So, you want to be a Hawaii Real Estate Agent? You have an interview with a Broker at XXX company and the only thing on your mind is $$$$. Well, there's always commission because you're an independent contractor. There is no two week or twice a month paycheck. You get paid when you sell a home.
You have income, taxes and expenses.
What they don't tell you before you get into real estate is that you will need money to start up with. "In order to make money you have to put out money". Like with any business you have to have ‘start up' money to get going and keep putting money into your business just like any other.
The following list will give you an idea of what to save up for so you aren't going into the industry blindly and KNOW what YOUR expenses and responsibilities are as a Real Estate Agent.
In the beginning:
- Real Estate School
- State Exam (If you pass the school)
- Licensing (If you pass the school and exam)
Starting Out and Ongoing Stuff:
- Multiple Listing Service, Realtor® Dues, Local Board Dues
- Business Cards (and if you want a professional shot go to a photo studio)
- Signs (Open House signs to start with) and if your company does not provide property signs you'll need a few of those too.
Announcements and postage (you do want to get the word out to family and friends to start with)- A good PC and equipment. (you will spend the majority of your time on your pc so make sure it's in good working order or buy a new one)
- Office Supplies (this can range from paper clips to a great all in one printer, scanner, fax, copier)
- Your Website (research different website companies, designers and so forth to see which will best suit your needs.
- A good blogging site. (ActiveRain is just $29.95 a month for a Rainmaker account!)
- A good virtual tour site (my favorite is www.realestateshows.com )
- Additional Education (process, financing, escrow, listings, purchases, marketing and more!)
- Gas, Car, Insurance, Upkeep (you will be using your vehicle more than usual ...obviously)
- Advertising (depending on the type there are costs for newspapers, magazines, books, websites)Savings in the bank of at least three to six months as it will take some time to create business.
- Errors and Omissions Insurance
- Some companies may charge office and desk fees.
- For every dollar you make there are taxes to pay. In Hawaii we have to pay not only federal and state estimated self employment taxes quarterely but have our General Excise Tax to pay as well.
Make sure you know everything there is to know BEFORE you pursue a career in Real Estate. You have responsibilities as an independent contractor and you pay your own taxes and expenses. READ MORE HERE>>> Real Estate is NOT JUST A PAYCHECK Be proactive in your research so you aren't going into the industry blindly and thinking you're making oodles of money with no expenses or responsibilities.
Oh, and the biggest item you will need of all.
TIME. LOTS of TIME.
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Celeste "Sally" Cheeseman is a Realtor-Associate with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocating to Hawaii, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents. Website: www.hawaiihomesmarket.com
Celeste "Sally" Cheeseman is a Realtor-Associate® and Certified Residential Specialist (CRS) with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocations, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents, Home Buyers and Sellers.
© 2007-2012 Celeste "Sally" Cheeseman's Hawaii Real Estate and Relocation Blog.
All rights reserved.
It costs $ to get into real estate?
I could add about 100 other things that costs THOUSANDS! Quit now and send all you referrals to SALLY! Let her treat you to beer and pizza instead - save your time!
Woo-Hoo: Excellent post on the cost of being a Realtor! Seems like there's something new daily to add to our expenses. And when you're making NOTHING, it's tough!
Susan: hahah..no kidding. MANY DON'T realize that there are so many expenses. I've even heard the consumer ask how much we get paid for driving them around to look at homes.
Greg: Really? lol. I've heard some pay to get on the first page of Google ...big bucks. You clown. :)
Kat: Hey Kat...yup there's always something new although I think this may help some to be prepared ....so many get into the business and aren't prepared...and end up getting out because of the expenses. Better to know ahead of time so they can make a conscious decision. :)
YIKES. Noticed a few years back the average price of a home in Maui was $375,000. That was the headline in the local paper hidden in glass as we walked off the plane and into the terminal. So much more expensive than Northern Maine where you can buy a nice home for $54,900!
Andrew: Oh, since you're on the subject....yes, our expenses for shipping signs etc is higher as well. More expenses!
Now I know where all my money is going. Greg thinks about money for beer and pizza? Wow, he's doing great. Sally, a great outline of the $$$ to run your ship in this biz!!
Sally do mean that it isn't all profit ..... LOL
That list is a real eye opener, and a costly one at that.
This is a good wake-up call for anyone thinking of getting into real estate anywhere.
It is anazing that agents have no idea of the costs involved and the lack of a paycheck when sales are slow.
