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Do Real Estate Companies Pay for Licensing (Whats the Catch?)


Do Real Estate Companies Pay for Licensing

The cost to get a real estate license will vary by the state, but it’s not unusual to shell out over $1,000 in total. Between the pre-licensing course, exam fees, and application costs, it all adds up quickly. So is there a way to get your company to pay for your license, and is there a catch?

Some real estate companies will pay for licensing for brand new agents. But there’s a catch; you’ll either start at a lower commission split, be forced to work under the broker’s name and not your own or have the cost of licensing and more taken out of your commission checks. 

There’s no one size fits all answer for this question, as all real estate companies (and even individual offices) run the show differently. So let’s go over whether real estate companies pay for licensing, and if they do, what’s the catch?

The Costs of Getting Licensed

Getting your real estate license is a process that tends to be quite costly, making it just out of reach if you’re currently living paycheck to paycheck. Just when you think that’s the last they’ll milk you for; another unavoidable fee suddenly stands in your way.

That’s why many new agents opt for a real estate company willing to pay for licensing.

So take a look at the standard costs that come with licensure:

  • Pre-licensing courses or real estate school: $200-500
  • Exam prep programs: $100+
  • Exam fee: $85-200
  • Fingerprinting and background checks: $25-70
  • Application fee: $100
  • License fee: $50-200

By the time you get your license (assuming you pass your exam and pre-licensing course on the first attempt), you might be out $1,200 or more. And this doesn’t take into consideration the costs of marketing your brand, buying business cards, and subscribing to paid platforms like Zillow Premier Agent.

So having your real estate company pay each fee along the way sure sounds convenient.

Getting Licensing Paid For

Not surprisingly, real estate companies probably won’t pay for your licensing after the fact. So that means you’ll need to reach out to local brokers and companies in the area before you enroll in pre-licensing courses. This could set your career back a few weeks or months as you make appointments with all local companies.

Yet, this also has a few benefits as a new agent.

Most importantly, you might be able to find a real estate company willing to cover all of your licensing fees from start to finish (with caveats, of course). Though rare, some companies will make this offer apparent in their online job listings, writing something similar to “will pay for real estate license” somewhere in the ad. Other companies will keep this offer under wraps but might be able to negotiate to cover the fees when you meet with them.

But even if you don’t find a company willing to do so, you’ll have experience interviewing brokers, and you might just find one that you’ll want to work with once you get your license. This is something that all new agents that want to hit the ground running should be doing anyway!

Regardless if you can get a broker to agree to pay for licensing, still interview brokers before you get your license (and while you’re taking your pre-licensing course).

The Catch Behind Getting Your License Paid For

There are real estate companies out there that are willing to pay to license new agents looking to work with the company. But of course, like anything in life, you should never assume that having your licensing paid for comes at no cost to you. Did you really think a company was going to bite the bullet and spend $1,200 on an agent they don’t know can produce?

Having your license paid for sounds great right now, but you might end up paying more in the long run. Here’s why (and how):

Commission Splits

As a brand new real estate agent, your commission split (how much you earn vs. how much you share with your broker) can range anywhere between 50/50 and 70/30—though some companies have more complex splits that change over time. 

To make up for what you cost the company for your licensing fees, don’t be surprised if you start on a lower split to “pay off what you owe.” Instead of a 60/40 split like your company normally starts new agents at, you might be at 50/50 for your first year. This can be a difference of tens of thousands of dollars in your bank account by the end of the year.

On top of starting you at this lower commission split, you might also have to sign a contract stating that this split will last for several years. Or, you might not be entitled to an increase in your commission split that many agents look forward to after a period of success, despite proving yourself to be a high volume producer.

There’s also the chance that your broker or company will let you off easy. 

And when we say that, we mean that they’ll simply take the total cost of licensing (and maybe a little more) out of your first commission check to pay the company back. This is the best-case scenario, but it still highlights the fact that having your license paid for is absolutely not an offer for “free” licensing.

That $1,000 you saved by having your company pay for your license up-front has now cost you $10,000 or more. If this is what a company is willing to offer you, and you want your license paid purely to save a dime, it’s not worth it!

If you’re brand new to real estate, you might not even realize just how big of an impact each percentage point on your commission split makes. So the video below will help to explain how the commission works:

Broker vs. Agent

Some brokers or real estate companies say all the right things right off the bat. They know what to say to make new agents feel comfortable and willing to sign on with them once they get their license. You’ll be surprised to hear they’re eager to offer a 60/40 split, similar to what the other companies are willing to offer without paying for your license.

They might not be dropping your commission, but they’re sneaking in another way to benefit the brokerage instead of the agent. And it’s not at all uncommon for a real estate company to require you to do all business under the broker’s name rather than your own.

You might not realize how dangerous this is during your first few months, as you’re still getting a decent split and getting experience under your belt. But with your broker’s name on all MLS listings and yard signs, you’ll never be able to build your brand, reputation, or referral business. 

You’ll always be in search of new listings—they won’t come to you on name recognition alone, something all agents look forward to after years in the real estate industry—and your broker will make a killing off all your hard work. 

Again, this is a choice you have to make, but this could be a career-ruining caveat. (I posted about my experience with changing real estate companies)

Conclusion

Now you have a choice to make: Are you going to pay for your real estate license out-of-pocket, or will you agree to have your real estate company cover the costs?

Do Real Estate Companies Pay for Licensing

If you choose the latter, do your due diligence and analyze every detail of the contract before signing it. Take note of things like commission splits and how they’ll last, whether you’re allowed to do business under your own name, and how much will be taken out of your first check to pay your broker back.

Don’t ever sign a contract if you feel it’ll limit your career or your income.

Robert Earl

Robert Earl started in Real Estate in 2001. During his career he has helped hundreds start a career in real estate, helping them understand the licensing process and assisting them in getting their business up and running. Robert is a Coach, Mentor and also an Air Force Veteran.

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