You might be thinking, I just got my real estate license now what?
In the meantime: JamesWilson.SevenFigureAgent.com
One of the first things I noticed about getting into the real estate business was the relatively low start-up cost compared to every other business venture. Most businesses have huge start-up costs especially if you think about going into some type of a franchise business model for example the average McDonald’s restaurant start-up costs are $1,000,000. To get into the real estate business you can actually get started for the cost of the education training and license which could be just a few thousand dollars.
The cost for most real estate schools is anywhere from $300 to $500 and on occasion there are real estate brokerages that operate their own real estate schools that will actually either reimburse you for the cost of the training or just give you a scholarship for the training provided that once you get your license that you hang your license within that brokerage.
Okay so you have the money for real estate school but what does that mean well first of all you want to understand you‘re in a highly regulated industry which means that the state dictates the information that you must know in order to operate within the confines of the state as well as some national knowledge requirements so once you go to real estate school you‘ll be learning two different sets of objectives you‘ve got National objectives and state objectives and this is all part of the training you‘ll receive. What that means is that you‘re going to be going through a certain number of hours of training that are required by your state you going to be meeting in the classroom just like you would in high school or college class you‘ll have an instructor whose typically already licensed within your state and usually already been a broker for several years now keep in mind that you‘re not going to be learning how to actually do real estate you‘re just going to be learning what I would call the language of Real Estate. I wouldn’t say the tests are difficult if you understand the vocabulary so I would spend a lot of time with flashcards and writing down any legal terms that you don’t understand because really real estate is mostly legal terms around real estate and you‘ll need this information because you‘re going to be taking multiple choice tests there will clearly be one or two wrong answers and then they’ll be one or two right answers with one of them being the most accurate.
I got my first license in the state of Arizona and it requires just 90 hours of classroom instruction and so in Arizona many people will take a fast-track to their training and they’ll go to class for 9 days 10 hours a day and knock out there 90 hours. I would suggest that you focus on the vocabulary of real estate because once you understand the language of real estate then you‘ll be able to understand the actual questions that you‘re being asked and then you‘ll know what the correct answers are on the exam. Many schools are set up for you to go part-time meaning you‘re going to go one or two nights a week and you can take up to a year or two to complete the training however I would not suggest that you take the slow track because your examination is going to be over the entirety of all the material meaning the longer it takes to finish the course work the more you‘re going to have to remember before you take your exam. When I went to real estate school I was running the call center for realtor.com and so I set myself up to go 2 nights a week and I think it took me about 10 months to finish the course. It cost me $399 and I really had no intention of actually doing real estate I just wanted to have better customer service within the call center because all of my customers were real estate brokers and Realtors. The other issue is this you‘re going to have to pass a school examination before the school will let you go take the state examination every school is a little bit different and most schools require you to pass two of three or four test because they want to make sure that they keep their certification with the state so if you can’t pass the school exam there’s no way you‘re going to pass then National exams so you want to make sure I’m put a good amount of time in studying the material and do good on the School tests and pass them before you think about going on to the state exam. Bit of advice here don’t do what I did after I finish the school exam I waited 9 months to go take the national exam which really put me at a disadvantage because I had to go back and brainstorm all the materials before I went down and took the test it’s really better if you schedule your real estate exam for the national level at the testing center within about two weeks of passing the school exam so it’s fresh in your mind and really the shorter time the better so if you can get it the same week that would be great. many of us have good short-term memory But as time goes on you‘ll start to forget some of the material so don’t let too much time lapse.
Once you go to the Real Estate School and passed the school test you then have to go and take a a certification test to verify that you have the knowledge from the school and you‘re going to have to pay to register for that test and that’s usually somewhere between $75 and $200 each time you take it. direction to portions of the test one is a local or state requirement and the other one is a national portion and you must pass both portions.
After you pass the test you then have to go down to your local State Department of Real Estate and you‘re going to have to actually pay for the license and that could be anywhere from another 75 to as much as $500 to the state to quote-unquote activate your license.
The next set of expenses you‘re going to have is you‘re going to want to join your local Real Estate Association sometimes called the Board of Realtors period not a cost associated with joining your local Association or board could be 2 to $300 to as much as $500 it varies based on your membership and the cost Associated but you will be required to join one of the local associations in order for you to be called a realtor. Without being a member of The Association of Realtors you are only going to be what’s known as a licensee. No there’s nothing wrong with being a license, however if your broker is a member of the National Association of Realtors then you are required to be a member of the National Association of Realtors. In order to call yourself a realtor you must be a member of the National Association of Realtors which also will make you eligible to receive commissions from other Brokers within the industry it’s called sharing on commissions explain with more about this later since we’re going to focus just on the start-up cost.
