You Just Passed Your Real Estate License Test. Now What?

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I remember the feeling. Finishing the last question on my exam to qualify for my real estate salesperson license, and hitting “Submit”. Moments later, I felt the great sense of relief finding out I had passed. But, now what?

I know there is tons of debate on whether or not you should get your license as an investor, but I’m not going to argue that point in this article. Let’s just assume that you are on the side of the debate that believes it ‘is’ worth it.

I also want to mention that things may be a bit different from state to state, however, I believe the overall arching concept is true. In the state of Michigan where I have my license, after passing the exam….

The very next thing you need to do is find a “sponsoring broker”.

What is a “Sponsoring Broker” in Real Estate?

This is a person/company who has their broker’s license. They essentially, for lack of a better description, bring you under their wing and take on responsibility for you. If you screw up and so something stupid, they are going to hear about it. Because of this liability and risk, these are also the people who you need to pay in order to have sponsor you. Sorry, they don’t do it out of the goodness of their hearts. How much are they going to charge you?

(Side note: I’ve seen the term “broker” and “sales agent” mixed together, but here in Michigan, there is a massive difference. You can NOT all of a sudden become a “broker”. In order to obtain your broker’s license, you must have experience as a “sales agent” (the exception being lawyers I believe)).

Real Estate Brokerage Cost Structures

There is really no point in discussing “how much” you are going to pay since there is a virtually unlimited amount of prices, but the key component here you will need to consider is what structure do you want? There are two primary overall structures your sponsoring broker should allow you to choose from.

  1. Flat Fee. As the name implies, you pay your broker x-amount every month. It’s a fixed number so your monthly planning for ‘cost’ is much easier.
  2. Commission Split. This option really varies from broker to broker, but a popular one it seems is the 70-30 split. Meaning, for any commission you bring in as an agent, 70% goes into your pocket, and 30% goes into your broker’s pocket.

What is the best path for you? If you plan on selling lots of houses and making a core component of your business “revenue from commission”, then I’d just pay the Flat Fee. If you obtained your license more for the freedom it allows and access to the data, then I would go with the Commission Split option as that usually carries no flat fee or an extremely lower one compared to the Flat Fee option.

Related:Why I Love the Fees that Accompany a Real Estate License

Real Estate Brokerage Education Services

This may seem out of place, but getting your real estate license does not teach you anything about how to “do real estate”. Sure you’ll learn about all the laws and state regulations and requirements… but… how to fill out a purchase agreement? How to run a market analysis? How to work the MLS? how to market/advertise? Forget about it!

You need to factor in what kind of education will be available to you. It doesn’t necessarily have to be required or anything like that; however, having access to some education should be a variable you consider. This could be some online courses, pamphlets, or actual sit-down classes. They want you to succeed (remember, it puts money into their pocket when you do!), so there should be some education options available.

You Are the Interviewer, Not the Real Estate Broker

No broker is alike. They all have their own structures and policies. Just like if you were getting a bid on a rehab project, the same strategy should be used here. I’d sit down with a minimum of three brokers before making my decision. Brokers are competing for you, so they will be selling themselves and their business to you. You don’t need to sell yourself to them. This doesn’t mean you should walk in without brushing your hair and with food stains all over your clothes, but assuming you show up and conduct yourself in a professional manner, they want you apart of the team (again, they make money of you!).

To this day, I still get post cards in the mail from various brokerages marketing to me to switch from my current broker and go with them. It’s very common place for brokers to compete for agents, so when you sit down with them, don’t be shy! Ask questions regarding their fees, education, and whatever else you deem necessary.

Related: Pursuing Real Estate Investing Freedom? Consider Getting a Real Estate License!

Brand Name Real Estate Brokerage?

Remax? Century 21? Keller Williams? Do you need to go with a big name company? There is no right or wrong answer to this. Each has its pro’s and con’s. The brand name places are going to have higher fees and such; however, the flip side is they are brand names, so when you hand someone a business card with their name on it, you’ll look much better than someone with a little brokerage that no one has heard of.

