Starting a real estate business is an exciting venture that combines a passion for property and people with sharp business savvy. The residential market is a multi-trillion dollar industry, with steady demand for properties from first-time homebuyers, growing families, and investors.
This guide will take you through the practical steps of obtaining necessary licenses, validating your business concept, securing initial funding, and building your client network to help you launch a successful real estate business in the U.S.
Step 1: Plan your business and validate your idea
Start by analyzing your local market. Use data from the National Association of Realtors (NAR) and your local Multiple Listing Service (MLS). These resources provide reports on median home prices, sales volume, and average days on market. This data helps you find your niche.
Next, look at the competition. Review the websites of top local brokerages and agents. You can also use Zillow or Realtor.com to see who closes the most deals in your target neighborhoods. Pay attention to their marketing and client reviews.
A frequent misstep is to only watch the big national firms. You should also study successful independent agents in your area. They often have unique strategies that work well locally.
Understand your startup costs
With a clear view of the market, you can now map out your finances. Your primary costs will involve licensing, insurance, and association fees. These are necessary investments before you can represent clients.
Expect to spend between $2,500 and $7,500 upfront. This range typically covers pre-licensing courses ($500-$1,200), exam fees ($100-$300), E&O insurance ($500-$1,000), and initial marketing materials ($1,000-$3,000).
Here are 4 immediate steps to take:
- Research median home prices in your target zip codes using NAR data.
- Identify three local competitors and analyze their online presence.
- Create a startup budget that includes licensing, insurance, and marketing costs.
- Check your state's real estate commission website for specific exam requirements.
Step 2: Set up your legal structure and get licensed
Choose your business structure
You might want to consider forming a Limited Liability Company (LLC). It protects your personal assets from business debts and lawsuits. An LLC costs between $100 and $500 to set up, and it allows profits to pass directly to you without corporate taxes.
Many new agents start as sole proprietors for simplicity, but this choice leaves your personal finances exposed. An LLC provides a vital layer of protection as you begin to transact deals.
Secure your real estate license
Your state's Real Estate Commission governs all licensing. The process involves a pre-licensing course, typically 60 to 135 hours, followed by a state exam. You must also pass a background check and find a sponsoring broker before your license becomes active.
A detail many overlook is that you cannot operate independently at first. Your license must be held by a sponsoring brokerage. This broker will supervise your work for a period, usually one to three years, and take a percentage of your commissions.
Here are 4 immediate steps to take:
- Decide if a sole proprietorship or an LLC is right for your risk tolerance.
- Find state-approved pre-licensing courses on your Real Estate Commission's website.
- Begin researching local brokerages to find a potential sponsor.
- Budget for your license application and exam fees, which can total $200 to $500.
Step 3: Secure your insurance and manage risk
Protect yourself with the right coverage
Your first priority is Errors & Omissions (E&O) insurance. This policy protects you if a client claims you made a mistake or were negligent. Expect to pay $500 to $1,000 annually for a policy with $1 million in coverage, a standard amount in the industry.
A frequent misstep is buying a policy that fails to meet your sponsoring broker's requirements. Always get their minimum coverage amounts in writing before you purchase a plan. This simple check avoids having to buy a second, more expensive policy later.
You might also consider General Liability insurance if you plan to open a physical office. For specialized coverage, look at providers like Victor, Pearl Insurance, and Hiscox. They have deep experience with real estate professionals and understand the specific risks involved.
Here are 4 immediate steps to take:
- Confirm your sponsoring broker's minimum E&O insurance requirements.
- Request quotes for a $1 million E&O policy from providers like Victor or Hiscox.
- Review policy exclusions carefully to understand what is not covered.
- Assess if you need General Liability insurance for a planned office space.
Step 4: Set up your office and get the right equipment
Choose your workspace
You do not need a large office at first. Many agents start from a home office or use space at their sponsoring brokerage. This approach saves thousands in rent and utilities, letting you invest more in marketing.
If you decide to lease, look for a small professional suite around 150-300 square feet. It only needs to be large enough for a desk and a small meeting area. Ensure the property has commercial zoning that permits client-facing business.
