6 Common Annual Expenses First-Year Real Estate Agents Can Expect
Real estate continues to be a popular career choice for many Americans. In fact, in 2021 the Bureau of Labor Statistics projected the field will grow by 5% by 2031. However, like many professions, there are some costs to starting your career as a real estate agent. Some or all of these costs may be covered by your brokerage, unless you’re striking out on your own. In this article we will discuss some of the most common expenses new agents run into.
1. Pre-Licensing Education ($100-$500)
This fee will vary by state, but you can expect to pay up to $500 for pre-licensing education. The learning includes industry classes and training required to take the exam.
2. Real Estate Exam Fees ($150-$250)
After completion of pre-licensing, prospective agents are then eligible to take the real estate exam. Expect an application fee in addition to an exam fee and the cost of a background check. Again, these costs vary by state, but first-time agents can expect to pay a couple hundred dollars.
3. Board and Broker Fees ($500-$1000)
One of the larger expenses agents pay is board fees. These are dues that go to a local real estate board to provide agents with resources to better serve clients. Broker fees are similar to board fees, except this money goes to the agents’ sponsoring broker. It may be a percentage of each sale, or a monthly fee.
4. Gas & Vehicle Expenses ($1,460)
Recent statistics from NAR show that the largest expense category for most real estate pros was vehicle expenses, totaling $1,460 on average in 2021.
5. E&O Insurance ($540)
Although not required by every state, Errors and Omissions insurance is an important tool to protect an agent’s liability. It is required by most brokers and banks, and preferred by clients. On average, E&O insurance should run you about $45/month.
6. Business Cards and Marketing ($1,000)
This number tends to decline as agents establish themselves, but an agent just starting can expect to spend at least $1,000 annually on marketing materials such as business cards, websites, personal flyers, and so on.
Real estate is a growing field attracting new professionals daily. While the high earning potential seems to be a focus point, rarely do agents discuss the cost associated with just starting out. These are some of the 6 most common expenses new agents can expect. If you are new in real estate, keep this list front of mind to make sure you’re prepared going in.