I personally am with a little brokerage made up of four people. The broker and three agents. For me, I don’t care about the name recognition. At the end of the day though, if you come across as a caring professional, the name of your brokerage isn’t going to matter. Treat people right and the rest will take care of itself.

Real Estate License Hidden Fees

This has nothing to do with finding the brokerage, but it is still a step of something you need to do. I’ve already talked about the brokerage fees, but guess what, there are more! Outside of your brokerage fees, you’ll need to account for all the fees that go with the organizations/associations/groups. For example, I have fees that I must pay to the Grand Rapids Association of Realtors (GRAR). It doesn’t matter ‘what’ brokerage I am with, these fees are paid regardless.

Point being, when you are setting up your spreadsheets and/or bookkeeping software, don’t forget to add in these numbers when doing your financial forecasting and planning.

Did I Miss Anything?

Did I leave anything out that would be helpful to the person who just passed their real estate license exam? I’m sure I did! Please leave your suggestions below in the comments section. Maybe you have a great question to ask brokers when you are interviewing them? Please share with us all!

Photo: Erich Leeth

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About Author

Clay (G+) is a licensed real estate agent and the owner of Huber Property Group, LLC, a real estate investment company located in Grand Rapids, MI. His company purchases distressed properties with the main exit strategy of fixing them up and reselling with owner financing, particularly, land contracts.

65 Comments

  1. Michael Smith on

    I got my Real Estate license just over 1 year ago in Florida. I think when you decide to choose a Broker, you should also ask about what you are getting for your money. As a Real Estate investor, do you want to be paying fees every month just for a desk and office you probably will never use? Does the Broker offer free advertising? Does the broker require joining the local association of Realtors? Is there any quarterly fees for MLS access? When speaking to a Broker who only charges a commission split and not a regular fee, remember, that fee is negotiable. Working for a good broker can get you on the inside track with Real Estate deals before they get advertised. You may even find deals for your fellow investors and if you collect on their investment purchase, Bonus! That will definitely give you something to blog about in the Bigger Pockets Forum.

    Having a Real Estate license can increase your earnings even if you split the commission or pay a monthly fee. Just make sure you understand the difference in price and what you are getting for that price. Sometimes the split commission works best because if you don’t buy or sell, you have large fees to pay.

    • Excellent Excellent Excellent stuff there Michael!

      Please everyone! Read Michael’s comment. Some truly great ‘questions’ in there that you should be asking.

  2. Aaron Beatty on

    Excellent article Clay, as I recently obtained my salesperson license in Ohio, an I was sponsored by a Broker with a small company. Thinking I would get a lot of mentoring but instead mls fees an local realtor fees from associations that I had to join because my broker was apart of them. Basically Im learning on my own how to use the mls an educating myself thru BP articles. I also wanted to have my own business of investing on the side as well, from wholesaleing, to rehabbing how would I obtain that Clay as I see you have your own investing business as well???

    • Thanks for the comment Aaron.

      Great question. My answer is “explore your options.”

      What I mean is, it sounds to me like your current sponsoring broker is not really adding any value to you besides “sponsoring” you. I would go out and start interviewing other brokers and finding someone that fits your model. That’s what I did. I was with one broker, but found another one who better fit/understood my goals, so I switched to them.

      You can start a real estate investing business, but you’ll just need to find a broker who understands your main goal of having a license is for your investing business, NOT to work with clients every single day. I had some brokers tell me, “Naw, we want you out there finding and working with clients”, and then I had others saying “that is fine!”

      From the sounds of it, my suggestion to you would be to define your goals, that way, when you go out and interview new brokers, you can explain what you are trying to accomplish and they’ll give you a “yey” or “ney”.

      Hope that helps!

  3. john milliken on

    great timing! my wife is wrapping up her hours, and getting ready for her exam soon. sending her the link to read. thanks clay

  4. Kevin Lackland on

    Great article Clay. I just finished my hours and will be going for my license soon, I am also looking to start my investment business on the side.

    Thanks again for the infirmation.

    Kevin

    • Awesome Kevin! Glad you found the article helpful.

