So, you’re thinking about becoming a real estate agent? It’s an exciting career with plenty of potential, but let’s get real—it comes with its own set of costs. From licensing fees to marketing yourself, it may feel like everyone’s got a hand in your wallet.
But don’t worry, this isn’t about scaring you off. It’s about prepping you so those real estate agent expenses don’t sneak up and burn a hole through your bank account. After all, launching a real estate career is like starting your own business, and that means start-up costs and ongoing expenses.
The good news? Many of these are tax-deductible, and with the right planning, you’ll be ready to handle them like a pro. Let’s break it all down so you can hit the ground running without feeling overwhelmed. Here’s your handy dandy index:
Table of Contents
Licensing Costs
To kick off your real estate career, you’ll need to navigate a series of licensing costs, and while they may seem small at first glance, they can stack up quickly. First up, you’ve got the pre-licensing course, which typically costs between $150 and $1,000, depending on your state and whether you opt for online or in-person classes.
Study guides, which make prepping for your exam easier, can add another $35 to your expenses. Then there’s the state exam fee itself, usually around $100 to $400, plus the background check, which runs anywhere from $22 to $100 depending on where you live.
Once you pass the exam, you’ll need to pay a fee to obtain your real estate license—anywhere from $150 to $350. But don’t forget, some states also require post-licensing education to keep your license active, which can range from $50 to $450.
Once you have your real estate license, the next step is joining a brokerage, and with that comes a whole new set of real estate agent expenses. First off, there’s the commission split—this is where the brokerage takes a percentage of your earnings. Splits can vary widely, mostly in the range from a generous 90/10 split to a heftier 50/50, which can make a big difference in your take-home pay.
On top of that, many brokerages charge an initial start-up fee, usually around $50 – $150, just for joining. After that, you’ll likely be paying monthly fees or annual fees. These range from about $85 to thousands per month, which covers the brokerage’s ongoing support, office space, tech platforms, tools, and resources.
Then, there’s Errors & Omissions (E&O) insurance, a necessary protection against potential lawsuits, which typically costs anywhere from $60 per transaction to $2200 upfront before you have any deals. So, yes, this is a big one to know the exact amount.
All these real estate agent expenses vary wildly between brokerages. To get more thorough information on brokerage splits and fees check out our brokerage comparison tool here.
Overall, these expenses can add up quickly, so it’s essential to compare brokerages and to know what brokerages offer in return, whether it’s resources, training, or marketing materials.
Professional Fees
Once you’ve joined a brokerage, there are some additional professional fees to consider. One of the most common is the cost of joining the National Association of REALTORS® (NAR), which can be a great boost to your career.
While not always mandatory, NAR membership gives you access to valuable tools like marketing guidance, tech solutions, exclusive discounts, and a network of over a million associates. Membership also offers you the prestigious REALTOR® designation, which can elevate your credibility. NAR dues are around $150 per year. https://www.nar.realtor/membership/dues-information
State and local real estate boards may also charge a few hundred dollars or more annually for membership. On top of that, there are MLS (Multiple Listing Service) fees, which run about $150 to $500 per year. The MLS is essential for real estate agents as it gives you access to property listings, making it a must-have for anyone serious about their real estate career.
Operational Expenses
When it comes to operational real estate agent expenses, things can add up quickly in your real estate career. One of the first expenses you’ll need to consider is building and maintaining a website, which can cost anywhere from $180 to $3,480 per year, depending on how fancy you want it to be.
Other website options can be to use a personal website that your brokerage offers. For example, eXp Realty agents get a personal IDX website (more than a page on the brokerage website) that is part of their $85 monthly fee. That helps keep costs down!
Then there are the business cards—around $500 a year for a memorable design that leaves an impression. Plus, promotional items like branded pens or magnets can keep your name in front of clients, helping you stay top of mind for future business.
Also don’t forget about travel expenses, especially since real estate agents are always on the move. Expect to pay at least $2,000 a year on gas, car maintenance, insurance, and maybe even the occasional plane ticket if you’re attending national conferences.
