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Top Expenses as a Real Estate Agent

Raman Gakhal of Alberta Real Esatte School carefully explaining the top expenses to expect as a Real Estate Agent.

When you first get your real estate license it may seem like everyone has their hand in your wallet. There are fees for your licensing course, study guides, real estate exam, broker start-up fees and the list goes on. As a new real estate agent, you do have to think of this as starting a new business, and with every new business, there are start-up costs and expenses as a Real Estate Agent!

Managing your expenses, especially business expense is a hefty task and should be done with consideration and planning. And planning starts with getting an idea of the upcoming expenses beforehand. Thus, let’s take a look at the list of the top expenses you can expect once you become a Real Estate Agent.

Let’s look at some of the average expenses and fees as a new real estate agent, including:

[1] Brokerage Costs

Brokerage Cost is the most basic, common, and one of the mandatory costs that you must incur once you become a Real Estate Agent. This is a Monthly Expense i.e., it comes in every single month.

To diversify further, there are 2 types of Brokerage Costs –

  1. Flat Monthly Fees: The amount you are paying every month to your brokerage
  2. Commission Fee: Commission Payment per deal

The brokerage costs can vary from Brokerage to Brokerage. To become licensed as a real estate agent, you must join a brokerage company. There is a wide range of how much the Brokerages cost you every month. There are some brokerages that won’t charge you a monthly fee but then their commission split will be high. The monthly fees can be as low as $0, or it could reach up to $100 per month.

Additionally, there may be a higher Commission split ranging from $300 to $500 or even $1500. It really depends on the type of brokerage you join. Their expertise and offerings will dictate the monthly fees that they will charge. In terms of the Commission Splits, they can vary from $0 so that you are not splitting your commission, but it is a deal fee. It could be either between a range of $275 – $600 or higher; or there may be a Percentage Commission Split. It could be any % ranging from 20% to 50%.

[2] Professional Fees

Professional Fees refers to Licensing Fees & Real Estate Insurance Fees that you pay every year to the Regulatory bodies of Real Estate in your province.

A. Licensing Fees: For licensing fees in Alberta, we have RECA (Real Estate Council of Alberta). RECA charges Annual Professional Fees every September 30th. We need to renew our license, and these are the licensing fees that we pay to RECA. The amount for Licensing Fees varies around $650.

B. Errors and Omissions Fees: The Insurance Board for Real Estate Agents in Alberta is REIX (Real Estate Insurance Exchange). We pay the REIX Fees on September 30th. Average costs for E&O coverage are usually $500 to $1,000 per employee, per year.

C. Membership Fees: These fees are Annual Fees paid again to the Real Estate Board of the Province [AREA (Alberta Real Estate Association) in Alberta]. The Membership Fee in Alberta varies around $2,500 annually.

[3] Transportation

A lot of times you, as a Real Estate Agent will physically drive your clients around for various purposes including showing different properties of their choice and many more. So during that time you are going to incur different types of expenses including Gas, Snacks, Water, etc. Whether you’re driving the clients around or not you still have to go to the site location to show it to your clients and this is where you are going to need transportation costs. This will also include maintenance and repairs. Thus, when going into a real estate business make sure you do account for these types of costs.

[4] Marketing

Another type of cost that we must incur will be the marketing cost. Real Estate Agents are a kind of free-lancers and will have to market themselves to get clients. Thus, although this expense is optional, it is a must for agents, especially in today’s time.

For most parts, marketing costs will be covered by the real estate agents. These can include all types of marketing costs from business card printing, marketing through flyers, physical hoardings, sign boards, newspaper ads, and magazine articles to online ads on search engines or various social media platforms, website, or blog costs, photoshoots, MLS (Multiple Listing Services) Fees, and much more.

[5] Operations

These would include things like Supplies and Utilities. For example, stationary items, printers, phone bills, internet bills, computer/laptop, etc. These are petty expenses with small utilities but are still important to run smoothly. Thus, make sure when you plan the expenses for the year, you keep a healthy operations budget aside.