A mistake many new agents make is signing a long-term lease. You might want to negotiate for a shorter term, like one or two years, with an option to renew. This gives you flexibility as your business grows.
Get your technology in order
Your business runs on technology. Plan to spend on a reliable laptop ($800-$1,500) and a modern smartphone ($700+). A multi-function printer for scanning documents is also a good purchase, typically costing $200-$400.
Beyond hardware, you will need access to your local Multiple Listing Service (MLS), which can cost $20-$50 per month. You should also consider a Customer Relationship Management (CRM) system to manage leads. Options like Follow Up Boss or LionDesk start around $50-$100 per month.
Here are 4 immediate steps to take:
- Decide if a home office or leased space fits your initial budget.
- If leasing, research commercial suites between 150-300 square feet.
- Budget for a business laptop, smartphone, and multi-function printer.
- Compare pricing for MLS access and a real estate CRM subscription.
Step 5: Set up your payment processing
Your commission is not paid directly by the client. The title or escrow company disburses it from the seller's proceeds at closing. Your sponsoring broker receives the full commission and then pays you your agreed-upon split.
Many new agents are unsure how earnest money works. These funds are not paid to you directly. The buyer's deposit is held in a secure escrow account, managed by your brokerage or the title company, until the sale closes.
For other situations, you may need to collect smaller fees for rental applications or consultations. For these on-the-go payments, a mobile solution is a great fit.
For real estate agents who need to accept payments on-site, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone—just tap and done.
At just 1.99% per transaction with no hidden costs or extra hardware, it is useful for collecting those smaller fees. Other payment solutions often charge between 2.6% and 2.9%, making JIM a more cost-effective choice for your business.
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available right on your JIM card as soon as the sale is done—no waiting for bank transfers.
Here are 3 immediate steps to take:
- Confirm your brokerage's procedure for commission splits and earnest money deposits.
- Evaluate if you will offer services that require on-the-spot payments, like rental applications.
- Download the JIM app to see how it could work for your mobile payment needs.
Step 6: Fund your launch and manage your cash flow
You will need a financial cushion for your first six months. Your first commission check may not arrive for three to six months, a timeline many new agents underestimate. A good goal is to have $10,000 to $20,000 saved to cover both personal living expenses and business costs.
Most agents self-fund with personal savings. You might also consider a business credit card with a 0% introductory APR for initial expenses. This gives you short-term, interest-free capital if you pay the balance before the promotional period ends.
Explore loan options
For external funding, look into the SBA Microloan program. These loans go up to $50,000 and are designed for startups. Lenders will want to see a personal credit score over 680 and a solid business plan. Personal loans from credit unions can also offer competitive rates.
Once you have your funds, open a dedicated business checking account. This separation is not just good practice; it makes tax time much simpler and gives you a clear view of your business's financial health from the start.
Here are 4 immediate steps to take:
- Calculate your total living and business expenses for a six-month period.
- Open a dedicated business checking account to separate your finances.
- Check your personal credit score through a free reporting service.
- Research SBA Microloan lenders in your state.
Step 7: Hire your team and set up operations
Define key roles for your team
You will not need a large team at first. Your first hire is often a part-time Transaction Coordinator (TC) who manages all the paperwork from contract to close. They are typically paid a flat fee per transaction, around $350 to $500, which is a smart investment.
You might also consider a Virtual Assistant (VA) for administrative tasks like managing your calendar or social media. VAs offer great flexibility and are usually paid hourly, from $15 to $30, depending on their experience and location.
Establish your operational systems
Your brokerage will likely provide access to transaction management software like SkySlope or Dotloop. These platforms streamline document signing and compliance. For scheduling property viewings, ShowingTime is the industry standard and often integrates directly with your MLS.
A mistake many new agents make is asking an unlicensed assistant to perform tasks that require a license, like showing a property. This is a serious compliance violation. Only licensed agents can conduct activities like hosting open houses or discussing contract terms with clients.
Once you consistently close two or three deals per month, it is time to bring on help. This frees you from administrative work so you can focus on lead generation and client relationships, which are your core income-producing activities.
Here are 4 immediate steps to take:
- Draft a job description for a part-time Virtual Assistant.
- Research local Transaction Coordinator services and their per-deal fees.
