Costs To Consider When Starting A Real Estate Career
Starting a new career is always an exciting opportunity, a blank canvas for you to do what you will in order for it to flourish. As a fledging real estate agent, there are a plethora of different factors that you have to think of while trying to get your feet off the ground. For example, you have to focus on growing your network, as a large network will lead you having more clients to work with. Starting out means that you’ll be putting a lot of effort into establishing your own brand, and making the community aware of your brand. Additionally, there are also costs that come with starting a real estate career that one might not be aware of before they officially start.
Here’s a few of those costs that you need to consider when you’re starting a career in real estate.
Pre-licensing real estate classes and training
Before you can even think of taking a real estate licensing exam, you have to enroll in an accredited real estate institution. Required coursework differs depending on the state, while school tuition depends on the institution you choose. On top of that, you also have to think about the school supplies, textbooks, etc. that come with getting your training.
License exam and fees
Now that you’ve gotten your schooling out of the way, the next thing you’ll have to pay for is that actual license. The exam fee will differ depending on the state you live in though it shouldn’t cost more than $50. Other fees you’ll have to pay for include fingerprinting and a background check. Once you take the exam and pass, you will also have to pay a fee in order to receive your license. Once you handle all the appropriate fees required to become a real estate agent, you’ll be legally allowed to begin working (even though there’s still quite a bit that you need to do in order to get the ball rolling.)
When you start out, other than word of mouth, there really isn’t any other way to broadcast your services other than to invest in advertising. The price will obviously vary depending on what kind of medium you choose, whether it be print, radio, TV, etc., but you should be prepared to spend some money on marketing. You will also have to think about brochures, business cards, and a website for all of your content to live on. If you go and seek out a professional to design all of these things, that is an additional fee you’ll have to pay along with the advertising. As a new realtor, you’ll most likely be paying more money than a realtor that is already established; however, these expenses are crucial to ensuring that your career will take off.
As a realtor, you’re going to be driving back and forth between clients. Therefore, you’re going to have to look at expenses like commercial insurance, the depreciation costs of the vehicle, and selecting a client friendly vehicle. If you’re taking a client to multiple properties, look for a car that has good gas mileage and has plenty of space to accommodate your passengers.
As a real estate agent, you most likely will be paying for your own health insurance, as you make your money off of your commissions. Though some real estate brokers may offer benefits packages which include reduce rate insurance policies, you should still consider the possibility of having to pay out of pocket for your own insurance.
Real estate broker fees
When a person receives their license and becomes a real estate agent, they usually “hang” their license in a managing broker’s office. These brokers are also known as managing or employing brokers, and they take on the task of managing all the agents that are in their office. They typically take care of daily office work, such as providing office supplies, photocopies, and other resources. Those costs are typically covered when you pay a portion of your commission to your real estate broker. It’s also very common for the broker to require a desk fee from their agents.
Real estate continuing education courses
As the market changes, realtors will be expected to be knowledgeable of the real estate market and be able to adapt to the changes. To keep your real estate license, you will have to take continuing education courses which offer credits that will go towards any licensing requirements. These requirements vary on the state, and for each credit hour you take, you will have to pay a fee to attend the course.
Self-employment income taxes
Since your pay will be determined by your commission rather than a fixed hourly rate or salary, and you’ll most likely be working on your own, that also means that you’ll have to worry about self-employment income taxes. This means that because you are an independent contractor and are therefore not subject to tax withholding, you will be required to pay taxes to the IRS. The income and self-employment taxes are typically paid four times a year. If you don’t want to have to crunch those numbers yourself, you also might have to look into getting an accountant.