Additional Tip: As a real estate agent, you are considered an independent contractor. You own your own business. Because of that, many of the real estate costs referenced above are considered business expenses and can be tax write-offs. Make sure you keep all the receipts and talk with your CPA about any other possible write-offs that might be available to you as a new agent, such as your car lease or home office.

These are some of the major expenses that you will manage as a Real Estate Agent. Make sure to define each of your expenses in a suitable category and maintain your budget sheet regularly. This will help you to analyze your real estate expenses in the best way possible.

RECA has gathered a Complete list of Fees and Expenses that can be incurred by a Real Estate Professional in Alberta. Have a look.

Join Alberta Real Estate School for expert help with understanding the concepts of Real Estate and getting uncommon and detailed tutoring sessions summarized as per your needs. Get our personalized Notes designed to get you through the Real Estate Exams in the first attempt! Visit our list of Real Estate Tutoring Sessions for details.

If you have any doubts for Exam Preparation of any of the real estate courses or topics, reach out to us directly at 587.936.7779.

You can also listen to this article in the podcast above. We Hope you found this information useful. Stick to us for more updates.

Happy Realtoring!!

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5 Mistakes Students Make when preparing for the Alberta Real Estate Exam

Alberta Real Estate School Tutor, Raman Gakhal discussing the 5 most common mistakes that students make when preparing for the RECA Exam.

If you’re a prospective real estate agent, then one of the first steps to launching your career as an agent or broker is to pass the Alberta Real Estate Exam. Whether you’re a good at exams or not, there’s no skipping this step.

As a result, you may be wondering, “Just how hard is the Alberta real estate exam?” The answer depends on how well you do your exam prep.

Well, to be thorough, real estate exams in Alberta are designed to be difficult to pass, so they can weed out people who are not going to be skilled agents. Though the pass rate varies based on the state exam, they hover around 60% across the province. This means about half of the people who take a state licensing exam do not pass.

The Alberta real estate exam is a challenging test that takes the right preparation to do well on. Yet, to get your real estate license, you must pass the state exam for a real estate broker or agent. Right preparation is the key. Preparation includes doing the right things as well as NOT DOING THE WRONG THINGS.

Have a look at the video below –

Today, we will discuss the 5 most common mistakes that Students make while preparing for the Alberta Real Estate Exam.

[1] Assuming that the Exam is Easy

Now many of us come into the real estate field or are willing to get the real estate license because we are interested in real estate. The industry seems so tempting, beneficial, and interesting from a bird’s eye view. So, we decide to make a career out of that short term interest. Now the problem is as we come into this field we may think that we have experience and we know what’s going on in the market or we know how to buy and sell properties.

Also, therefore we may have the impression that the exam is easy. But that is a mistake the reason the exam is not easy is because the courses are based on teaching us about the Real Estate Act. Although, when we talk about the real estate act there are a lot of technical things that we need to understand. It’s a law that needs to be studied efficiently. When you are attempting the exam, there are different types of question that require different efforts to pass through.

For Eg:

  1. Definition Questions: They are based on the concepts that are specific to the Real Estate Industry. Terms like Broker, Real Estate Assurance Fund, Personal Property, etc. belong to this section. If you understand the meaning of the term, only then you will be able to answer the question.  
  2. Technical Questions: These include topics with Math Calculations and detailed concepts that a common man may have never heard of before. Topics like How to Calculate IRR, Incentive Calculation, Mortgage Installment Calculation, etc. require through practice and understanding.
  3. Scenario Questions: What are Scenario Questions? These are questions that give a specific scenario or a situation to deal with hypothetically and let’s you decide how you would handle such a situation as a Real Estate Professional. These questions may seem tricky. Thus, a thorough understanding of the course that you are taking is a must. These questions put you in a real-life situations and make you learn how to deal with each of the scenarios.

[2] Waiting till the Last Minute to Study for the Exam

We have seen students that come to us when there’s two months left to finish their course out of the 18 months. Last minute pressures and procrastination at the start can lead to anxiety. It basically means that the time allotted for preparation was not well-utilized. RECA Courses or any other Provincial Real Estate Exams need preparation with time and efforts to get good scores. It is not a study that can be completed within weeks if you are an amateur in the industry.