      One bit of advice… don’t wait too long after your classes to take the exam. You want that information as “fresh” as possible up in your head.

  5. Timely post, Clay. I just finished up all my schooling for my CA RE license test today. Great tips for me when it comes time to hang my license at a brokerage. Currently, I’m leaning towards a smaller brokerage so I can fix-n-flip primarily while soliciting for listings in my direct mail pieces. Enjoy your long weekend!

    • Congrats on finishing up all the “classroom time”. That’s the major part of the battle.

      Sounds like a solid business plan to me, fix-and-flip, but if you can pick up some listings along the way, that is a nice additional source of revenue.

  6. Jan Whitney on

    Thanks for this blog Clay. Timely for me – I just finished my course and am waiting to find out when I can take my exam. I didn’t know when I signed up for the course exactly what the next steps would be and am on the fence whether I really want the license or not. I wanted access to the MLS and to be able to view properties without bothering an agent and didn’t realize all the costs associated with having your license. Through the course I found out that I have a year after passing the exam to apply for a license so that gives me time to interview brokers and make a final decision. I really appreciate your insight.

    • Glad you found it helpful Jan.

      While I do understand where you are coming from in regards to all the fees, also keep in mind that the longer you take to do the exam, the more and more you are going to forget. Maybe you have an excellent memory, but for someone like me who does not, I tried to take the exam as soon after my classes as possible.

  7. Kingcia Saintil on

    Nice discussion everyone. I’m planning to take the real estate class next month. I pray that I pass the state exam. I think going with a broker who is investor friendly such as one in your local real estate investors club might be a good way to go. Thanks everyone for the info posted here.

    • No worries Kingcia, if you study and review the material (and don’t sleep through class haha), you’ll pass it. The exam isn’t a cake-walk, but at the same time, it isn’t like a calculus exam either.

      That’s a great idea. Going to your local REIA and locating brokers there is a great way to find ones that would logically be “understanding” of your goals and ambitions as a real estate investor.

  8. Anyone looking in the Triad area of North Carolina, we’re always hiring agents.

    As has been pointed out, brokerages are not all created the same. We don’t have the “big” agency name, but we pay all the fees, do tons of marketing, bought 68 properties last year (many bought and then re-listed through our own agents), teach our agents about real estate investing, and pay not only on traditional deals but we also pay our agents for bringing in tenants or rental properties. Some of these things can be negotiated with your broker-in-charge.

    Thanks for spelling out so many things that new agents are not aware of, Clay.

  9. Great article and a good summary for new real estate agents.

    Being a real estate investor and owning a RE/MAX brokerage, I can understand both sides. If you join a no-fee, commission only firm as an investor who wants to flip or wholesale houses, your brokerage can’t make any money from you. And, yes, the brokerage needs to make a few bucks to maintain the office, pay all kinds of fees and support the agents. Obviously, a no-fee brokerage is not excited having you on their roster. Most likely they don’t understand what you are doing and may even consider it questionable.

    A flat fee brokerage on the other hand is less concerned about your commission earnings, as you pay a monthly fee. If the broker/owner is a real estate investor he/she will probably be supportive of your business and help you grow, even if you just wholesale or flip properties.

    • Thanks for the comment Kurt.

      There are just so many ways a relationship can be formed it’s countless, but I agree, if the brokerage is making zero dollars off of you, I don’t blame them for not wanting to sponsor you.

      If that is the case though, I’m thinking the investor is a total tire kicker…. I mean what is the point of getting your license if you are never going to pull the trigger and buy a house?

      • I agree with you on that one Clay.
        If the investor is actually doing anything it is hard to believe that they aren’t doing anything that would generate income to the Brokerage.

        I suppose if they are only buying off market deals and selling them with putting them on MLS it is possible. Though as you said why go to the trouble to get established as an agent?

        In my situation I have never listed someone else’s properties and have never closed a deal with a buyer client (I have done a tiny bit of work with some but never closed a deal) but I have collected commissions on about a dozen MLS buys and 3 resales (I do list most of my rehabs with other agents) in less than 2 years so I’m far from dead weight.

