Costs of Getting a Real Estate License
As a real estate agent, you'll be required to be licensed by the state in which you plan to practice, and you can expect to shell out around $2,000 over the course of becoming licensed. At minimum, obtaining a real estate license requires that you check the following tasks off your to-do list:
- Complete an approved real estate course
- Pass the licensing board's real estate exam
- Complete fingerprinting and background checks
Fingerprinting and Background Checks
You'll want to get the fingerprinting and background checks out of the way as soon as possible, as the process can take several weeks to complete. The costs associated with this step will generally range from $50-$100 to satisfy the state requirements.
While waiting for your fingerprinting and background check results, you can get started on meeting the education requirement. For our purposes, let's assume you're getting licensed in the state of Nebraska.
Nebraska requires that incoming real estate agents have at least 60 clock hours of real estate education to sit for the exam. Approved courses can cost anywhere from $250 to upwards of $1,000. Since we are on a budget, we'll use the lowest cost for our calculations. If 60 clock hours is equal to two courses, our pre-license education cost is $500.
Now that you have completed your coursework, you're ready to take the exam. But wait! Just to be absolutely sure you're ready; let's do a little bit of test prep. You can find more information about preparing for a real estate exam along with test prep coursework, flashcards, and a practice exam in this Real Estate Exam Prep course. Study guides specific to several states' licensing exams are also available:
- Arizona Real Estate Salesperson Licensing Exam: Study Guide
- California Real Estate Salesperson Exam: Study Guide
- Florida Real Estate Sales Associate Exam: Test Prep & Study Guide
- Michigan Real Estate Salesperson Exam: Study Guide & Practice
- New York Real Estate Salesperson Exam: Study Guide
- Ohio Real Estate Salesperson Exam: Study Guide & Practice
- Texas Real Estate Sales Agent Exam: Practice & Study Guide
- Virginia Real Estate Salesperson Licensing Exam: Study Guide
…Alright! Now, we are ready for the exam.
Since we are in Nebraska, you will pay an exam fee of $150. However, in other states, real estate licensing boards may charge more or less. For example, in Vermont you would pay $115 to sit for the exam, but in Missouri you'd pay $62. To sit for the exam, you need to have proper photo ID at the very least. Some testing centers have additional requirements, so be sure to check with the real estate commission in your state for specifics.
Once you've passed the exam, you are now ready to hang your license with a broker.
Selecting a Broker
Assuming your background check and fingerprinting are complete, you now need to find a broker under which you can ''hang'' your license. As a real estate agent, you are licensed to act on behalf of the broker. Once you select a broker, you and the broker will complete a license application and other onboarding paperwork. Once this paperwork is filed and approved, your license can then be issued.
Besides requiring a percentage of your commission on each sale, most brokerages charge a monthly desk fee. As with all real estate fees, this can vary greatly, and depend on location and/or what is included. For example, one major national realtor charges between $50 and $80 per month, depending on location.
License Application Fees
As with all other fees discussed in this article, costs vary by state and locale, but to give you a general idea, Nebraska's fee is $135, with an additional $80 yearly fee, while the license application fee in Texas is $205.
The real estate commission in your state can provide information about costs specific to your state.
Errors and omissions insurance is a requirement to keep your real estate license active. Without this insurance, you could be held personally responsible for even small mistakes that lead to losses, so it's probably a good thing that the state will deactivate your license if you let your insurance lapse. For this protection, you will pay approximately $400 or more per year.
The National Association of Realtors Membership (NAR) offers a wealth of tools to help you be a successful real estate agent, including listing services. It's difficult to imagine how one would practice real estate without this service, and for that reason, your broker will require that you are a member of the NAR. Fortunately, the annual cost of membership is currently only $150.
Adding It All Up
Now, let's review and do the math to find out how much it costs to become a real estate agent in our example.
- Fingerprinting and Background Checks- $100
- Pre-license Education - $500
- Exam Fee - $150
- License Application Fee - $135
- Yearly License Fee - $80
- Broker Fees - $80
- Errors and Omissions Insurance - $400
- National Association of Realtors Membership - $150
And the grand total is: $1,595
Keep in mind that after you are licensed, you'll still incur additional expenses for necessities like transportation and marketing materials, which you can learn more about through this Marketing for Real Estate Agents course. But now you have a better idea of what it will cost to become licensed to practice real estate, which is a very good start. Good luck!