If you work from home, office expenses like internet, paper, and pens will add up to about $2,400 per year. Plus, you’ll need a reliable printer and scanner to keep your documents in check.
Health insurance is another biggie, costing roughly $450 per month for individuals and more for families. However, again, large brokerages like eXp Realty that leverage their size and influence have access to much lower-cost healthcare options for individuals and families. More about that here.
And there are more operational real estate agent expenses. There are transaction coordinators to help with deal paperwork likely costing from $300 – $700 per transaction.
Even small costs like lockbox keys (about $15-$25 a month), and all-important client lunches and gifts ($25-$150 a month) can make a dent. But remember, these tools and services keep your real estate business running smoothly, so it’s smart to budget for them upfront!
Listing Expenses
When it comes to listing expenses, they can stack up quickly, but they’re key to making your properties stand out and attracting potential buyers.
First off, you’ll want to invest in real estate signs, which typically run between $50 and $150 per sign. You’ll also need lockboxes for your listings, usually around $100 each, to keep the property secure during showings.
Hiring professional photographers or videographers is crucial to showcase the home’s best features online, with costs ranging from $100 to $500 per listing.
You also may need 2D or 3D floor plans, single property websites, drone shots, and 3D walkthroughs. Expect to tack on $500 to $1500 more here. And if you’re listing luxury properties, expect these costs to be closer to $5000.
Printing listing flyers adds another $50 – $300 to your expenses while promoting the listing through social media ads or classifieds could cost anywhere from $100 to thousands.
When it comes to open houses, you’ll need to budget for snacks, drinks, and other refreshments to make the experience inviting, typically costing $50 to $250 per open house.
If you really want to go the extra mile, and if it’s economically feasible, consider staging the home, which can lead to faster sales and higher prices, making it a worthy investment.
All in all, listing-related expenses for each listing can range from $1,000 to multi-thousands annually, depending on how you choose to market the property. It’s these extra touches that can make a big difference in how quickly and successfully you close deals. And, that’s what you want – a payday to refund you for all your expenses!
Lead Generation Expenses
When it comes to generating leads, real estate agent expenses can add up, but they’re crucial for growing your business. Advertising your services is one of the biggest investments, with most agent’s costs ranging from $1,000 to $10,000 annually or more!
In your first year, marketing will likely take a big chunk of your budget. You’ll either pay for it upfront or invest your blood, sweat, and tears with low-cost methods such as door-knocking, calling FSBOs, or creating organic social media accounts and YouTube channels. 🙂
On top your actual advertising, you’ll need a process to keep your leads and communication with them all organized. You’ll need a CRM – customer relationship management tool – to accomplish that. CRMS can cost $1000, $3000, or even more. But some brokerages, like eXp Realty, include top-end CRMs as part of their agent fee package without additional agent expense.
While advertising significantly adds to your real estate agent expenses, it increases your visibility and provides prospects for you to convert to deal-closing clients!
Professional Development Fees
Staying sharp in real estate means ongoing learning, and that comes with a price tag. Continuing education (CE) courses are essential for agents who want to keep their licenses and thrive in a competitive market. On average, agents spend around $200 per year on these courses, but costs vary by state.
Beyond the basic requirements, agents often take classes to earn certifications and gain designations to boost their expertise and credibility. These investments enhance skills and open doors to new client opportunities and specialized niches. Costs range from hundreds to thousands.
Networking events are another real estate agent expense, allowing agents to meet new people, exchange ideas, and grow their businesses. Sometimes, these events require travel and accommodations, adding to the cost, but the payoff in connections and potential clients makes it worthwhile.
Hosting your own events can also be a smart investment, giving you a platform to stand out and expand your network in the real estate world.
Financial Planning
When you’re a real estate agent, financial planning is a must, especially since most agents are classified as independent contractors. This means you’re responsible for covering self-employment taxes, which include both Medicare and Social Security—the costs that a typical employer would handle.