And don't forget all the vendors that will line up to part you with even more of your hard-earned money. :-)
Gary: lol...no kidding...I've spent more on my business than I made so far...for real!
George: I do believe many of us can add more on ...but these are the basics. And I know you're joking and know it's not all profit. First thing I do is put my taxes aside...second is put some aside for more expenses (pay credit cards). Tomorrow I'll have nothing left from that check :(
Margaret: Most of us didn't do the research although I got into the business right at the start of the boom. I found out quick and adjusted quickly too!
Norma: It's not just agents...it's the public in general. I have run across many that believe we're rich...that we get all the commission (none goes to the brokerage) and that we get paid for expenses. I had one lady I treated to lunch say "yeah, it's a write off anyway". Arghhhh!
Cheryl: Good one....they will bleed a newbie dry if they don't know what to watch out for.
isn't it something else that so many people think all we do is sit back and rake in the bucks, lol - this is great info for anyone contemplating a career in real estate. Thanks Sally! Aloha :)
Oh.. you forgot to add that you won't sleep much at first either! This is a great post and really outlines what it takes to get started in this business.
An easy to read, clear and concise list of the expenses that all of us encounter, for those who want to join our thinning ranks. Sweet. It's too bad that so many of us didn't have this when we got into the business.. I wonder how many of us would actually be here if we had. Great post as always, Sally!
I wish some one had sat me down and told me more about the financial realities of being in real estate 2 1/2 years ago when i got in to it. That is another one of the practicalities they don;t teach you in class
Hi, Celeste, Good for you to lay it out for the newbies. Lots of new comers really don't have any clue about real estate and jump into the business.
Sadly many dont realize just how much money they will have to put out up front. That's the little 'detail' that is left out of the school portion. It's not easy, and if you don't have a few months expenses saved up ... well, you're going to get awfully frustrated.
I wish I read this before I got into real estate
Steve
Every Potential Realtor Should read this! Most have no idea what it takes financially to be a Realtor!
I made one of these lists in a blog one time. I think it was about twice as long. I know I'm not telling you anything you don't know. You've listed the basics. But there are always surprises that pop up when we least expect it! And who knows when you'll get paid?
Good post. It shows that you should only get involved if you are serious. The "good news?" (if you want to look at it like this) is it keeps out the folks messing around for a part time thing and makes your competition less.
Two things are definitely not taught in Oklahoma real estate. First is budgeting and cash flow analysis. Second, what you need to do to get a loan to pay for the $10,000 plus loss you are going to have in the first year, unless you are really lucky. The low hanging fruit has already been picked and now you need a financial step ladder to get to the commissions.
In Manhattan New York market, the company takes a pretty big cut when we make money, but at the same time, the company does offer great amount of advertising, exposures and services for the agents.
I always say that if you come out ahead the first year after expenses- that is a pretty good start!
Sally, excellent post describing the many startup costs in real estate. I'm currently teaching a pre-licensing class for people to become real estate agents and many have asked about these costs. I tell people that it takes about $3000-$4000 minimum just to get going.
Time lots of Time..........but I need to take vacations every other month. You mean that won't work???? And I want to drive around in a nice fancy car..... the broker supplies one for all the agents, right? LOL
Seriously - great post! So many don't have a clue!
Gene: Whoever believes we rake it in is sooo wrong.
Joan: No kidding...good one.
William: Thanks William ... and it's good for us to let others know... it's very important they all understand.
Does it cost money to be a realtor? Of course it does, but that is the cost of doing business. No one ever said that it would be easy out there. I bet that Hawaii is a very competitive market too!
Sally, This is a great overview. I think it will be good for prospective agents to know this but it would be good for all those folks who think we make huge checks for nothing as well. I was well prepared when I started and knew up front what to expect. It made a big difference. I broke even my first year and have done quite well in this business but it certainly costs a lot in money, time and determination. I for one think the rewards are worth the effort.
We were well prepared in our pre-licensing course...not only the expenses involved, but the length of time it would take to turn a profit. We were told to have the equivalent of one year's salary in the bank to live on...and that was in 2005, before the market slowed down! One item you left off your list that hopefully one will need to spend at some point and often after that...closing gifts!