        • Exactly Shaun. If you are an investor who is actually…investing… then your broker should have zero problems figuring out a way to make some profit off of you (which creates a ‘win-win’ situation).

          Sounds like you have a great thing going with your current set-up.

          Thanks for the comment.

  10. Clay, How much are the yearly MLS fees in Grand Rapids. I flip homes in grand rapids and wanted to get my license to get mls access.

  11. Johanna Grullon on

    Thank you so much for the information Clay. I just got my license in MA last week and feeling a little lost. The information you provided in this article was very helpful. Need to go interview some brokers now :-)
    Thank you so much Clay and everybody’s comment as well

    • Hey Johanna,
      Great job!
      Where in MA are you? I am an agent and an investor here. If you have any questions please feel free to send me a PM.

      • Johanna Grullon on

        Thanks Shaun! I’m in Boston, MA. I definitely have some questions. I’m going away on a much needed vacation next week after all that studying :-) When I come back I will send you a PM. Thank you!

        • Hey Johanna,

          Enjoy the vacation, I’m away with the family for a quick long weekend off myself.

          I’m in Newton so we are pretty close.

          Look forward to connecting!

          Shaun

  12. Pablo Guzman on

    Hi Clay,

    Thank you for posting such useful information and thanks to everyone else as well. You guys have truly added value to my day and my future endeavors. I just passed my Florida State Exam yesterday and, like everyone else, can’t wait to get started.
    My main concern is to join a broker who provides good quality training so I have a solid foundation to start from. I am definitely looking for that right “go-getter” individual/brokerage who will provide that key support in the beginning.
    Is this training more commonly offered with big name companies like REMAX, or Weichert? Or do smaller broker offices offer training as well? I guess this is good information/questions I can ask when I go on my interviews. Thanks again. Make it a great day!

    • Congrats on passing your exam Pablo!

      I think the training you are seeking for support and education has no “trend”. Meaning, I doubt it matters whether it is a big company or small.

      For me, I am with my broker and 2 other salespeople. The company I’m with is about as small as it gets; however, my broker is always ready to assist me anyway I can. When I first got started, it was awesome the level of support he gave me.

      I’m sure you could find this level of support at a bigger place too, it is just a matter of doing your research and finding out “where” these types of support systems exist.

  13. Lisa Waddill on

    Thank you for the valuable information. Just passed my exam in Austin, TX, and have an interview lined up with a broker, so now I’ve a couple of great questions to ask!

    My question is, how do you get started developing your client base? I don’t even have business cards yet to hand out, even though I’m letting friends and acquaintances know that I’ve passed the exam. Your ideas and suggestions are most appreciated!

    • Congrats on passing the exam Lisa! Definitely not a small feat. Well done.

      As far as developing your own client base, just keep on doing what you’re doing. Let people within your family, friends, associate circles know you are licensed.

      Some brokerages (the bigger ones) will give you “floor time” where you must take all incoming calls during set hours. This is also a great way to get started and get your feet off the ground.

      And then of course, there is a ton of information all over Bigger Pockets geared at marketing and getting your name/brand out there.

  14. Great article Clay! Thank you for the insight. I am just starting out in this process. I will be attending the licensing class starting tomorrow and then will move on to take the test and find a broker. I work full time as a teacher, but my husband and I have an investment business. I am pursuing a license for the benefit of our business but am interested in also closing some deals with clients as well. I was wondering if anyone on BP knew of any brokers in the Richmond VA area that are “investor friendly” or that they recommend looking into?

    Thanks!
    Abbey

    • Abbey – I believe you are making a wise decision for your real estate business by obtaining the license. Having access to more data and the opportunities to make side commission is never a bad thing!

      I’m not in VA, so I can’t comment; however, I would recommend asking that very same question on the forums. My guess is many more people read the forums then the comment section below the articles.

    • Congrats Kevin! Take your time with this next step. There are lots of brokers out there, so no need to rush through it. Find one where you feel you will fit in best for whatever your business plan is.