The Exam is designed to be difficult to pass so that students take efforts to study the minute details and information necessary for the real estate industry.

A course includes various types of topics that are extensive and take time, efforts, and consistency to complete. For Example, the first most basic Course – Fundamentals of Real Estate includes 10 Units with different number of Sessions covered in each of them. Have a look at the table below that shows all the Units with Number of Sessions for each of the Units included:

[3] Taking too long to go through the course

When we start the course, we study hard for the initial period. By the time we get to dig more, the excitement wears off. Although, the courses are big and time-consuming, showing consistency in studies can create a big difference.

One of the most common mistakes we see in our students (this is based on personal experience with real cases) is that they study without any help, which takes them too long to complete and then they delay the exam as they are too tired of completing the hefty course materials. Big study notes require management, planning, and consistency to follow up on the earlier topics along of proper understanding of each of the topics to not go in the wrong direction. If there is a huge time-lapse between your preparation and the exam, you need more time to again revise all the topics thoroughly to retain all the understanding once again, which we usually tend to avoid.

[4] Memorizing Questions and Answers

When it comes to studying, we start off well but then we tend to drag through the hefty course notes by RECA and the interest seems depreciating. This could be because we directly try to memorize the concepts without completely understanding them.

For Example, calculation problems need to be solved with understanding of the question as well as the calculation required to solve the question. Have a look at the video where our Tutors explain the compete Calculation of IRR using a Realtor’s Calculator. Until you don’t understand the theory behind the calculation and why does the steps make sense, you will not be able to do it. You cannot memorize stuff without understanding them.

We have seen students memorize Quiz and Practice Questions with solutions to prepare for the exam. Again, memorizing without understanding the concepts will not serve well. The exam is designed to test the understanding of our knowledge of the real estate concepts we have learned. Thus, the questions will be different from the quiz questions and tricky enough to give us a mind churn.

[5] Focusing on the Wrong Topics

The RECA Notes are big enough to confuse any student and makes it difficult to gauge what is important and what is not. This is where you might require some help and support. Based on our experience and expertise in the industry, Alberta Real Estate School gives weightage to important topics from each of the courses to help save time and energy from unimportant topics.

For eg, for Fundamentals of Real Estate Course, we have the following Exam Weightings for the RECA Exam –

Avoiding these common mistakes can help you pass the difficult RECA Exams in the first attempt.  These will help you to plan your studies as well as the exams with a better understanding of the topics involved. You can anticipate accurate results when you are aware of these small details while you are preparing for the Alberta Real Estate Exams.

Guidelines on niche topics with our Expertise . For Eg:

How to Change the Class of Real Estate License

Join Alberta Real Estate School for expert help with understanding the concepts of Real Estate and getting uncommon and detailed tutoring sessions summarized as per your needs. Get our personalized Notes designed to get you through the Real Estate Exams in the first attempt! Visit our list of Real Estate Tutoring Sessions for details.

If you have any doubts for Exam Preparation of any of the real estate courses or topics, reach out to us directly at 587.936.7779.

We Hope you found this information useful. Stick to us for more updates.

Happy Realtoring!!

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MEAN, MEDIAN, MODE IN REAL ESTATE

Raman Gakhal of Alberta Real Estate School deliberately explaining the concept of Mean, Median, and Mode in Real Estate Licensing Studies

Concepts Explained with Real Estate Examples

A market analysis of any given period requires an in-depth study of all the information available with detailed reporting. A complete set of statistical data with key indicators and other anecdotal data helps us to identify the market conditions of any given time.  Even in real estate, such analysis is an absolute must. Whether it’s a realtor® or an investor, understanding the real estate market makes you a more empowered buyer or seller. Mean, Median and Mode are key factors of generating data and performing data analysis with a statistical approach.

Have a look at the video below to see the tutoring for the topic with calculation details –

New real estate professionals can develop and maintain a general awareness of the current market condition. This is accomplished through:

  1. Experience with the different markets throughout their real estate practice
  2. Anecdotal observations of real estate activity for their locale and property type
  3. A regular review of the available key market statistics from reliable sources

The topic of Mean, Median, Mode is covered under the Residential Real Estate Course. This is one of the basic concepts you must learn to understand how averages are taken for property prices in Real Estate. If you are applying for the Residential Real Estate Licensing Course through RECA (Real Estate Council of Alberta) and are preparing to become a Real Estate Agent or a REALTOR® in Alberta, then these topics will help you prepare for your RECA Exam.

