About 2 years ago, I posted a summary of what my startup costs were as a new Realtor. As a much more established Realtor, I would like to revisit those costs and share resources to where new agents in BC can utilize when starting their business.
Similar to the original post, I will be expanding in more detail of the actual costs associated to being a Realtor. However, there are some crossover costs such as personal vehicle expenses, cellphone expenses, etc. That said, I will allocate the percentage of those costs to the business based on what you will most likely claim as a business cost on your taxes. Lastly, these costs are related to the “Luxury Market” and my attempt to break into the Luxury Market in my first year of real estate in 2011/2012.
I have broken out what I feel are the true costs of being a Realtor for your first year in the luxury market. These costs do not include the marketing costs of a single listing. I will be including resources for you to consider for many of these costs to use as a reference. I also recognize that it is very possible to reduce a lot of these costs using different suppliers but I’m going with what I know can be a bare minimum pass in my industry compared to the cheapest possible option.
BOARD FEES – ANNUAL DUES
These fees are for annual fees for the Greater Vancouver Real Estate Board.
BROKERAGE FEES (DESK FEE)
So brokerage fees can range. There are less expensive brokerages out there for sure. There are also different commissions split options as well depending on the brokerage monthly fee.
For example, you may only pay $250/m for your desk fee but your brokerage might take up to 25% of your commission. If you make a $100,000 commission, that’s $25,000 off the top! Alternatively, you may opt to sign up for a 100% plan and pay a higher desk fee allowing you to keep as much of that commission as possible. I like paying th
e higher desk fee and keeping my hard earned money. If you think you are going to be successful, pick the 100% plan. If you are a part-timer doing a couple deals per year, go with the lower desk fee and higher commission split.
Again, each brokerage is different so do your homework. You will pay a bit more to be a part of a more established or luxury brand rather than a brokerage that takes almost anyone.
SMALL OFFICE RENTAL
When I first started, I was lucky enough to have a have an opportunity to rent a small office for $500/m. This gave me my personal space and it felt like I had a real business. Going to the office is key when starting out because you get to feel the energy in the office, see the top agents making the big deals, ask questions, and get some good opportunities like open houses. Again, showing up at the office is a necessity when working in this business. I start my day off at my desk before heading out to appointments and showings.
In the Real Estate Board of Greater, you need to take 3 Professional Development Program courses every 2 years. One has to be “Legal Update” and the other two are your choice.
Yes, people will say that you need a cellphone anyways nowadays. But now, you can write off your cell phone as a business expense. As well, you will need a smart phone along with a good data plan so $75 per month for a cell phone plan is not unreasonable. I’m currently spending over $120/m for a near unlimited plan and I am using almost all of my 18 gigs on social media posts, large documents, and hot spotting while I’m on the road.
$180 per month just for business when you are starting is not unusual at all. You will be driving to agent opens, driving to neighborhoods to door knock, driving to open houses, and driving to work. Hopefully, you will be driving to showings and listing appointments! As a comparison, my gas bill is about $100 per week.
If you are going to swim with the big fish, get yourself a nice car. In the luxury market, your competition will have cars that they lease for well over $1500/m. However, you won’t be able to afford that. Buy a decent 4 door Audi, Mercedes C Class, BMW, or an entry level used Rover. But that’s what you need as a bare minimum to give your clients a good experience while driving on tour.
Check out MCL motors to see if you can find yourself a trade-in.
CLIENT MEAL ALLOWANCE
Protect your money at all costs – especially during your first year! You will be cash poor so invest in your top clients that will be purchasing or selling within 6 months. You don’t need to go to Giardino Restaurant (yet) to wow your clients. However, it’s my own personal favorite restaurant so perhaps celebrate your first deal there!
Spend your money on small lunch meetings, coffees, or a drink. Your clients will appreciate the gesture, the effort, and your time. But you will be out quite a but trying to keep yourself top of mind with your clients so budget about $2500 on meals for your first year.
Ladies and Gentlemen, this is your uniform and your brand. When I started out as a Realtor, I suited up every day! I then became known as “The Guy in the Suit” – along with DJ. You will need a rotation of 3 Suits, nice dress jeans, 4 shirts, 4 ties, 3 pocket squares, 2 reversible belts, and a pair of both black and brown shoes. If you are a businesswoman, you need similar combos with your attire. The idea is to make your wardrobe stretch and maximize its potential.
When I was broke, I discovered that you could find a get cheap suit that look great! A suit is all about the fit rather than the quality. A “cheap” suit that fits looks much better than an expensive suit that’s off the rack. Travelling tailors from Hong Kong or Bangkok is your ticket to a cheap suit that looks great! Go with some friends and you can get a good deal.
Here are a couple traveling tailors that I have used:
*Himark Martin Tailors
There are some great website design services out there targeting Realtors. You can go ahead and create your own basic website using WordPress you won’t have access to really neat and useful features that populate your initial site like Reciprocity or Search functions. Reciprocity pulls listings of your choice off of MLS and populates your listing section. If you are trying to compete with the Yaletown loft market, you can pull all Yaletown loft listings very easily and call yourself the Yaletown loft specialist.
You can also build a cheap website with the Reciprocity functionality for $500 to $700 but the site will look very vanilla.
Our www.NeacsuDenner.com team website was exponentially more expensive than the $2,000 budget as shown in the spreadsheet. For $2,000, you can create a good-looking site using a customizable template.
Expect to pay around $90/m for your website hosting fee.
You need a good business card and you shouldn’t cheap out. You’ll be very pleased with a budget of $150 when creating your first business cards. For $150, you should be able to order 1,000 high quality cards. These aren’t the best cards available but they will certainly do the trick. Get a thicker card with a nice finish if possible. I like my picture on my cards but some agents do not.
Visit www.jukeboxprint.com to see a selection of different business cards and stationary. What I like about Jukebox is that there are so many customizable selections and some of the sales are unreal.
Office printing costs will be a large portion of your budget. You should always print color feature sheets for your open houses at the very minimum. Expect to pay about $0.15 per color copy at your Brokerage. $70/m is a reasonable budget for printing.
Based on my spreadsheet, you will incur around $35,000 of expenses during your first year in Real Estate. These numbers are not inflated because they are based on my very own numbers from when I started in the Business with adjustments based on what I know now.
Referring to the spreadsheet once again (I love spreadsheets) It will cost you $95.88 to just to show up to work. I love that statistic because if you take a day off, that day off just cost you $95.88 out of pocket! Interesting concept would you say? Just wait until you are in year 4 or 5 when your annual costs are 5 times your first year costs.
I believe this snapshot should be reviewed by anyone who wants to become a Realtor. I also included a snapshot of Pre-Licensing costs in British Columbia in case you are wondering about that.
As always, I am open to feedback and questions. Please feel free to leave a comment below.