How Much Does It Cost to Become a Real Estate Agent?

by | Jun 1, 2021 | Getting Licensed

Launching your career in real estate is no easy feat. In addition to the time it takes to complete a background check, the pre-licensing courses, and pass the exam, it costs a significant amount of money. 

Exactly how much does it cost to become a real estate agent? This guide breaks down all the costs you can expect to incur during the licensing process, as well as the typical business expenses you’ll encounter during your first year. You’ll also learn how important it is for you to budget for these costs during your first year as a real estate agent. 

Let’s break out all the costs, fees and charges you can expect to incur while becoming a real estate agent. 


Licensing Fees

Start-up costs are the most prohibitive aspect of going into real estate. The licensing process can take anywhere from 3-12 months to complete and you should be prepared to spend a significant amount of money. Although it’s a spread-out process, you’ll find the fees associated with each step will add up quickly. If possible, you’ll want to continue employment elsewhere during this time to support all of the fees associated with getting your real estate license.

1. Background Check

The background check is the first step in the licensing process. You’ll submit a fingerprint card, signed state and federal waivers and payment to the Iowa Real Estate Commission through the Iowa Professional Licensing Bureau’s online portal or through the mail. 

The background check costs $51. It can be paid online after you submit the completed packet or you can mail in a check or money order.

Total Cost: $51

2. 60-Hour Pre-Licensing Course

The 60-hour pre-licensing course is the most expensive step in the licensing process. The cost of the course varies so choose the course that best suits your budget. Pre-licensing courses can be taken online or in-person. In-person courses have both weekday and weekend options available. Each option comes with its own price tag and additional fees. 

In-Person Weekday Pre-Licensing Course – $460-$500

There are currently only two approved in-person weekday course providers in Iowa: the Iowa Association of REALTORS® (IAR) and the Skogman Edge-U-Cation Center. The IAR® offers the course for $460 and Skogman offers the course for $500. 

The benefit of an in-person course is that all supplementary learning materials (such as textbooks, workbooks, study guides, etc.) are included with the class so you won’t have to pay for them separately. 

In-Person Weekend Pre-Licensing Course – $300-$500

You have a few more options when it comes to taking the pre-licensing course in-person on the weekends. There are currently six approved course providers in Iowa and the costs range from $300 for the course offered by the Mid-American School of Real Estate to $500 for Skogman’s weekend course. 

Weekend courses are a good choice for anyone with a full-time job or other commitments during the week. 

Online Pre-Licensing Course – $299-$574

You can take the 60-hour pre-licensing course with any of the nine course providers currently approved by the Iowa Professional Licensing Bureau. You’ll find the cost range is much wider with online providers, which gives you the freedom to shop around to find a provider that fits your budget. However, online course providers do not necessarily give supplementary learning materials with their courses, so you may find yourself paying extra for these.

 It’s up to you to research all the pre-licensing courses currently provided and find the one that best suits your learning style while still fitting into your budget. 

Total Cost: $299-$574

3. Licensing Exam

Once you’ve completed the 60-hour pre-licensing course, you’ll take the licensing exam. The exam is administered by PSI Examination Services and costs $95 each time you take it. The fee can be paid when you register to take the exam. 

Total Cost: $95

4. Additional 12-Hour Courses

All real estate license applicants are required to complete three 12-hour courses, in addition to the 60-hour pre-licensing course. These three courses are not required for the licensing exam. In fact, most people take them once they’ve passed the exam. 

All 12-hour courses are in-person. There are no approved online providers. Each course ranges in cost from $80-140, depending on which provider you choose. 

Total Cost: $240-$420

5. License Application

Once you’ve completed the 60-hour pre-licensing course, passed the exam, and completed the three 12-hour courses, you will submit your license application. At this point, you’ll have chosen a brokerage to work with and your sponsoring broker will sign off on your application and help you obtain errors and omissions insurance (E&O). 

Some brokerages will enroll you in their own E&O plan and the cost will be rolled into your broker fees. However, some brokerages will have you carry your own insurance. If this is the case, you’ll have to enroll and pay for that before you apply for your real estate license. This cost is accounted for in the next section. 

The license application can be submitted online and there is a $125 fee. You’ll receive approval of your license within seven business days and then you can apply to join your local, state, and national REALTOR® associations.

Total Cost: $125

6. Join Local MLS and REALTOR® Association

This is the last step in the licensing process (but definitely not your last start-up cost!). Your new brokerage will walk you through joining the local Multiple Listing Service (MLS) and REALTOR® association. 

Your local REALTOR® association is the first stepping stone to the state and national associations- membership to your local group typically includes membership to the state and national ones as well. The cost to join varies by association, but you should expect to pay around $765-$1,035 upfront. This includes the entrance fees split among the local, state and national associations and the ongoing annual dues that go to all three organizations. 