  15. Hi Clay, here is the big question though, I am thinking of a career change and think I would love to be a realtor, but is there money to be made in West Michigan now, has the market rebounded enough to support all the realities out there? I’d love your thoughts on this, I’m very interested and work hard, but I’ve gotta bring home the bacon. Thanks!

    • Alicia, hard for me to make that call as I know nothing about you. If you are a super hard worker, have money to get started (obtain license, maintain license and marketing money to obtain clients), then there is always money to be made no matter what the market.

      There were Realtors who still did it as a career when the market was at its lowest, so it ‘is’ possible in any market condition. Some times may be easier than others, but at the end of the day, it all boils down to your personal work ethic and what types of business systems you have in place.

  16. Do you know of any companies or brokers that do sponsorships where they pay for classes and licencing? Or have advice on how to find something like that?

    • That is really going to be a “case by case” type question. All brokers are different, so the best way to answer this is to just tell you to hop on the phone and call some of the local brokers around you and ask about this.

  17. Typed in “I just passed my real estate exam” and your page came up. I am nervous about the unknown. I want a very supportive broker that will guide me through my real estate career. I have a meeting scheduled next week with a large company. Are there any additional questions I should ask????

    • Andrea,

      It’s very normal to be nervous about the unknown, so no worries there, as long as you are willing to make the required effort, you will be fine!

      From what you’ve said, the key questions you should be asking is what sort of mentorship programs do they have? You will want to align yourself with a brokerage that will “hold your hand” as you first get started. If you get the impression they will just “throw you to the wolves” and not provide much assistance, then I certainly wouldn’t go with them.

      You may need to pay higher fees to be with a brokerage who will be more hands on with you; however, you will need to figure out if that trade-off is worth it or not to you.

      Hope this helps.

  18. Hi Clay! I am taking my licensure test in about 10 days. I interviewed with 4 brokers, and choose the one that felt like the best fit for me. I recently went to an open house and met with a broker who I had not interviewed with, and feel like they may be an even better fit for me. Is the broker who sponsors you to take your licensure exam the broker who you must work for once you pass? Thanks in advance!

    • Hi Chelsea. What do you mean by “sponsoring you to take your exam”? If you mean they are paying for the classes and exam fee, then I’d assume you would be required to work for them for at least a certain amount of time after you have passed the exam.

      If they haven’t paid anything towards your education or exam fees, then my guess would be you can choose whomever you want.

      It really comes down to whether or not you signed any paperwork that would “lock-you-in” to a certain broker.

  19. Hello, i loved your article. I just passed my exam yesterday in california. My grandmother is a broker and owns her own business. She has paid for some of my classes and now i am going to work under her, but she is the only one in her business, she has never had any employees under her and she runs it out of her house. My concern is that i am not going to get the proper training while working with her. Do you have any suggestions?

    • First off, congrats Meagan on passing your exam!

      Well… if you feel like you’re not going to get the training you will need to be successful, I would say pay back your grandmother whatever she contributed to your education, and move onto a place where you feel better.

      Probably easier said than done since it “is” family; however, you gotta put on your “business hat” and leave your emotions at the door. This is about the success of you and your new business, so you need to do whatever is necessary to make you feel confident.

  20. So….could you tell me how much approximately will I be investing after I get my license? with most of the fees. I live in Texas (the cost of living and everything else is average to low I would say) Thanks for this article by the way!!!

  21. Great info Clay,
    I just passed the exam last Thursday and boy am I glad that’s over !! I see you holding your license in the pic above which is funny. In KY where I’m at we don’t get our actual license, we have to find a broker first then apply with the commission and they send our license to that broker. Weird !!!!. Maybe I can ask to visit my license on weekends. LOL. Seriously though I got my license so I could wholesale and plan on getting my husband out of the workforce ASAP so we can work together. Inspiring to see others like yourself doing this. Thanx :)

  22. Michael Brucken on

    Hey Clay,

    As you have already heard this was an excellent article. I haven’t even started taking classes yet and I truly don’t even know where to begin. What would my first FIRST step be? How do I go about even finding classes? I’m in San Diego CA and don’t know where to start. Is it possible to do a full time job and get my license and lastly can I maintain a job while I get my business up and running? Sorry for a flood of questions. You’re article answered so many I had though so again, thank you!

