This week’s Q&A column is written by Karisue Wyson, Director of Recruiting & Agent Support at McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article, contact Karisue at 703-615-0876 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: How do I get my real estate license and what happens next?
Answer: The Great Resignation is upon us, and you may be thinking about launching a career in real estate. Good for you! Real estate offers those with an entrepreneurial spirit a path to an income that is limited only by the time, energy and focus that you put into your work.
But beyond dreams of selling luxury homes and being the master of your own workday, what does it really take to get started as a Realtor? Here are answers to some of the most frequently asked questions.
How do I get my license and how long will it take?
The first step in the licensing process is completing 60 hours of the “Principles and Practices of Real Estate for Salesperson” coursework. This can be done online or in-person (limited locations and times) and can take less than two weeks if done in-person, similar or longer for online (depending on how quickly you finish the self-paced work). Popular sites for online classes are TheCEShop and Moseley (which is Virginia focused) but you can find a full list of exam prep companies at the Virginia Department of Professional and Occupational Regulation (DPOR).
After you complete the coursework, you will take an introductory exam that, once passed, allows you to sit for the national and state licensing exams. Scheduling an exam can take a few weeks and while you are completing your studies you should also be interviewing brokerages and learning about the different business models for working in real estate. When you pass your exams, you will then need to affiliate with a brokerage and submit your licensing paperwork before your license becomes active and you can begin practicing real estate. (Currently it is taking about a month to process licensing paperwork.) But wait! You’re not done yet with classwork…
All active new salesperson licensees must complete a DPOR Board-approved 30-hour post-license education (PLE) curriculum within one year from the last day of the month in which the license was issued to remain on active status. If you do not affiliate with a brokerage or have not completed your PLE within one year, your license will be placed on inactive status, and you may need to begin the license application process again. That’s why it’s important to have your timeline mapped out before you begin your coursework.
The timeline to make your move to real estate is up to you, but once you make the leap to get started, be aware that a clock does start ticking.
How much does it cost to start a real estate business?
New agents are often surprised to learn that there are significant costs to getting licensed, even before you sign your first client. In addition to the licensing costs, new agents join several associations — such as local, state, and national Realtor groups, and the local Multiple Listing Service (MLS) — and purchase equipment such as lockboxes, post signs, sign riders, business cards, etc (these costs will multiply if you decide to work in additional jurisdictions like D.C., MD or other regions outside of the Metro-D.C. area).
Many brokerages will offer a new agent package that includes an initial amount of these items at no cost, but you should set aside funds to supplement or replace them as they are used up.
Depending on how you structure your business, you may also incur legal or incorporation fees (although some agents wait to determine how they will structure their business — sole proprietor, limited liability corporation (LLC), S-corp, or other entity… but that’s a discussion for another column).
Start-up costs for real estate can vary but estimating about $2,000 should cover your coursework, licensing fees and association costs, with another $500-$1,000 for costs associated with launching your personal business and branding (if not covered by your new brokerage).
What does it mean to be an independent contractor?
The traditional relationship between Agent and Broker is one of independent contractor, where the agent operates under the supervision of a broker but is otherwise self-employed. You likely won’t have a broker checking on your day-to-day business — are you calling prospects? Did you host any open houses? How many people did you add to your database this week?
But you will be required to complete your 30 hours of PLE under their instruction and may also be encouraged to attend business meetings and other brokerage training. While autonomy is a key motivator for many people to get into real estate, developing a good relationship with other agents in your company will go a long way to helping you understand the rhythms of the industry so take advantage of all the training and support your brokerage offers as you get started.
It’s also important to understand that real estate is a commission-based business, where an agent’s income is paid at the end of a transaction and that a commission is split between the listing and selling brokerages, which in turn pays their respective listing and selling agents at their agent split. That means you will also be paying your taxes, health insurance and retirement funds out of your commission income so be sure to set aside a percentage off the top (usually 20-30%) to cover those expenses. You will also incur business expenses — mileage, meals, client gifts, marketing, etc. — so have a budget established and invest in a good accountant or accounting program to keep on top of all those receipts!
When you become a Realtor, you are the CEO of your own start-up company. It’s an exciting adventure and will deliver many rewards, but it takes preparation. To learn more about how McEnearney Associates supports our new agents in their first year, please visit www.JoinMcEnearney.com or reach out to me at 703-615-0876. We have the right plan for your success!
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703.549.9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria