- It takes longer and costs a lot more to get a license and close your first deal than many realize. Make a financial plan, and choose the right brokerage for you.
The million dollar listers, flippers and fixer-uppers on TV make real estate look glamorous, easy and fun. You get to make huge amounts of money on one deal, exercise your creative and design muscles and meet new people — all in a day’s work, right?
So you’ve done some research and walked through more open hoses than you can count. And you think that getting your real estate license is your next move.
But before you jump into this exciting and challenging industry, here are six important things you need to know.
1. It’ll take longer than you think to get your license
The process of getting your real estate license varies from state to state. For most states, the requirements for getting your license include taking a real estate laws and theories class, passing an exam at the end of that class and then taking and passing the state-sanctioned licensing test.
There are several different ways you can take these classes including online, in-person and a combination of live streaming and classroom time. Unless you are taking a single-week, cram course, your studying and exam prep will take longer than you think. You should expect a minimum of two to three months just to get licensed.
And that timeline is assuming you pass the exam the first time you take it. Plus, if you fail the exam the first time, you will have to wait upward of another month before you can take the exam again.
However long you think it will take to get your license, add at least another two months to your timeline.
2. Getting a license costs more than you think
The biggest hurdle most individuals who get their real estate license come across is the amount of money it can take to start being a real estate agent.
You can expect to spend a minimum of $1,000 in your first year simply on licensing and fees. And that doesn’t even cover any of the actual business expenses it takes to do any of the job functions required of an agent.
You will probably spend around $200 – $400 on courses, textbooks, exam prep and testing. You can expect to spend another $400 – $800 on Realtor association dues at the local, state and national level.
Plus there are MLS fees on top of those dues. On top of that, you might even have to pay your brokerage money just for being an agent under that brokerage. All these fees would then be on-going for the rest of your career as an agent with that brokerage.
Why does it cost so much to be a real estate agent?
Being a real estate agent isn’t just a job. It’s a career as a business owner.
As an agent, you will be an independent contractor for a real estate broker. The best way to think of an independent contractor is like a small business.
In this case, this small business is you as a licensed real estate agent. You are the CEO of your own small business. As such, you should treat yourself like a small business owner.
Do you think it doesn’t cost any money to open a restaurant? Or become a doctor? Or to own a bowling alley? Or a mobile pet grooming salon? No. It costs money to open and run any business. Just like it will cost you money to open and run your small business in the real estate industry.
3. All brokerages are not created equally
There is a reason there are several thousand real estate brokerages across the country. Every single one is unique and offers different services and tools to its agents and clients. It is up to you to pick the real estate brokerage that is best suited to fit your needs and wants.
There are six things you should look at when selecting a real estate brokerage:
- Education and training
- Branding, advertising and marketing services
- Technology tools
- Lead generation
- Compensation plans
- Company culture
The best brokerage for you is the one that is going to provide the highest level of service in all of these areas of expertise.
4. Closing your first deal takes a while, probably way longer than you think
Once you pick a brokerage that is right for you, your duties as a real estate agent are only just starting. The most important job duties for you as you start your career are to prospect, prospect, prospect. The vast majority of your time early in your real estate career should be focused on getting clients.
After all, you could be the best negotiator, the best reviewer of contracts and have all the latest tools and gadgets. But if you don’t have any clients to use your skills and expertise on, all of that training will be wasted.
5. Get involved in your trade association — it’s the most important thing you can do
For some real estate agents, they see being a part of their local, state and national Realtor association as a necessary evil. They feel they are forced to join because their brokerage is already a member of the associations. Or they feel handcuffed to their local association because access to the MLS is dependent upon membership to the association.
But you should really look at being a member of your local, state and national Realtor association as the best way to advance your own career, learn more about your industry and make a difference for your clients in the community.
Beyond prospecting, educating yourself on what it takes to be a great real estate agent is the most important thing you can do for your career.
If your brokerage is lacking in that department, turn to your local and state Realtor association for classes and guidance. They almost always have weekly, if not daily, classes on a wide range of topics for you.
The Realtor associations also advocate for homeowners and business owners in your local town and across the country. Realtor associations stand up for the rights of property owners.
There is no other major organization fighting for these rights. If you believe owning property and owning a business are part of the essential American dream, get involved with your Realtor associations to show you believe in that message.
6. Being a part-time agent is way harder than doing it full time
Because the timeline can take awhile for some people to get their real estate license, they choose to study for the exam during the off hours of their current full-time job.
And because real estate agents hardly make any money their first year in business, many people choose to keep a full-time or another part-time job while they start off in the real estate industry.
Although going the route of being a part-time real estate agent is certainly feasible, it is much more difficult in the long run versus jumping into real estate full-time.
Once again, real estate agents are small business owners. Would you expect a veterinarian to open her practice part-time while she also sells homes on the weekend?
Would you expect a stock broker to work only in the mornings and work as a real estate agent in the afternoon? No, you would expect professionals in other fields to dedicate their time and resources to perfecting their craft full-time.
So too should you consider going into real estate full-time and perfecting your craft.
The career of being a real estate agent is both challenging and rewarding. However, there are several things you need to consider before going all-in on being a real estate agent.
Be mindful of these six pitfalls, and you will be well on your way to being a great real estate agent.
Nico Hohman is the broker-owner at Hohman Homes Real Estate Brokerage & New Home Consultants in Tampa-St. Petersburg, Fla. Connect with him on Facebook or Twitter.