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  3. What is the ROI of a Real Estate License?

What is the ROI of a Real Estate License?

Some individuals thinking about getting their real estate license or entering the industry ask “What is the return of investment on getting one’s real estate license?”

That, unfortunately, isn’t an easy question to answer. The real estate industry has numerous opportunities to either be gainfully employed or an independent contractor.

The reality is that with most real estate jobs (especially most sales positions) your success depends on your business/ marketing plan and the dedication you put into executing that plan.

Let’s figure it cost between $500-$1,000 to obtain your real estate license (these costs vary by state).

If the only home you either bought or sold was a home you owned, you would still see a pretty decent return on investment.

The median home price in America right now is $231,000. If you sold that home and grossed 3% in commission, your total commission would be $6,900. Please keep in mind that with every transaction there are brokerage splits, E&O insurance, and other costs. These vary depending on what brokerage you are with.

I will be conservative and say $1,900 covers those costs for you. Again, this is just a rough estimate. You’ll want to explore brokerages before deciding which one is best for you.

After the $1,900 in sales costs, you now have $5,000 in commission.

You are most likely going to want to save 20% for taxes.

So let’s say you get to keep $4,000. It cost you $500-$1,000 to get your license and after one transaction you walk away with $4,000. That gives you a 4-8x return on investment. Not too bad considering these costs come with the purchasing or selling of your home regardless.

“What Is The Return On Investment For A Real Estate License” Video Transcript:

What is the ROI or return on investment for getting your real estate license? If you’re starting to think about this question and you’re brand new to real estate, or you’re thinking about getting into real estate, that is a huge win. Because when you get your real estate license, if you’re going to run a real estate business, you have to start thinking like a business, right? Or if you’re just going to sell real estate in general, most people make the mistake if they don’t think of themselves as an actual business. So if you’re thinking about ROI, if you’re thinking about return on investment, that’s a huge win. But the question is, what is the ROI? Right? The real answer is, it’s infinite. If you get your real estate license, you know, the possibilities are endless in terms of how much you can make and what kind of future you can build for yourself.

What I like to tell people is, at the very least have you get your real estate license, and you don’t ever sell anyone else a home or represent someone to buy or sell a home or you’re thinking about buying or selling In real estate for yourself in the near future, the ROI just from that is huge, right? It might cost you $1,000 at the end of the day after the classes and whatnot and the fees and the association dues to get your real estate license. But if you end up representing yourself to buy or sell a home again, if you’re thinking about moving in the near future, three, four or five years, you’ll get that initial investment back 5-10 times over depending on what price range you’re looking for. Or what your house is worth if you’re going to sell your own house. So the return on investment for getting your real estate license is 100%. There, if at the very least you’re going to buy or sell a house for yourself in the future. If you’re going to make a career out of it. The possibilities are endless.

Updated on September 17, 2020

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