From there, you’ll pay annual dues to your local association and portions of it will go to the state and national groups. Your annual dues will be prorated based on the time of year you join.

You can read more about the advantages of joining a REALTOR® association here

Total Cost: $765-$1035

How Much Does It Cost to Get Your Iowa Real Estate License?

Exactly how much does it cost to get your Iowa real estate license? You’re looking at spending around $1,575 to $2,300. 

Your total may vary depending on your course provider, if you purchase additional study materials for the exam, if you take the exam more than once and what your local REALTOR® association charges for dues and entrance fees.


60 Hour Pre-Licensing Course$299-$574
Background Check$51
Real Estate Exam$95
Listing Practices 12 Hour Course$80-$140
Buying Practices 12 Hour Course$80-$140
Developing Professionalism 12 Hour Course$80-$140
License Application$125
MLS and REALTOR® Fees$765-$1035
Licensing Fees TOTAL$1,575-$2,300

Common Real Estate Agent Expenses

The most helpful thing you can do for yourself as you start your career in real estate is to budget. The costs don’t stop once you have your real estate license- in fact, they’ll keep adding up. Real estate agents should expect to shoulder a lot of business expenses, even if some are covered by their brokerage. 

The National Association of REALTORS® (NAR®) creates an annual member profile by surveying NAR® members. Part of the 2020 profile broke out how much agents spent on business expenses in 2019, based on their gross annual income. 

cost to become a real estate agent

Copyright ©2020 “2020 Member Profile” NATIONAL ASSOCIATION OF REALTORS®. All rights reserved. Reprinted with permission. February 9, 2021,

The median amount agents spent in a year on their business was $6,290. Agents who earned less than $10,000 (new or part-time agents) had median business expenses of about $2,050. This gives you an approximate idea of what you can expect to spend on your business as an agent. 

Let’s break down some of the costs real estate agents can expect to incur:

Brokerage Fees

Each brokerage is different in how it administers fees but no matter which one you work for, you will pay fees. Some will charge a monthly fee and some will charge an annual fee. Your broker will manage the agency, oversee transactions, manage the trust account, train you, and maintain E&O insurance for the brokerage. Part of your fees will go toward these services. 

Depending on your brokerage, additional services like coaching, tools and marketing will be included in your fees. But for many agents, you’ll pay for services like a customer relationship management system (CRM), E&O insurance, marketing, continued education, and office space out of pocket.  

Administrative Expenses

According to the 2019 NAR® member profile, the median amount agents spent on administrative expenses were around $640. This can include all the small day-to-day costs that add up, such as printing costs (if your broker doesn’t cover this or have an office for you to use) to transaction fees. 

This may also include E&O insurance if your brokerage doesn’t cover this for you. You can expect to pay around $250 a year. 


Marketing is an all-important part of being a real estate agent. It’s a broad expense category that covers business cards, yard signs, flyers, a website, social media marketing and third-party site advertising. The 2019 NAR® member profile broke down marketing into two categories: business promotion and marketing of services. Agents spent a median of $470 on marketing of services and $660 on business promotion. 

Professional Development

Real estate agents in Iowa have to take 36 hours of continuing education courses every three years in order to renew their real estate licenses. Unless your brokerage offers continuing education classes in-house for free, you’ll have to pay to take the courses from approved providers. 

You’ll also have the option to attend professional development events, which will cost money. According to the 2019 NAR® member profile, agents spent a median of $490 in a year on professional development opportunities.


You’ll be responsible for getting your own computer, phone, CRM and other necessary technology. You could even account for the cost of maintaining your website domain as a tech expense. The 2019 NAR® member profile puts technology expenses at a median of $470 a year for agents. But you could find yourself paying even more than that if you have to purchase a new laptop, which can set you back anywhere from $200-$2,500. 


This expense category is by far the costliest part of doing business for a real estate agent. You’ll be meeting with clients, attending open houses, meeting partners, checking out properties and attending professional events. As an agent, you’ll need a reliable vehicle and be ready to pay for gas, insurance, maintenance and repairs. 

Real estate agents spent a median of $1,290 in a year on vehicle expenses, according to the 2019 NAR® member profile. NAR® estimates that agents can rack up at least 3,300 miles in a year for business-related driving, but you may find it adds up to more than that. 

MLS Dues and Lockbox Fees

As a member of your local MLS and REALTOR® organizations, you’ll have to pay annual dues. Fees will vary based on your local organizations and state REALTOR® organization, but you should plan to pay out around $500 a year for dues. 

If you purchase a lockbox, you’ll get it from your MLS- this can run you around $100 per lockbox. Lockbox access keys can also be purchased from your MLS and you will incur a one-time fee plus a monthly charge for the ability to have ongoing access to lockboxes. You can expect to pay anywhere from $18 monthly to $260 annually for this, depending on if the key is a physical key or a mobile app. 

