In February of 2022, I decided that I wanted to get my real estate sales license. I have a long-term goal of owning multiple investment properties and I was going to be in the market soon for my own personal property so I thought, why not save money on commission and learn about real estate by working on deals myself? But I didn’t think about one important question, how much does it cost to be a real estate agent? Would it be worth it to go for it part-time?
What State Did I Get My Real Estate License In?
I live in Orange County, CA, which means that I would be getting licensed in California. Each state has different licensing requirements and you are only allowed to practice in the state you are licensed in (but you can get licensed in multiple states if you wish!) Currently, I only have plans to be licensed in California but if I wanted to buy property in a different state, I could act as my own referral agent and get a cut of the commission as well!
So how much does it cost to be a real estate agent? Licensing requirements and costs vary by state, but here’s a breakdown of what I had to do to get my license in California as well as all the expenses that went along with it! Most states will have similar fees so I hope this will help you estimate what kind of expenses will go into getting licensed in your own state.
Read until the end to see the TOTAL cost to be a real estate agent just for the first year!
Real Estate Licensing Education
In order to get your real estate license in California, you have to take three real estate education classes totaling 135 education hours. Other states have higher or lower amounts of education required. These classes are as follows:
Real Estate Principles (45 hours)
Real Estate Practice (45 hours)
Any one of the following 45-hour classes
Real Estate Appraisal
Property Management
Real Estate Finance
Real Estate Economics
Legal Aspects of Real Estate
Real Estate Office Administration
General Accounting
Business Law, Escrows
Mortgage Loan Brokering and Lending
Computer Applications in Real Estate
Common Interest Developments
You can take these at accredited institutions or you can take them online. I chose to take them with Colibri Real Estate, which broke down the topics very well and allow you to learn the material at your own pace.
How Much Does It Cost to Be A Real Estate Agent in California?
Studying and passing your courses along with taking your exam is the first step of the process. But it’s important to remember that this process takes a considerable amount of startup costs even after you take your courses and pass your licensing exam. Here’s how much I spent to get my license.
Pre-Licensing Fees
Even before you get your license, there are many fees involved with education and licensing. Here are the ones that I paid in California:
Course fee: $90
Exam fee: $60
Licensing fee: $245
Fingerprinting fee: $79
Pre-Licensing Fees Total: $474
Post-Licensing Fees
After you pass your licensing test, you can officially sign with a brokerage and start working as a real estate agent! This isn’t free though, as you’re going to want to show houses with lockboxes, have access to the Multiple Listing Service (which has all the public listings for your state), and more, which all comes with fees.
Some may opt to not be a part of the National Association of Realtors to lower their cost to be a real estate agent but that’s honestly pretty rare. It’s one of those things that’s “optional” but not really optional because it comes with benefits that real estate agents are pretty useless without. Many brokerages, including mine, also require you to be a part of it. Here are the post-licensing fees total for my first year:
National Association of Realtors (NAR) fees: $1418 for the year ($118.17/month)
Supra fees: $50 initiation ($15.99/month)
Post-Licensing Fees Total: $1660
Supra is the lockbox that my local (Orange County) National Association of Realtors uses, but the lockbox you use may vary by region. Regardless, you will most likely have to pay fees to get access to them.
Fun fact: Realtor is actually a trademarked word and only real estate agents that are members are the National Associated of Realtors can call themselves a Realtor!
Brokerage Desk Fees
I joined eXp Realty, which comes with monthly fees. There are brokerages without monthly fees but I chose to join a brokerage with one for reasons I elaborate on below. Here are my desk fees for my brokerage:
eXp Realty fees: $149 initiation fee, which includes first monthly fee, $85/month every month after
Brokerage Desk Fees Total: $1169
What is a Desk Fee in Real Estate?
A desk fee is a reoccurring fee that you pay to your brokerage. This is usually in lieu of paying more commission per transaction you close. Brokerages charge this fee because they give you resources, tools, and training as well as mentorship.
Are Brokerage Desk Fees Worth It?
It all depends! If you’re a high producing agent and want a lower commission split to your broker, I would definitely go to a brokerage with desk fees. Even if you can close one deal per year, depending on the sales amount, a desk fee could be worth it.
For me, the math was as follows. I’d pay $85/month in desk fees, resulting in $1020 per year. If I closed on one $700k deal at 2.5% commission, having an 80% split would allow me to make $14k. Going to a traditional brokerage with no desk fees, I would make $8750 on that deal having a 50% split. The difference is $5250, which more than covers the desk fees for that year!
Note: eXp Realty (my brokerage) does have a three transaction “mentor” period in which your transactions are actually 60/40 instead of 80/20. This just means that if you’re a new agent at eXp or haven’t closed 3 transactions in the past 12 months when you join, you’ll be assigned a mentor and get a 60/40 split for your first three deals. This means that I would have made $10500 instead of $8750, a difference of $1750 (still worth it!)
For example, I have a 80/20 split with my brokerage. This comes with a $16k annual cap, which means that once I pay eXp Realty $16k in commission splits, I will get 100% commission on the rest of my deals for the year. I also get 100% commission on up to 3 personal deals per year. I’m planning on using this for myself as well as my parents (putting my name on the title) when I help them.
Real Estate Brokerages With No Desk Fees
Some real estate brokerages have no desk fees. Here are some of the popular ones.
Coldwell Banker
Era Real Estate
Century 21
Compass Real Estate.
It’s important to note that no brokerage is truly “100% commission with no fees” because all brokerages need to make money somehow. Some of these brokerages may have transaction fees, where you pay a set amount per transaction. You can also get charged for forms, signatures, and more. Make sure you thoroughly evaluate a brokerage before you decide to sign with them.
Miscellaneous Fees
Business cards
Gas
Marketing materials: signs, doorhangers
Networking events
As you can see, becoming an active and working and licensed real estate agent in California is pretty expensive. If I didn’t close a single deal in a year or even do any marketing or networking, I would still easily be paying$3303 per year just to be a licensed agent!
My First Month as a Real Estate Agent
In my first month as a real estate agent, I learned about the paperwork. I also ordered business cards, went door knocking, learned how to use the MLS and various other tools with my brokerage. As a part-time real estate agent, I knew I wasn’t going to go hardcore on getting leads but now that I’m a couple months in, I do I have some creative ideas that I’ll execute in the coming month.
I was lucky enough that one of my good friends decided to use me as her agent soon after! I got to learn so much from the deal and am eternally grateful. I’ll be posting more details on that deal soon!
Summary
My first deal closed in late April and I was lucky that two of my close friends decided to use me as their buyer’s agent. This was a super exciting and unique deal and I’ll be sure to share more about it in a future blog post!
Being a part-time real estate agent for me has been 100% worth it. I’m a big advocate for constant learning and growing and it’s been a fun side hustle to add to my list! It definitely isn’t cheap being a real estate agent but I’m only planning to learn more and grow more with it. Now that you know how much it could cost to be a real estate agent, would you want to do it?
Did you enjoy reading my article about how much it cost to be a real estate agent? As always, feel free to subscribe to keep posted on my latest articles and contact me if you have any questions.
Hello, I’m Chloe! I’m the primary author of Off Hour Hustle. Currently, I work as a software engineer, sell products through eBay, Etsy, and OfferUp, have 26+ credit cards, and am always working to diversify my income streams. In my spare time, I enjoy climbing, hiking, and other outdoor activities.
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