Mean, Median, Mode

In the Real Estate Industry, we have a “Mode Sale Price”, “A Median Sale Price”, and “A Mean Sale Price”. Thus, this primer will explain the actual meanings of Mean, Median, Mode and their use in the Real Estate Industry.

You might know that mean, median, and mode are all names for “average,” but do you know how are they different? People haphazardly deploy terms like “average”, mean, median, mode and other statistical terminology without either understanding what they’re talking about themselves, or with the intent to deceive their audience with ‘fact’.

Real Estate Mean, Median and Mode

Let’s see what the definition of each of the average types is and how are they calculated differently from each other with their specific real estate examples.

Mode

The mode in mathematics is the number in a group of numbers that appears the most often. Therefore, it is the number that appears in the group more times than any other number.

It does provide a general awareness of the price at which most sales occurred for the specific locale and period indicated. However, this does not mean that the mode sale price is the sale price of every property in that locality.

The mathematical representation of this average would be as follows:

The mode is 10 in the following group of sequential numbers:

1, 5, 8, 9, 10, 10, 10, 15

Real Estate Example with Visual Representation:

Mary has a residence in the Holly Park subdivision. The sale price that occurred most often in the previous month in Holly Park was $445,000. Therefore, the mode sale price was $445,000 for that month.

Median

The median in mathematics is the number that is in the middle of a group of figures that have been sorted in a particular order. The median is the middle number, or the mid-point number, in a range of numbers that have been organized in ascending order. It does provide a general awareness of the mid-point for sale prices that occurred for the specified locale and period indicated.

Note: The key point to keep in mind here is that the data should be presented in Ascending Order to be able to calculate the Median Average of the same. 

The mathematical representation of this average would be as follows:

Real Estate Example with Visual Representation:

Mike has a residence in the High Park Community. The mid-point sale price in the High Park sales for the previous month was $785,000. Therefore, the median sale price in High Park that month was $785,000. However, this does not mean that Mike’s residence is worth $785,000.

Mean

The mean in mathematics is also be referred to as the basic average. The process is to add all the values of data and divide them with the total number of values in the given data and the result you get is the Mean Average.

The mathematical representation of this average would be as follows:

A set of numbers: 45, 62, 81, 74, 93

Mean = (45 + 62 + 81 + 74 + 93) / 5

            = 355 / 5

            = 71

Real Estate Example with Visual Representation:

Eg: Mia has a residence in the Hilltop community. The mean (average) sale price for Hilltop for the previous month was $435,238. The average selling price is calculated by adding the total dollar volume of all Hilltop property sales and dividing the total by the number of properties sold that month. Therefor, the average sale price in Hilltop that month was $435,238. However, this does not mean that Mia’s residence is worth $435,238.

This article in a nutshell:

These are some important tips for fresh applicants who are planning to appear for the Residential Real Estate Exam by RECA but have minimal knowledge of the distribution of marks and emphasis given to each of the topics in the exam.

These will help you to plan your studies as well as the exams with a better understanding of the topics involved. You can anticipate accurate results when you are aware of these small details while you are preparing for the Residential Real Estate Exam in Alberta. Get your Residential Real Estate Course Notes from Alberta Real Estate School.

Get details of Exam Weightings with Unit-wise Distribution of Marks for Residential Real Estate – extensively from Alberta Real Estate School.

Join Alberta Real Estate School for expert help with understanding the concepts of Real Estate and getting uncommon and detailed tutoring sessions summarized as per your needs. Get our personalized Notes designed to get you through the Real Estate Exams in the first attempt! Visit our list of Real Estate Tutoring Sessions for details.

If you have any doubts for Exam Preparation of any of the real estate courses or topics, reach out to us directly at 587.936.7779.

You can also listen to this article in the podcast below. We Hope you found this information useful. Stick to us for more updates.

Happy Realtoring!!

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