Sally..Thanks for the reminder of how much money it costs not including the time and the anxiety..but then there is the satisfaction of knowing you found the perfect home for the right person and how they will never forget you ...Great blog post! Thank you
HELPFULHANNAH
Sally- You betcha.... I know I was surprised after I got my license so many years ago it seems... lol
Yes most people don't know about our expenses... That's an understatement for sure.... And living in Ha. must be even more what with marketing shipping costs etc. Great post Sally... Wish I could send this to a couple of our just "list em and leave em" customers that think that's what we do....
If people saw my expenses they would pass out or offer to pay me more.
The nice thing about the profession is that it is free to quit. Unless of course you are locked into contracts for employment, cell phones, online accounts, etc. Then, it might cost less to stay in then to get out, lol.
And a good psychiatrist:) This profession is nothing like I thought it would be. And not only upfront money, but make sure you manage your money for those long months in between closings!
Sally, What an eye opener. I knew it was expensive but you listed things I hadn't thought of that Real estate agents have to pay for. They should give you some advice beforehand about the fees involved. When I became Certified, there were no marketing classes...we graduated and wondered what to do :) Now they taach part Feng Shui and part Marketing (which I'm not sure is a good idea, either!). I'm sure many people will appreciate the advice you gave.
Sounds great! Sign me up! Oh ... wait. I'm already one and have already been spending thousands a year on those things and more. Never mind.
When I got in 2 1/2 years ago, it cost around $1500 for school, licensing and my computer. Of course, that doesn't include taxes...
I remember my first year. I generated $25K in commissions and spent $25K to generate it.
The second year I spent $25K again and received $50K in commissions.
Needless to say, I was accustomed to much higher income. It took me about 5 years to make significant money.
Un-like Lenn, I spent more money the first year than I made. I love to encourage new Realtors but I always tell them the truth, also. Great list for a referance when someone asks me how great is it to be a Realtor!
Excellent! If I may add...we need an armor as well...for those times when friends, family members, neighbors desert you for 'nuther agent. ; )
Great list Sally. It does help to know what you are getting into. Also, months of waiting for your first pay-off.
There is nothing cheap about being a Realtor and doing it right. Hopefully a lot of people who are thinking about jumping into the business will read this and know what they are getting into.
Being a realtor is very expensive. These are the things you won't learn in real estate school.
Aloha Sally,
Did you mention the other benies? No sick pay, no paid vacation (2 weeks or otherwise) no paid holidays, etc. etc. What in the heck are we doing? (lol)
Other benies, you get to work when you want to work, and with the people with whom you want to work. You can work half days if you want (12 hours), and as late as you want.
Your client, the other agent, the other agent's client, the respective brokers, the state real estate commission, the local real estate board, and great attorneys are all there to help you get the job done right to the satisfaction of all parties. But, should something go wrong, the whole team is there to help you fix the problem, right?
Great post! nothing but the truth.
WOO HOO, Speaking of getting your wallet out, an new idea was put forward for all Independant contractors in California. Commission checks would have a 3 % withholding taken out of them and it doesn't even count towards the estimated quarterly income payments. The new state budget was just agreed to and I am trying to discover if this is for sure included. According to sketchy details in the newspaper, I think it is but I will post on this as soon as I know for sure.
UPDATE: I just received a bulletin form our state association and they said the following. According to legislative sources and newspaper accounts, the agreement does NOT include the 3 percent independent contractor withholding proposal. However the official budget language is not yet in print. There will be a follow up with additional details when they are available. Our state association has been fighting the proposal with a Red Alert to REALTORS® residing in districts represented by majority members of our legislature.
It's a good list. I would also add Health Insurance, you pay your own.
Hi Sally -- This post is enough to drive one to drink! LOL But you are soooo right. Most people think it's easy and the dollars flow. NOT!
Hi, Sally
Great post!!! You need to really LOVE what you do...yes, real estate is very costly, but I LOVE IT!!!!
I would love to sell in your beautiful state...and I am already a C-21 agent...
Tinker
Ann: No they don't so we do have to educate them. If real estate agents don't understand that this is a business and it takes money to run, then at least they can make that decision instead of getting 'surprised'.
Rita: Yes they do. I admit ....when I got into the business I knew it was going to be my business but I really did not know the scope of it.
Carol: It is left out ...and it is not easy ...especially in a hard market.
Steven: Me too :)
Lisa: this is good info for the real estate agent and the consumer to understand that our individual businesses are just like any other small business. We pay our own way and everything comes out of our pocket ...until a transaction closes. Even then, there are expenses to our brokerage firm (unless you own your own company)
Lisa Hill: I think I missed it.