You also want to get setup with access to the lockbox system some associations will let you pay this monthly and some require you to pay a year at a time it could be anywhere from $300 to $500 a year but without this, it’ll be very difficult if not impossible to actually go out and use a lockbox to show houses to prospective buyers or even hang a lock box if you get a listing. if you actually have a seller hire you and you take a listing you‘ll want to use an electronic lockbox and they cost about $100 to $125 each but you will not need one of these right away until you get your first listing.
Lets say you have the money, you next want to consider there are some other things you should know before I get started.
Some of the main reasons why people get into real estate is because they just don’t want to be an employee they want to be able to make their own schedule and have the time for you to fit working around their lifestyle and sometimes real estate can do that. I think for the majority of us we don’t like to be told what to do we’re not good about punching a time clock we tend do not follow rules of an employer we don’t like to ask for time off to go to our children’s events or to travel we don’t really think about it as far as the tax savings which is to say you want to earn self employed income or 1099 income real estate is for self-employed tax versus a W-2 employee tax. While most of those are considerations I think for many of us we love meeting new people we definitely want to be able to control our own income provided that we can have regular income, some of us love marketing and there’s a few people that just love to take on a challenge
As you can see, there is almost nothing that keeps most people from getting started in the real estate industry, however, “if there is little to no barrier to entry into this business and it’s so easy there must be a lot of people that get into the business” and if that’s the case what are the results. You will find the numbers can be a bit sobering such as the national number is 97% of people who get their real estate license do not renew their license at their first renewal. That means only 3% of individuals renew their license when it comes time which is usually at the two to three year mark. There are many reasons for this however the main one is the reason is that it is not easy to make a living in real estate.
Personally, I think most people get a real estate license as a spare job kind of like driving for Uber or Lyft meaning they just want to fit it in around what they’re already doing. They have a primary career or job they like houses they watch HGTV or flipping real estate shows on television and they make it look really easy however think about this, the typical real estate transaction can take anywhere from 45 to 90 days and most people have been conditioned to exchange an hour of their time for a certain amount of money. This means for most people the reward for the work is so far in the future and disconnected from the activity it can be very challenging for people to keep up the amount of work needed to have a successful career. Unless you know how to create and maintain amazing relationships, continuously market for new business, constantly ask for referrals, and love to help people solve their real estate problems.
You will want to determine what is going to be unique about you for example why should someone work with you with roughly 1.2 million licensed real estate agents in the United States why should people work with you? The answer to that question is critical to your future in the business. Many people will call this your “unique selling proposition” or what value you will bring to the transaction. If you believe that opening doors for buyers and filling in blanks on a purchase agreement is going to make you a lot of money, then you might be surprised the find many of the other people in your real estate class have the same idea.
The other thing to consider is the future impact on the internet and technology on real estate as an industry as more and more buyers are choosing to complete their first showing on the internet and in many ways they feel they only want to work with the listing agent believing that they can save up to half of the commission’s on the purchase and take that as a discount on the purchase side meaning they think they don’t need a buyer’s agent.
These are some things to consider when you look at the cost of getting into the business.
Let me give you a little bit of background.
When I got out of high school I wasn’t sure exactly what I was going to do for a living but I knew it needed to be something that I enjoyed. Growing up I work in my parents donut shop so being self-employed from an early age was something I was used to. Starting in the sixth grade I would go down to the donut shop at 3 a.m. and help Frost Donuts that have been made my step dad would go down to the donut shop at 10 the night before start making donuts so I knew it takes a lot of hard work to be in business for yourself. Real estate can be very much the same way. You have to do a lot of preparation work before you start earning income but the great thing about real estate it has relatively low start-up cost. So for example when I got out of the Air Force I looked at perhaps starting a Subway franchise they were just getting popular in the late early 90s, so I went out and I met several owners of Subway restaurants and what they told me was the cost was going to be about $100,000 for each location that I wanted to set up. Now wasn’t really sure what that meant because I just thought it was straightforward you open the sandwich shop and you‘re in business what did they mean by several locations period Well after some more questions what I started to understand was that each location would not make very much profit because there was so much money spent and invested and not only initial startup cost but more importantly in labor and if any of youremployees called in sick then you got to go down and make the sandwiches. so after I thought about that for a little bit I realize that was probably not going to be a business that I wanted to get into. I knew that I could count on myself but I wasn’t quite sure about how to deal with employees that no called no-showed. The next thing I had to look at was where was I going to get $100,000 so I knew that was out.
In the meantime: JamesWilson.SevenFigureAgent.com