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Real Estate License Cost: Should I become a real estate agent?

Tuesday, April 29th, 2008

Real Estate License Cost: Should I become a real estate agent?

One question I hear asked all of the time is should I become a real agent agent?, or not. Most people that ask this are investors, but not always. First I will say that becoming an agent is a lot of hard work, it’s not easy, big money like people make it sound. Yes there are $5000-$8000 checks, but please don’t underestimate how many months agents work for that, and how few buyer’s and seller’s don’t work out, or never make it to closing. Agents do a lot of work for free, and these are the reasons why it’s not a get rich quick. As a general rule agents who have been in the business a longer period of time will work more with seller’s and listing houses. Listing agents just find it to be a better use of their time. Some agents enjoy being both.
Some agents will work on filling up vacant houses, or work with buyers. Some agents will even do property management. What kind of commissions are made? As a general rule listing agents make 5-7% listing fees. In a competitive market it was getting down to 5%, on bigger houses it may also be lower. 7% use to be more in the days when houses were worth $100,000. A seller should not always go with the flat fee, or the cheaper listing agent. The reason is often the listing agent who charges a very low list fee could be hungry for business and that’s why his/her fee is so low. Sometimes the agent just wants listings for the marketing and has a great system in place and is able to compete better and does volume. Also with a flat fee just to get it on the MLS, please keep in mind that’s a lot of work that you have to do, that the agent wont’ do. An agent that does a full listing does a lot of work, a lot. Buyer’s agents back in the day use to drive buyer’s to 15-20 houses, that’s becoming more rare. The reason it’s much more rare is that 84-90% of buyer’s now start their home buying search on the internet, weeks or months ahead of time.

Typically an agent will set up a buyer on an email list for properties that match their criteria. Buyer’s review these listing results maybe daily, or weekly depending on how many fit their criteria. Buyer’s these days do more work up front looking at photos, property info, virtual tours, using mortgage calculators, etc. This means most buyers are a little more
qualified by the time they talk to an agent these days, but not always. Agents will hold their license under a broker, and pay either a desk fee and 100% commission, or pay less of a fee and get 70-80% of the commission. The broker has overhead like office expenses, desks, furniture, printers, fax machines, etc. to pay for. Agents will have to have a license for a minimum of 2 years before they can even take the test and go become a real estate broker. To get a real estate license, at the time of this writing you can probably do it for around $900. this includes about 3 full-time weeks of class which is about $275 per week, plus about $50 for each of about 2 books needed. You will receive the majority of the info in the first week. Get prepared to study and read. You will have to take a test and pass it before getting the license. At the time of this writing 70% score is needed on both the national and state portion of the test. The two objections I hear the
most from people of why not to get a license are these two: 1. You have to disclose you are an agent 2. You are held to a very high standard increasing liability.

These are both true statements, I have not found the disclosing of being an agent/broker a big deal. I don’t understand why that’s a big deal. As far as being held to a high standard, that’s fine also. Agents are suppose to be loyal, honest, ethical, and other stuff. Shouldn’t everyone hold themselves to those standards? If you do more than 5 transactions per year on your “own” transactions you are only allowed to do that if you pay and get a “limited broker’s license” or if you get a real estate license. A limited broker’s license doesn’t allow you to collect a “fee” on behalf of someone else. If you want to get a license, I say go ahead. It’s worth the real estate education, it’s a chance at some extra money, but it’s a job, it takes a lot of hard work. You will end up with 15 credits(14-15 hours) per year of continuing education that’s required as a real estate agent. The cost of 15 credits isn’t much, it’s probably about $200. Contact me anytime if you have questions ron@minnesotainvestors.com

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Posts Tagged ‘should i become a real estate agent’

Real Estate License Cost: Should I become a real estate agent?

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