But don’t worry; there are perks too! Many work-related expenses, like gas, office supplies, and even marketing costs, can be claimed as tax deductions. Keeping track of these deductions helps offset the self-employment tax burden.
It’s also important to budget for quarterly tax payments to avoid a hefty bill at the end of the year. Agents should also work closely with a tax professional who can ensure they’re taking advantage of all possible deductions, making tax time smoother and more financially beneficial.
That’s a Wrap
Becoming a real estate agent comes with exciting opportunities, but it carries significant real estate agent expenses. From licensing and brokerage fees to ongoing expenses, agents face a variety of costs that can add up quickly.
However, you can manage these expenses effectively while building a successful and lucrative career. Understanding these financial commitments upfront will help you stay ahead and thrive in the competitive world of real estate.
With Smart Agent Alliance you’ll enjoy personalized day-to-day concierge care plus assets like customizable agent presentations, business automation, production checklists, customizable social media posts, and so much more.
As a member of our team, you’ll also enjoy exclusive access to the Wolf Pack weekly webinars, Social Agent Academy for social media training, the Wolf Pack Hub for easy onboarding, Investor Army for investing and flipping houses training, and more.
Don’t miss out on this amazing opportunity to maximize your earnings and build a thriving agent business. Join eXp Realty today and experience unparalleled support from our FREE team.
Not quite convinced? No problem! Contact us to set up a meeting, request a link to a live webinar, and/or get all your questions answered via email, phone call, or video call. We’re here to help you succeed!
What are the typical start-up costs to become a real estate agent?
Those include a pre-licensing course, study guides, state exam fee, background check, real estate license fee and later post-licensing education to keep your license active. All in all, these likely add up to between $500 and $1,500 depending on your state and choices. Find more information here.
What brokerage fees will new real estate agents pay?
First off, there’s the commission split that usually ranges from a 90/10 split to a heftier 50/50. Many brokerages charge an initial start-up fee, and monthly fees or annual fees. Then, there’s Errors & Omissions (E&O) insurance. To get more thorough information on brokerage splits and fees check out our brokerage comparison tool here.
Regarding real estate agent expenses – what are the usual professional fees?
One of the most common is the cost of joining the National Association of REALTORS® (NAR), which is not always mandatory. State and local real estate boards may also charge a few hundred dollars or more annually for membership. On top of that, there are MLS (Multiple Listing Service) fees, which run about $150 to $500 per year.
What operational expenses can real estate agents expect?
There are numerous expenses such as building and maintaining a website, business cards, promotional items, travel expenses, gas, car maintenance, insurance, and maybe even the occasional plane ticket, office expenses like internet, paper, pens, printer and scanner. Also, health insurance (More about eXp Realty’s Healthcare here), transaction coordinators, lockbox keys, and client lunches and gifts.
What do real estate agents pay for listing expenses?
Listing agents often pay for real estate signs, professional photographers or videographers, 2D or 3D floor plans, single property websites, drone shots, 3D walkthroughs, printed listing flyers, open houses refreshments, sometimes staging, assistants and transaction coordinators.
What lead generation expenses do real estate agents have?
Advertising services is one of the biggest investments. Agents can invest heavily in magazine ads and neighborhood mailers or they can use their blood, sweat, and tears to door-knock, call expired listings and FSBOs, or seek organic social media and YouTube leads. Agents also need a CRM – customer relationship management tool – to accomplish lead organization.
What professional development fees do real estate agents have?
Continuing education (CE) courses are essential for agents who want to keep their licenses and thrive in a competitive market. Plus. agents often take classes to earn certifications and gain designations to boost their expertise and credibility. Networking events are another real estate agent expense, allowing agents to meet new people, exchange ideas, and grow their businesses.
California lawyer turned Realtor and eXp Certified Mentor, Karrie is Co-Founder of Smart Agent Alliance and a six-figure producer in her first year at eXp Realty, all without door knocking or cold calling. More About Karrie →
