The Real Costs to Get Started in Real Estate

by | Nov 4, 2019 | Getting Licensed | 0 comments


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Launching your own start-up within any industry can be expensive and initial start-up costs are to be expected. It is vital to budget for real estate licensing costs when launching your real estate career. These costs can vary, depending on the state, local MLS, and brokerage in which you’re joining. You should be prepared to spend a significant amount of money during this initial licensing time period. The charges and fees will not necessarily be due at the same time, but all can be expected to occur within a 3-6 month time period if you are working diligently to obtain your license.

Below is a typical schedule of fees you should expect when obtaining your license in the state of Iowa.

 

LICENSING FEES

During the licensing process itself, you will want to be prepared for various small costs – which will eventually stack up to total anywhere between $1,116 to $1,206. If possible – keep working during this time to support all of the costs during and after this process. The largest cost to you is going to be all of the coursework. Make sure to weigh all of your options when it comes to choosing which 60-hour and 12-hour courses to take, as class prices do vary. 

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LICENSING FEES BREAKDOWN
Weekday 60 Hour Pre-Licensing Course $425-$485
Background Check $51
Real Estate Exam $95
Listing Practices 12 Hour Course $140
Buying Practices 12 Hour Course $140-$150
Developing Professionalism 12 Hour Course $140
License Application $125
Licensing Fees TOTAL $1,116-$1,206

JOINING THE LOCAL, STATE, AND NATIONAL BOARD OF REALTORS®

After completing your coursework and real estate exam be prepared for another round of expenses for joining the local, state, and national Board of Realtors® which are required to obtain your real estate license. These fees will vary based on the Multiple Listing Service (MLS) and brokerage that you choose to join but can vary anywhere from $845 to $1,725. To enroll attend your local association of REALTORS® board orientation which will give you access to the MLS. At this point, you will be asked to pay one large lump fee which includes the local, state, and national entrance fees as well as prorated annual dues.

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JOINING THE LOCAL, STATE, AND NATIONAL BOARD OF REALTORS* BREAKDOWN
Local Association of Realtors Entrance Fee $200-$725
MLS Fee $150
Iowa Association of Realtors Entrance Fee $150
National Association of Realtors Entrance Fee $150
Prorated Annual Dues & Other Fees $200-$350
MLS & Association of Realtors TOTAL  $850-$1,475

*fees vary by MLS, proration based on time of year you join, and optional donations

ADDITIONAL FEES

You will want to account for additional fees that occur prior to starting up. In addition to your annual errors & omissions insurance – which is required by law for all real estate professionals, you will also need to purchase lockboxes and a lockbox access key from your local Board of REALTORS®. There is a fee for each lockbox and a fee for the issuance of the lockbox access key as well as a cost for either the physical key itself or the mobile app. All of these initial costs can range from $200 – $600+.

Not to mention you will need to think about your additional business start-up expenses such as:

  • Transportation – Do I have a reliable car & insurance? How much gas will I be using?
  • Office space/supplies – What supplies will I need to run my business? (Microsoft Office, Paper, Pens, Printer)
  • Marketing – How will I market my business? (Business cards, Signs, Website, Postcards, Advertisements) 
  • Technology – How will I communicate with my clients? (Laptop, Phone, Email)
  • Insurance – What are my options? Private health insurance can be costly.

These costs can be significant if you haven’t planned for them ahead of time. Your additional costs alone can range from $600 and higher. Most of the time all of these costs will need to be paid for before you make your first sale in real estate so it is essential to understand and budget for these ahead of time.

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ADDITIONAL FEES BREAKDOWN
Annual Errors & Omissions Insurance $140-$250+
Lockbox Access Key Issuance Fee $50-$75
Lockbox Access Key (mobile app version vs. physical key) $18-$260
Lockbox (price per box, depends on MLS & brokerage set up) $100+
Laptop $400-$1,200
For Sale/Open House Signs $50-$300
Business Cards (250) $75-$150
Other Fees TOTAL $833-$2,235+

TOTAL COST FOR START-UP: UP TO $3,000-$6,000

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.

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HOW TO SUCCEED

How to succeed in your first year of real estate is often a question we hear. So we put together a course to explain everything from budgets to generating leads. 

LEARNING CENTER

Your comprehensive guide to getting started in real estate.

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