It is not uncommon to hear someone talk about wanting to get their real estate license. While it is true that anyone can buy the real estate course and take the test, becoming a successful real estate agent takes a lot of work. Today I am answering common questions around getting a real estate license and sharing my experience. I was definitely naive when I first signed up for the course and learned a lot of lessons during my first few years as an active real estate agent in Toledo, Ohio.
When does it make sense to get your real estate license?
Here are the three most common scenarios I see when someone is thinking about getting their real estate license:
- Real estate investors who want to buy and sell their own properties
- Part-time real estate agents
- Full-time real estate agents
Real estate investors often consider getting their own licenses when they are buying and selling multiple properties each year. While this saves some money, it is not as much as you may think. Investors can avoid paying a listing agent if they decided to represent themselves. This is about 1-1.5% of the list price because they will be required to pay their brokerage a commission and the buyers agent & brokerage. Another benefit for investors is access to the local realtor listing service (NW Ohio is called the MLS). It is your own personal preference if you think the 1.5% savings are worth it. Depending on how many investment properties you buy and sell, the cost of time spent and fees to maintain your license may just be a wash when you compare it to 1.5% savings.
The Part-Time Agent
I would proceed with the most caution if you want to become a realtor as a side gig. The average person knows around 8 realtors. This means that you will be competing with those other agents who have relationships with your friends and family. Those realtors who are active with finding leads and marketing themselves will almost always be chosen over agents who get their licenses and do not put in the work.
The Full-Time Realtor
If you want to be a full-time real estate agent, congrats! This option offers the most potential for making money. New real estate agents that really thrive are self-starters and what some people would call “hustlers”. They are disciplined with completing tasks and scheduling appointments that will grow their business. The first year as a real estate agent can be challenging because it is a commission-based career and it takes time to build trust with clients. From my experience, I am learning first hand the importance of networking and developing a marketing strategy.
How Do You Become a Licensed Agent?
To get your real estate license, you are required to take a course that covers a variety of real estate subjects including principles and practices, appraisal, law, and finance. Each state has a different requirement for the number of hours you must complete to qualify for the exam. In Ohio, you are required to complete 120 hours, which seems to be on the higher end when compared to other state requirements (Florida only requires 63 hours). Once you complete the required hours and pass each course, you can schedule your exams. You are required to pass the national and state exam to get your real estate license.
How Do You Take the Course?
The real estate course can be taken online or in a classroom setting. I chose to take my course online through Hondros. This method was best for me because I could complete it on my own time and I could start the coursework while I was still living out of state. I also felt confident that I could retain the info by learning online and be disciplined to complete the course in a timely manner. In-person classes are great if you want to complete the course more quickly and prefer learning with an instructor in front of the room.
How Long is the Course?
If you sign up to take the course in a classroom, they will have a set schedule you will need to follow. I believe these usually take about 1 month to complete. If you purchase the online courses, you can complete it on your own timeframe. It does need to be completed within 2 years of purchasing the course, however.
Online coursework requires discipline to get through each section which can be challenging at times! It took me 4-5 months to complete my online course work. While I was completing it, we moved from Denver to Toledo, which took up a good amount of my time with packing and unpacking. Once you complete the 120 hours of pre-licensing work, you will schedule your exam.
How Much Does it Cost?
The pre-licensing coursework typically costs around $1,000-$1,500. You will have annual dues to the National Association of Realtors and a fee to use the MLS. Additional costs will come with continuing education requirements. To keep an active license, it will cost around $500-$1,000 each year, depending on your continuing education course requirements. You will be required to pay your brokerage as well. The payment method will depend on the brokerage, but the most common is by paying a percentage of commission with each deal.
To grow your client base, you will most likely need to invest in marketing as well. This would include advertising your listings online and in the local newspaper. Many realtors also sign-up for lead generation services through sites like Homes.com, Zillow and Realtor.com. Creating personalized snail mail and postcards is another common marketing expense for realtors.
What Brokerage is Best for Me?
Before scheduling your licensing exam, you must be sponsored by a brokerage. I would recommend interviewing various brokerages in your area prior to purchasing your course. They often offer a discount when purchasing the course that can save you a few hundred dollars.
Every brokerage operates differently and it is important to know this so you can choose what is best for you. Some brokerages require a monthly desk fee to work under their company name, while others require a portion of your commission for every property you sell. Some offices are extremely hands-on while others are very hands-off. You must decide which style is best for you and will help you achieve your goals. Another consideration is joining a team within a brokerage.
If you are thinking about becoming a real estate agent, I would be happy to chat with you and answer any questions! It is a really fun and rewarding career, but it takes a lot of work. I hope sharing my experience will help to make your decision a little bit easier.