    • I live in Riverside Ca and have just passed my test, waiting for my lisence in the mail. So I may be able to answer your questions. First step would be to find classes you are comfortable with. There are many classes available online if that’s what you are looking for, having a full time job and all. It is possible to do while having a full time job but don’t expect it be easy. One if the best ways to find classes that are approved is to go to the bureau of real estate website which is bre.ca.gov they have plenty of info and a place to look up approved classes/schools. Most community college courses are approved. Hope this was helpful. =]

  23. Hi, I’m about to embark on a new venture and study to get my Re license in AL and TN. My husban is an investor of sorts but no license or anything. We hope to create a successful investing company and own rental properties. I’m hoping getting my license will help that aspect of our future and give me an exciting career to boot!

  24. This is a great read! I too just passed my Massachusetts exam. I am currently associated with Duke Properties. I did read this article before sighing my contract. Clay, you made some excellent points.

    Thank you for the helpful information. Now off to get a listing!!!!

  25. Justin Green on

    Great article. I recently passed my Oregon exam and have found a company that lined up with my goals. Before taking the exam I interviewed with 4-5 firms. I have full intention of maintaining my current full time job and doing RE on the side (at least until passive income surpasses). I let every brokerage know that I am going in part time. Alot of people say you cant make it part time, I don’t care what “they” say. If I do 1 deal per year that covers all my fee’s for that year. I intend to take all my commissions and reinvest in rental property while living of my normal job’s income. One key in the decision of who to work with was who will think outside the box of SFR listing and buying. I am very interested to explore land development, sub divisions, personal neighborhood building, commercial leases, income property, and creative unconventional deals.

    • Hey Justin, great insight! I just passed my exam and I too have a fulltime job that I intend to keep. I am in the process of interviewing real estate companies. I was a little bit nervous about telling my potential new employer this because of the fear of them thinking that I am not serious about my new career. Clay, thanks again for pointing me in the right direction and arming me with the weapon of great questions to ask when I am interviewing. I am really excited about everything right now, this was such an accomplishment and I have so much more to achieve. Thanks again to everyone for their great feedback!!!!!

  26. Michelle Young on

    Hello Clay,

    Your direction is greatly appreciated and I say this because this is my second chance in the industry where my first experience had no direction, so I just let my license expire. I am venturing on my own in the interior decorating business and find real estate with some common grounds there. I hope to invest in learning the business before I start my own business, that way I can develop my salesman skills and interact within the industry to become familiar, but no only that, also to find business here with hopes of building clientele for interior decorating. I will take your advice along with many others from here to guide me through the process of interviewing brokers, testing and learning the basics of the trade.

    Thank you

  27. Hi Clay,

    Thank you for sharing such helpful information. I am at the beginning stages of starting an investment company to rehab properties, and flipping them along with keeping some to lease out. My thoughts are however, to go ahead and obtain my real estate license. My question is in reference to deciding whether to take a online course study or class study program. I have been in the title insurance, commercial banking for quite some time, so I feel pretty knowledgeable but I have never sold properties before. Which setting would you recommend given your experience? Thank you in advance for your response and insight.

    Linda in Texas

    • Linda,

      I chose an online program with 1 day a week in class discussions. That worked great for learning at your own pace. The weekly classes helped solidify the information learned online.

  28. ok so I find a sponsoring broker, and now I have to wait until the pocket card arrives before I can legally start to do business….what should I do until the pocket card arrives?

  29. I am a Career Coordinator for a real estate licensing school in Southern California. I take care of admissions to our school and I also hire real estate agents for our brokerage. I find that more people actually finish their courses when they sign up for real estate school with live instruction. The home study programs are great for people who cant make it to the live instructional classes, but I find that a lot of people who sign up for home correspondence courses only, don’t finish. I don’t think that they are motivated enough to keep them interested in the course work if they don’t attend live classes.

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