Client Costs

Many agents go above and beyond to make their relationships with clients meaningful. Part of that might include throwing client parties, giving your clients gift bags at big moments such as when their house sells or sending out annual cards around the holidays. All of these would be considered business expenses. 

This amount will vary every year depending on what you decide to do and how many clients you have.

Health Insurance

Remember, you’re considered self-employed as a real estate agent, even though you work with a brokerage. Most brokerages won’t offer you health insurance so you’ll have to search for your own plan in the healthcare marketplace or if you have a partner, plan to use their insurance. 

One of the realities of owning your own business as an agent is having to shoulder most of the business expenses that come with the job. Your brokerage may help with some of these but not all of them do, especially if you work for a hybrid or virtual brokerage. Success in your first year is dependent on your ability to budget and manage your finances. Let’s take a look at what your first year as a real estate agent might look like.


Brokerage Feesvaries
Administrative Expenses$730
Professional Development$780
MLS Dues & Lockbox Fees$860
Client Costsvaries
Health Insurancevaries
Business Expenses TOTAL* $5,000-$6,290+

*Costs are estimates based on the median costs in the 2020 NAR® annual member profile. Your total cost will vary depending on your brokerage fees, MLS dues, health insurance plan, client costs and how many lockboxes you purchase

Your First Year as a Real Estate Agent

Let’s be straight: your first year as a real estate agent will be tough. You’ll have to work hard to build up a client base and establish yourself in the market, all while handling business expenses. 

NAR® ‘s income data reporting shows that agents with less than two years of experience make a median gross  income of $8,900. However, NAR® does not tell us if those agents work full-time or part-time. 

The NAR® annual member profile surveyed agents on their income and found that 27 percent of agents made a net income of less than $10,000, after taxes and business expenses. It’s reasonable to assume these are mostly agents in their first year or two who are still trying to establish themselves. 


cost to be a real estate agent

Copyright ©2020 “2020 Member Profile” NATIONAL ASSOCIATION OF REALTORS®. All rights reserved. Reprinted with permission. February 9, 2021,

What does this mean for you as a new agent? Be prepared to make very little (or no) money in your first year as an agent. You may even spend more on business costs than you make in commission. Create a budget with the help of your managing broker. An experienced broker can offer insight and advice to help you navigate the first year. This will also take the mystery out of the job so you won’t be surprised by any costs or fees you encounter. 

Real estate is a business that requires you to invest money before you make any. You’ll pay to market yourself, your listings and invest in your professional credentials before you ever see a commission check. You should also keep in mind, it can take months to get paid for a sale or purchase. You might work with a client for six months before you see a paycheck.

Tax-Deductible Business Expenses

Keep in mind that almost all business expenses you rack up as an agent are tax-deductible. Even though you work for a broker, the IRS considers real estate agents to be self-employed. Stay on top of your expenses and document everything so you can claim them all when it’s time to file your taxes. 

According to TurboTax, these are some business costs you can write off:

  • Marketing expenses for signs, flyers, website, business cards and mailers
  • Professional development expenses for coaching, training and education
  • Licensing and renewal fees
  • Association dues– including to the MLS, REALTOR® organizations and brokerage fees
  • Transportation costs for maintenance and repair, gas, mileage, insurance, parking and new car purchase. 
  • Travel expenses like airfare, hotel and meals for real estate education and business trips
  • Home office costs if you work from home 
  • Client costs up to $25 for gifts you give to your clients

Mileage and other elements of transportation require extensive documentation in order for you to deduct the cost. So make sure you’re using a program like TurboTax or QuickBooks to track and document your miles and repair costs. 

Real estate is not an easy industry to break into and it is expensive to get started. In fact, the cost of getting your license and starting your business can seem daunting. Be aware that your first year in the real estate business will have its ups and downs, but it is much easier to manage when you have realistic expectations of your start-up costs and a solid budget in place. 

For help learning how to create a budget for the first 12 months, sign up for How to Succeed in Your First Year. This free course will help you get your business off the ground while avoiding some of the common first-year pitfalls. 


Starting a career in real estate can be expensive but if you develop a game plan for these costs, this will be one less hurdle for you to jump over. Be aware that your first year in the real estate business will have its ups and downs but is much easier to manage when you have realistic expectations of your start-up costs and a solid budget in place. Still, feel a little lost? Check out our guide to succeeding in your first year where we cover business budgeting and the real costs in depth.

cost to be a real estate agent

Download your guide to the Iowa Real Estate Licensing Process

The process for becoming a REALTOR® in Iowa can seem long and daunting. You’ll have no problem completing them with this guide to becoming a real estate agent in Iowa.

What you’ll get:

  • Entire licensing process timeline
  • Breakdown of each step and process
  • Helpful tips and tricks
  • Worksheets to make it easy


Your comprehensive guide to getting started in real estate.
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