Monthly Costs Being A Realtor Outside Of Brokerage?

Question

I know that it can vary widely depending on how the agent and their brokerage do splits and desk fees.  I am interested in the other costs, like membership fees (NAR I am guessing is a requirement), MLS access (or is that through the brokerage?), is there some kind of insurance in case a deal goes sideways, (Realtor malpractice?).  How about taxes, they are due quarterly how does a new agent even come up with a number?

BP has a Pro section and there are no shortage of other websites geared towards agents offering a variety of services, are there any other big sites that draw a lot agents?

I know that there are endless things you can spend money on, I am just looking to see what the average, if that is even a thing, agent costs are.  Any insight would be great, I am in WA, but would be curious to see if it varies greatly between states.

Thanks!

Mel Locke · Answer

J Beard, sorry if I wasn't very clear, I was just putting the cost of working with a broker to the side.  If I want to even further complicate the issue, WA has gone from calling agents salespeople to brokers and brokers to managing brokers.

The monthly cost of working with a broker is going to be whatever you negotiate, some have high desk fees, others take a big cut, there are pros and cons to all of it.  The purpose of this thread was to get an idea about budgeting for those other things, whether it's marketing like Russell mentioned or car washes like Sarah posted.

I like how Russell compared it to a small business, it really helps to think of the start up investment and the ongoing expenses that it takes to be a successful agent.

Thanks again to everyone that posted!

Mel Locke · Answer

Excellent points!

Also, good to know I wasn't being delusional, I was aiming towards $10,000, a number that is easier to swallow knowing I would already have a listing and I would have a couple who would hire me as a buyer agent.  Just like you, I would have some side income coming to cover life expenses.

Russell Brazil · Answer

@Mel Locke I always tell new agents or prospective agents that being an agent is more akin to running a small business than to having a job. And of course what does it take to make a small business successful? Time and capital. Most small business owners do not turn a profit in their first two years...and I think the same goes for being an agent. If you really do want to be successful,...it may mean not taking a salary...yet still spending money for some amount of time.  That can be scary for some. But on the other hand...what small business can you legitimately start with only $10,000 or $15,000 is capital? And it really does take capital. If you do not spend money on marketing you will not be successful. Some really high number, like 80% of new agents drop out of the field in the first two years.

I did not make the leap from being a part time agent, to being a full time agent until I had a portfolio of rental properties to provide me with an income as well as an ongoing means of providing capital for my agent business.

Russell Brazil · Answer

I spend about $30,000-$35,000 a year on overhead for the agent side of my business. MLS Dues, E&O insurance, office supplies, sentrilock fees, realtor association dues, marketing, postage, cost of preparing and marketing listings,  crm software. Im sure there are other things Im not thinking about.

Jeff B. · Answer

Discussion would appear to be consideration for operating a personal office space instead of a desk within the Broker's facilities.

Just wanted to note, any transactions would still need broker oversight.

Mel Locke · Answer

Thanks Sarah!  My family down in CA can get a car detailed for a fraction of the cost then up here in WA.  I am guessing the first couple of years, I will have to put some sweat equality into that.

Sarah Ziehr · Answer

I will get back to you after I do my taxes. But here are a few numbers that come to mind-

E&O (errors and omission insurance) $500 if paid in full ($650 if in installments)

MLS & Association dues $900

Parking, gas and car washes I probably spend around $3500 per year

I just had to pay $300 to renew my license.

As for taxes after the first year you can set up quarterly estimated taxes based on last years tax return.

Mel Locke · Answer

Thanks Russell!

It sounds like you are a more independent agent.  I was talking to a new agent that works for William & Keller and he didn't give specifics, though implied that he had a pretty big split, but let the brokerage handle most expenses and even most of the closing paperwork.

One of the big fears going into this profession is running out of savings.

Monthly Costs Being A Realtor Outside Of Brokerage?

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