Real Estate License Cost

Even if you do not intend to become a real estate agent, a real estate license can be a vital step in your investment career.

The licensing process and continuing education courses will provide you with greater insights into real estate principles, powerful networking opportunities, and access to the Multiple Listing Service (MLS) that serves as the lifeblood of the real estate industry.

Those who are serious about their real estate career will get a license in order to build credibility, particularly as the process can often be discounted as business expenses. 

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Average Real Estate License Costs

The cost to get a real estate license will vary depending on what state real estate exam you intend to take, but the total cost of the whole process ranges between $500 to $1,500. The breakdown of average costs is as follows:

• Pre-License Course – $350
• Application Fee – $25-$30
• Background Check and Fingerprinting Fee – $100–$125
• State Exam Fee – $50
• Licensing Fee – $150
  

Highest Real Estate License Costs

The cost to become a real estate agent will vary widely depending on your state. Some of the most expensive states for real estate agents learning the ropes include South Dakota, Colorado, Ohio, New Mexico, and Wyoming. Here’s what you can expect to spend in these states:

• South Dakota – $1,125
• Colorado – $1,115
• Ohio – $1,059
• New Mexico – $940
• Wyoming – $880
  

   

  In these states, the state licensing exam and pre-licensing education constitute the bulk of the expense.
  
  

Lowest Real Estate License Costs

On the other hand, there are also states where real estate school and licensing fees are quite affordable, including Michigan, Florida, Mississippi, Kansas, and Vermont. Your expected costs to become a real estate agent in these areas are as follows:

• Michigan – $338
• Florida – $350
• Mississippi – $385
• Kansas – $400
• Vermont – $400

While you want to save money while just starting your career, be sure to balance the real estate license cost with the potential profit in a given market. 

Real Estate License Acquisition Process

While the cost of getting a real estate license varies by state, the process of launching a career in real estate, including the education requirements, is almost identical regardless of the state. You must go through a pre-licensing course, apply for the real estate exam, undergo background checks, and complete the exam before applying for a license.

Real Estate School

Real estate schools provide a comprehensive real estate education, discussing the principles of the profession, legal considerations, ethics, anti-discrimination practices, appraisals, and finances. Most have payment plans, just like other higher education courses.

In many places, you can take online courses and go at your own pace. Only apply to an accredited real estate school, or your training will not apply to your real estate license.  

The number of credit hours you will require will vary. For example, to get a Texas real estate license, you must undergo 180 hours of training, while in Washington, DC, you only need 60 hours. The typical prices for real estate courses vary between $200 and $800. 

Exams

The real estate exam is a purposefully difficult test that covers everything you learned during your education. The passing grade is usually 70%, and many find that they need to retake the test at least once in order to pass.

When you have completed your courses, you will study the material before paying exam fees and scheduling your time to complete the exam. Some states allow you to take it online, while others will require an in-person test. Depending on the state, exam fees vary between $40 and $150.

Licensing Fee

Upon finishing the licensing exam, you’ll submit an application to the licensing board with your transcripts, proof of sponsorship with a licensed broker, the background check, and the processing fee, or license fee, to the state realtor’s association.

It can take over a week to receive your real estate license, though you will know right away if you have passed the exam. In some states, the license fee is built into the exam costs, but the prices range from $60 in Ohio to $615 in Colorado. 

Background Check

A background check is a critical element of becoming an agent. Those with a criminal history will generally be denied, particularly if they have violent crimes. You will have your fingerprints taken and logged. The cost of fingerprinting and a criminal history check is around $100.

If you have passed all of these hurdles, you are officially an agent and can begin your work. 

Real Estate License Recurring Fees

In addition to application fees and the costs of real estate school, you will have recurring costs throughout your career as an agent. 

Membership Fees

While being part of associations is optional, most agents choose to join in order to gain access to resources and networking that can further their careers. These will be paid yearly. National Association of Realtors (NAR) membership is $156 per year, while state associations vary.

Additionally, local memberships, such as a Chamber of Commerce or the Better Business Bureau, can be helpful for connecting with other professionals and gaining leads. These are usually cheaper than NAR and more localized.

Errors and Omissions Insurance

This is a specialized type of insurance for professionals in industries such as real estate, financial advice, insurance agents, and lawyers. It protects you against lawsuits should your advice lead someone astray.

As these lawsuits can be incredibly expensive, the errors and omissions insurance is a critical business expense, and it is typically required for agents to carry it. The average monthly price for insurance is around $60. 

License Renewal Fees

License expiration is between one and four years depending on the state. In order to renew, you will need to take a certain amount of hours of continuing education before your renewal, which is usually around 30 hours.

You will have to pay renewal costs. In some states, this is only $30, but it may be over $300 depending on where you operate.

Various Business Costs

One of the most obvious expenses for real estate agents is marketing costs. You need to get your name out there and develop a reputation for good service. Traveling to and from properties can also get quite pricey, though you can also take a deduction for this on your business taxes.

You will typically make around 3% in commissions on each sale, but this can be quickly eaten up by other expenses like your fee to list on the MLS, lead generation services, and association dues.

You may also pay a desk fee to a real estate broker, which is either a commission split or a flat fee that real estate agents pay for a sponsoring broker to allow them to use office space and marketing materials.

While these additional fees may be frustrating to new agents, desk fees have many benefits, such as helping connect you to potential clients and allowing you to learn from experienced realtors. A good broker can guide a new agent on their real estate journey and help them avoid common pitfalls. 

FAQs About Real Estate Syndications

Q: How long does it take to get your real estate license?

A: This depends on the state and how much time you devote to your coursework, but it is generally between two and four months. If you are a full-time student taking online classes, it may take you only eight weeks, but if you are going to a traditional, in-person school, you may have to take two semesters, which would be around six months. 

Q: Do you need a real estate license to flip houses?

A: You do not legally need a real estate license to flip houses. However, it is very beneficial and well worth the cost, particularly if you intend to turn house flipping into a full-time business. If you have a license, you can represent yourself, save money on commissions, and list on the MLS.

Additionally, getting a license will put you in contact with other professionals who can provide leads, referrals, and solid advice about your particular market. Your training will ensure you have a solid understanding of each aspect of the real estate business and will prepare you for some of the challenges you may face throughout your career. 

Q: How much do realtors spend on continuing education per year?

A: You may spend as little as $50 to as much as $300 on continuing education each year, depending on how many courses you take and where you complete your courses.

Some are a one-time fee, while others are full courses at a community college or other institute. Other professionals in your area can offer you guidance on which courses are most cost-effective and worthwhile.

If you’re ready to begin your real estate career, contact Visio Lending to learn about our loans, which are specially designed to meet the needs of investors. We provide flexible terms, competitive rates, and a fast underwriting process based on the profitability of your venture, not your personal finances.

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