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.
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.
LICENSING FEES BREAKDOWN
|Weekday 60 Hour Pre-Licensing Course||$425-$485|
|Real Estate Exam||$95|
|Listing Practices 12 Hour Course||$140|
|Buying Practices 12 Hour Course||$140-$150|
|Developing Professionalism 12 Hour Course||$140|
|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.
JOINING THE LOCAL, STATE, AND NATIONAL BOARD OF REALTORS* BREAKDOWN
|Local Association of Realtors Entrance Fee||$200-$725|
|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
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.
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+|
|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.
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.
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Preparing for the Real Estate Exam is definitely a daunting task (at least feels that way). The best advice is to think about what methods really worked for you to study when taking tests in school. For example, some are good with memorization – so flashcards & repetition within the hours leading up to the test can be really helpful.
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