Starting a real estate business requires a lot of work, training and time. While the laws vary in each state, starting a real estate business is normally a three-step process that can take at least two years. Before starting your own company, you need to become a licensed real estate broker, and before becoming a broker, you must be a licensed sales agent.
1. Become a Real Estate Agent
Find out the specific requirements in your state for attaining a real estate sales license. In most cases, you need to be at least 18 years old and meet your state’s requirements for being a trustworthy person – such as not being a felon.
In Texas, you need to complete an approved real estate course of at least 180 hours that covers real estate principles, real estate law, real estate finance and contract law. After passing your real estate sales exam, you have one year to apply to the Texas Real Estate Commission for your license. In Texas, you need a licensed broker to sponsor you before you can get your license. The TREC sends your sales agent license to your sponsoring broker.
In California, you can get your license without a sponsor; however, you can’t work in real estate until you get one. Most states require your fingerprints be on file.
2. Become a Real Estate Broker
After you have worked as an active real estate sales agent for the period of time specified by your state, you can apply to become a real estate broker. In California, you need to wait two years. In Texas, you have to work as a sales agent for at least four years. In addition to this work experience, you normally need additional education.
The TREC requires that you take an approved real estate broker course, consisting of 270 hours of classroom time. Additionally, you need either a bachelor’s degree from an accredited college or an additional 630 classroom hours in courses that are approved by the TREC, such as business classes at an approved continuing education school.
In California, continuing education classes do not count toward a broker’s education requirements; the courses must be college level.
3. Start Your Real Estate Business
As a licensed real estate broker, you are now in a position to start your own real estate broker business entity. First, you form your company entity, such as a limited liability company. In most states, including Texas and California, the business entity must have a licensed real estate broker who is in good standing named as a managing officer in the business.
Along with creating your business, you need to register it with the IRS and your state tax office for tax purposes. By this time, you hopefully have an established base of potential clients and new sales agents who are looking to find a sponsor to begin their own careers at your new company.
- Broker’s license
- Office equipment
- Office furniture
- Yard signs
- To maintain your profit margin, consider charging agents an office fee for the use of the copier and fax. Agents can also contribute to the cost of errors and omissions insurance.
- Don’t skimp on professional help. Have a lawyer look over all your independent contractor agreement, contracts and addenda.