YMR: Some won't know or are unable to make a calculated decision unless they have the whole scoop up front. If the real estate schools taught this they may not have as many students :)
Joe: That's it in a nutshell. And you depicted the topic to the tee. :)
Eileen: Of course they have overhead too...so that's standard. Bottom line...each individual agent does not rake in all those bucks..it goes to our overhead too :)
Kristi: Good one.... I barely broke even that first year :)
Brian: Good for you Brian...that's the first step....teaching them
Anna: Oh, goodness. I wondered when someone would come along and give the lines we hear constantly.
Crystal: Of course it's the cost of doing business. And so the reason we help out and educate everyone coming (or thinking about) into the business. And our market is really competitive. 6,000 agents just on our island alone ...oops...more like 5k something or other this year.
Marian: And those rewards...we all know....are seeing the happy faces on a client when they walk through the door of their new home...it's the seller who gets to move on with the next chapter of their lives and appreciate all you do.
Dianne: You were lucky. No one told us that. Oh, there's plenty we all could add to that list...bottom line...this start up list is a good one to follow for newbies.
Hannah: Exactly! I was wondering when those comments would pop up :)
Robert: OH, you betcha....I click on checkout and the shipping turns to three times the amount it used to say...lol.
Chuck: Ha! Good one!
Robert: That's a different perspective lol
Karen: Oh, good one there too! Yup, that would be a good one. I instead go see my massage therapist and acupuncturist to get those 'kinks' out lol
Carole: This is just the tip of the iceberg. Tack on the health insurance (I believe you had a high monthly out there) Good thing you had some training. I learned quick on that note too.
Susan: Hahaha no kidding....and to think you almost signed up ....again lol
Bob: Oh, goodness...you got off cheap for just those three items. lol
Lenn: Oh, that was me too... and that certainly did sound like my life cycle so far...except that this year I've had the same business...but working a heck of lot harder to get one out of five in contract.
David: Good for you...nothing like being up front and personal....:)
Yolanda: Ha! That armour comes under the criteria of skin...thick ones ;)
Kim: It sure does....and knowing that you have to work hard to get your buinsess started...and months.... (took me four months to close that first one)
JL: Oh, you're right about that. Nothing cheap....my home office is definitely not cheap.
Vanna: you're right about that :)
Lynda: You mean there's benefits? lol.
Wayne: Of course... those are the benefits and rewards.....after paying all the expenses.. :)
William German: Thanks
Hey William! 3% withholding. Is that like our GET tax? We pay 4.5% on all. Let us know the details. We pay fed, state and GET
Julie: That's a given for any independent contractor but a big expense for sure.
Chris: Well, I don't drink so I must be good to go lol
Tinker: Yup...and the ones who love it have made it through all...now it's our turn to educate others. Come on down :)
Woo Hoo, I just updated my comment with a Bullitn just received from our state association. It seems that the 3 % Independant Contractor Withholding proposal is not included in the final bill. Sure glad of it.
Woo Hoo, I just updated my comment with a Bullitn just received from our state association. It seems that the 3 % Independant Contractor Withholding proposal is not included in the final bill. Sure glad of it.
Hi, Sally:
If I had known then what I know now....
Well, for one thing I wouldn't have signed up for Service Magic or spent any money for enhanced listings on Realtor.com.
Great post!
Cheers,
Robin
Thanks for the update William...wish they'd redo ours lol
Robin: Oh...those enhanced listings. Enhanced this and that ...yup...can eat away your pocketbook.
So what you are saying is "anyone can be a real estate agent - for a price!" The joke is Florida is that not everyone has a drivers license but they do have a real estate license!
Sally, great list and a good information point for those interested in pursuing real estate as a career.
Sally -
GREAT tutorial for people considering a career in real estate! I'm going to re-blog this one!
Gary: It shouldn't be that way there. Anyway, the whole thing should not be anyone can be an RE. It is a business....and like any other business there are start up fees.
Olga: Thanks...it'll help some I'm sure.
Coleeen: Thanks Coleen...it'll help many :)
The cold hard truth!
That is a good list. I think the cost to start this business has really gone up because of the market. It is so much more work to get a sale to closure these days.
Tell it like it is... and now it cost those agents who havent sold $$$ to get out of the business, say franchise dues and desk dues that are unpaid. Aloha ha ha
Excellent post!! I run into soooo many new Realtors that are now in business and say nobody ever told them about the expense involved.