of your state and local real estate boards, which have fees related to them. If you join a local real estate board, you may pay the fee directly to the broker.
Realtor marketing expenses
Annual marketing expenses are usually among the highest costs of becoming a real estate agent. This will be especially applicable as a new realtor since you’ll want to spend significant time marketing yourself and telling people about your real estate services.
Real estate agents usually spend money on developing a website, as well as signage, business cards, brochures, social media marketing, and mailers. While marketing expenses increase quickly, they are crucial to running a business and can result in a considerable return on investment in the long run.
Most real estate agents typically allocate about 10% of their gross commission income (GCI) to annual marketing expenses. However, top industry professionals may spend closer to 15-20% of their GCI, depending on the level of market competition. For example, if your commissions total $50,000, you can expect to spend approximately $5,000 to $7,500 on marketing.
Some real estate brokerages may dedicate a marketing budget to help new realtors expand their business. Before joining a brokerage, it’s better to discuss marketing-related costs and learn what level of support the brokerage offers with regard to marketing and promotion.
Real estate ongoing education courses
You must keep your real estate license by taking the ongoing education courses needed. Although these can be expensive, it’s necessary to complete the required coursework to maintain your license.
Real estate continuing education courses usually cost between $50 and $300 per year, but the final tally depends on a mix of factors—your state’s rules, the course provider, renewal requirements, course type, and how many hours you need to hit the books. In short, the price tag varies almost as much as the real estate market itself!
Although some may regard continuing education as a load, it’s a good way to stay up-to-date about new real estate trends, conditions, and resources and will help you be an even better advisor to your clients.
Business-related costs
Apart from all of the above, you might incur another type of cost to become a real estate agent: Administrative and business-related expenses play a significant role in growing your business. These may involve office supplies, a new computer or printer (if working remotely), cell phone and internet bills, etc. In addition to administrative expenses, you may also pay for gifts, lunch, and client meetings while cooperating with them.
Break Out Your Calculator
To wrap up, the total cost of becoming a real estate agent can vary significantly depending on various factors. On the lower end, you can expect to spend at least $6,600, while the total can climb to $10,200 or more if you factor in all the necessary expenses such as licensing, memberships, marketing, and ongoing education. While these costs might seem substantial, they are a worthwhile investment when you consider the potential returns in the real estate industry.
Although the overall cost to become a real estate agent may seem very high, it’s an investment and a small portion in comparison with the average real estate agent’s income.