- Ask your broker what transaction management software they provide.
- Set a personal monthly sales goal that will trigger your first hire.
Step 8: Market your business and acquire customers
Build your online presence
Your digital footprint is your modern storefront. Start by claiming your free agent profiles on Zillow and Realtor.com. Post professional photos and a compelling bio. Use social media platforms like Instagram and Facebook to share market updates and property photos, not just listings.
Many new agents spend heavily on paid ads but lack a system to nurture the leads. A lead is useless without follow-up. Before you spend a dollar on ads, make sure your CRM is ready to capture and manage every contact.
Leverage your personal network
Your first clients often come from your personal network, or Sphere of Influence (SOI). Announce your new career to friends, family, and past colleagues. A single email can generate surprising results. Also, offer to host open houses for senior agents in your brokerage.
This lets you meet active buyers without any marketing spend. For every 50 people who attend an open house, you can realistically expect to find one or two serious clients. This is a powerful way to build your database from day one.
Here are 4 immediate steps to take:
- Claim and complete your free agent profiles on Zillow and Realtor.com.
- Draft a social media post announcing your new real estate career.
- Make a list of 50 contacts from your personal network to reach out to.
- Ask your sponsoring broker about opportunities to host an open house.
Step 9: Set your pricing strategy
Understand your commission structure
In real estate, your price is your commission. The standard commission is 5-6% of a home's sale price, paid by the seller. This amount is then split between the buyer's agent and the seller's agent, usually 50/50.
Your income comes from your portion of that commission, which you split with your sponsoring broker. New agents typically start on a 50/50 or 60/40 split. On a $400,000 sale with a 3% agent commission, a 60/40 split means you take home $7,200 before taxes and expenses.
A mistake new agents often make is to only look at the gross commission. You must factor in your broker split, desk fees, and marketing costs to find your true net income. This helps you set realistic financial goals from the start.
As you close more deals, you can negotiate a better split. Experienced agents might earn 80/20 or even 90/10. Some brokerages offer a 100% commission model where you pay a flat monthly fee instead of a split, which can be very profitable for high-producers.
Here are 4 immediate steps to take:
- Ask your sponsoring broker for their complete commission schedule, including any desk or transaction fees.
- Calculate your net income on a hypothetical $500,000 sale using your current split.
- Research the commission models of two other local brokerages to understand the competitive landscape.
- Create a simple spreadsheet to track your estimated net earnings for each potential deal.
Step 10: Control quality and scale your business
Measure your service quality
Your reputation is built on results. Track your list-to-sale price ratio and your listings' average days on market. Compare these numbers to your local MLS averages to gauge your performance. This data is powerful in listing presentations.
After each closing, send a simple client satisfaction survey. You can use a Net Promoter Score (NPS) to ask how likely they are to refer you. This feedback helps you refine your service and provides testimonials for your marketing.
To signal expertise, you might pursue a designation from the National Association of Realtors (NAR). The Graduate, REALTOR® Institute (GRI) is a great starting point that covers in-depth legal and technical knowledge.
Know when to grow
Once you consistently close two or three deals per month, it is time to hire administrative help. A Transaction Coordinator or Virtual Assistant frees you to focus on clients and lead generation, which directly grows your income.
A frequent misstep is to hire another agent before you have solid administrative support. This just creates more management work for you. First, delegate the paperwork. Then, you can consider adding a buyer's agent when you have more leads than you can service.
Your CRM becomes even more important as you grow. Systems like Follow Up Boss have features to manage a team, assign leads, and track everyone's performance. This ensures no lead falls through the cracks as your business expands.
Here are 4 immediate steps to take:
- Create a simple client feedback survey to send after each closing.
- Compare your last three listings' days on market to your local MLS average.
- Research the requirements for the NAR GRI designation in your state.
- Set a monthly sales goal that will trigger hiring a Transaction Coordinator.
You have the steps to launch your real estate business. Your reputation is your most valuable asset, built one client at a time. Focus on great service, and the commissions will follow. You are ready to take the first step.
As you manage your new business, keep payments simple. For smaller fees, JIM turns your phone into a card reader for a flat 1.99% fee, no hardware needed. Download JIM and you are all set.
