I want to be a Realtor® What’s involved?
The other day I was having a conversation with an individual who asked John, I want to become a Realtor® what’s involved. Of course we covered the many benefits inclusive of being an independent contractor and a licensed agent and Realtor®. For example making your own choices and business decisions with exception to the confines of an independent contractor agreement or employment agreement and standard office policy. We discussed the the joy of working with buyers and sellers and the sense of accomplishment that comes from a final settlement at closing. There are certainly many benefits for those that say I want to be a Realtor® but it is only fair to look at both sides of the coin before someone jumps in with both feet. Often times those that suggest I want to be Realtor®, whats involved see the glamor of our purported easy life and believe we simply drive around looking at pretty homes with pretty people. We live our silver spoon lives drinking fine wine and eating hors d’oeuvres all the while collecting large commissions. Yeah right, read on!
One may consider some of the following realities before stumbling to far into the abyss of our exciting Realtor® profession. Please don't get me wrong here, I truly love what I do but I am also a realist so lets not sugar coat the bitter pill. This is hard work, we only get paid when and if the transaction closes and the hours poured into any one transaction can at times be countless. So here are some points to ponder the question I want to be a Realtor®, whats involved?
- Retirement, 401K, Pension Plan? No sir!
- Health Insurance, Dental, Eye Glass coverage? Uh no. You pay your own way and you may want to check on the cost of those premiums. No group plan here.
- Weekends off and shorter working hours. Don’t even go there!
- Paid Vacation? LOL
- Sick leave or maternity leave? You're kidding right?
This is a commission only venture and I can assure you the bills keep coming whether you closed a transaction this month or not. You may want to consider having a minimum of 6 months reserve income nestled in your bank account before you start down this path of easy money.
Lets take a look at some start up costs and then some monthly expenditures. These obviously vary all over the country but these are meant as general concepts not specific figures. Some brokerage firms may cover a few of these expenses (very few) but often do so at a higher split rate of your hard earned commission.
- Getting your license. The courses and pre-licensing alone is 90 hours of paid classroom time, exam fees etc. Average cost $1,800.00.
- Pass both the state and national portion of the exam with a minimum score of 75 on each or take it over again. $90.00 non refundable for each attempt. It can be challenging.
- A $270.00 application fee to the NMREC is required.
- Another $270.00 is paid each three year cycle. Plus another 30 hours minimum continuing eductation at approximatley $20 per hour. $600.00 minimum!
- Errors and Omission insurance. Minimum $100K coverage approximately $280.00 yr.
- New Mexico requires fingerprinting for a background check. The actual fingerprinting is about $20.00 then another $44.00 is paid the Department of Public Safety to investigate. Hope your record is pretty clean. They don't like frauds, felonist or deadbeat Dads, that sort of thing.
- Joining a local board and actually becoming a Realtor® not just a licensed agent will run about $625.00 annually. That covers local, state and national Realtor® dues.
- Office fees can run the gamut dependent on the business model and production. Flat fee on 100%, flat fee plus a split, no fee and split etc. Keep in mind those flat fees come regardless of income. If your going to affiliate with a franchise like a Re/Max you will enjoy local, state and national dues as well. $1,200.00 yr. (+-)
- Brokerages may charge a deposit when you hang your license with them. $500.00 (+-)
- Business Cards. Depends on quality. $140.00+ per 1,000
- Yard Signs. Again these vary considerably. $75.00+ each x ?
- Lock Boxes. Supra E-Key boxes $100.00 each x ?
- A good digital camera is needed to showcase all of those listings. $400.00 +What about a video camera for YouTube.
- A decent car is pretty important whatever that costs you. Im sure you will want a Lexus, Beemer or Caddy right?
- You will likely have higher insurance premiums since it will be for business or mixed use.
- A smart phone is a wise investment. $200.00 + data package and normal rates. What about all those apps you will need.
- A tablet or iPad is a great tool for any sales person. Think listing presentation. $400.00+ a good bit more if you get one with cellular capability.
- You may want to consider a good laptop since you will need to be mobile showing all those pretty homes to pretty people.
Ok, so that's not so bad so what about some monthly fees I may encounter in my new Realtor® profession? I’m still thinking I want to become a Realtor®, what’s involved?
- We pay dues each month to access the MLS and be members of our local board. $45.00
- Our Supra E-Key access runs about $20.00 per month. So we can open lock boxes.
- Websites. One, two, three? These are all over the board in price & functionality. An entry template site runs about $200.00 set -up and $50.00 monthly host fees bare minimum.
- A really nice custom site will cost you thousands not to mention your time investment.
- Realtor.com website. Adjusted annually by volume of sales from the previous year so initially around $75.00 month plus start up costs.
- IDX solution for your website. Many Options from $40.00 a month plus start-up. So folks can see all the listed homes on your cool website. Some Realtors® use more than just one.
- Contact Management software or access i.e. Top Producer etc. $30.00 plus set-up.
- Off line marketing. Magazines, Newspaper, Post Cards, Flyers etc. $30.00 to $750.00+
- Land Line, Fax Line or e-fax $50.00
- Cell Phone, Data Package. $50.00
- Internet Connection. $30.00
- Auto Maintenance. Frequent oil changes, brakes and car washes.
- Auto Fuel. All that driving around gets expensive unless you have Smart Car :>)
- Postage for post cards, follow ups, marketing efforts annual holiday mail outs etc.
- Office Equipment. Computer, Printer, Fax Machine, Backup Drive, Desk, Chair etc.
- Office supplies. Paper, Folders, Ink, Pens, lots of white out
- Don’t forget to pay your health insurance each month.
- You should be building your investment portfolio maybe a ROTH IRA or Sep Account.
- We need to keep ourselves dressed for the occasion. I won't even go there.
- You may want to use the cloud to backup all that data. $15.00 month.
I know this all sounds a bit pessimistic but the reality is this is all true, there is no getting around the majority of these monthly and annual expenses short of having a spouse with a REAL job (that is sarcasim). If your going to jump into this great Realtor® profession be sure you have all the facts and be prepared for some lean times. I am so glad you asked that great question, I want to be an Albuquerque Realtor®, what’s involved?.
Rain Makers Feel free to share any expenses I have likely overlooked.
Albuquerque Homes and Lifestyle Blog
John McCormack Owner/Managing Broker, e-PRO
505-980-4576 / John@AlbuquerqueHomes.com
If your considering Buying, Selling or Relocating to Albuquerque or Rio Rancho, NM and need a Professional Realtor It would be my pleasure to help you!
Be sure to visit my AlbuquerqueHomes.com website for total access to all available homes in the following New Mexico communities: Albuquerque, Rio Rancho, Los Ranchos, Placitas, Bernalillo, Tijeras, Sandia Park, Cedar Crest, Bosque Farms, Los Lunas & Belen.
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