Entering the real estate industry as an agent is both an exciting and daunting venture. Among the critical steps you’ll take is choosing where to “hang” your real estate license. This article seeks to clarify some of the common questions you may have about this decision.
What Is the Process of Hanging a Real Estate License?
The term “hanging your license” refers to affiliating your real estate license with a brokerage. The initial step in this process is researching and interviewing potential brokerages to align with your career goals. Key factors to consider include:
- Reputation of the brokerage
- Support systems available (training, marketing, etc.)
- Compensation structure
- Office location and culture
After identifying suitable options, agents typically set up interviews with brokerage managers or owners. These interviews serve to mutually assess fit and discuss the brokerage’s specific expectations and offerings. We have written previously on the top of questions to ask during these interviews to ensure your goals are aligned with the brokerage. Learn the 21 questions to ask during your brokerage interview.
Before making a decision, weigh the benefits and drawbacks of each option. Your choice will affect your day-to-day operations, opportunities for client acquisition, and, ultimately, your earnings.
What Types of Brokerages Can I Hang my License?
When it comes to brokerages, one size does not fit all. You have several types to choose from:
- Traditional Brokerages: Offer comprehensive support, training, and resources, usually in exchange for a higher percentage of your commission.
- Discount Brokerages: Lower fees but also less support. Suitable for agents who prefer a more independent approach.
- Online or Virtual Brokerages: All transactions and interactions are carried out online, offering flexibility but requiring self-motivation.
Though there are three main types of brokerages, many brokerages fall somewhere in between. Century 21 Realty Services leans towards the Traditional Brokerage but at a reasonable price. We offer training, support, and resources without the high monthly fees. This model is perfect for agents looking for added support from the place they hang their real estate license.
Can I Move My License to Another Brokerage?
In Pennsylvania, like in many states, moving your license between brokerages is possible but involves several steps. Firstly, you should check your existing contract for any clauses that may hinder a move, such as outstanding financial obligations to your current brokerage. Then you need to:
- Notify your existing brokerage of your intent to move.
- Complete a license transfer application, often available on the Pennsylvania Real Estate Commission’s website.
- Pay any applicable transfer fees.
- Ensure your new brokerage submits the required documents to make the transfer official.
What Are My Continuing Education Requirements?
In Pennsylvania, real estate agents are required to complete 14 hours of continuing education (CE) every two years to renew their licenses. Courses may include:
- Real Estate Law
- Ethics in Real Estate
- Sales and Marketing
- Property Management
Each course varies in CE credits, typically ranging from 1 to 3 hours. Be sure to verify that the courses are approved by the Pennsylvania Real Estate Commission.
A great resource for finding classes to earn continuing education credits is the PA Realtors continuing education section. The PA Realtors site lists events that you can attend to continue to grow in the realtor field.
How Is Compensation Structured?
Compensation in real estate largely operates on commission, although there are various structures:
- Traditional Split: A percentage of the commission goes to the agent, and the rest to the brokerage.
- 100% Commission: The agent takes home the entire commission but pays a monthly or annual fee to the brokerage.
- Salary: Rare, but some brokerages offer a salary in addition to or instead of commission.
Each structure has pros and cons. Traditional splits may provide more support, while 100% commission structures demand more independence but potentially higher earnings.
For Realtors and Real Estate Agents who are newer to the business, the Traditional Brokerage model is ideal. The support and training that is provided are invaluable to growing and sustaining a successful real estate business.
How Do Taxes Work?
Most real estate agents are classified as independent contractors, often under the 1099-C form, rather than traditional employees. This means you’re responsible for your own taxes, including self-employment tax and quarterly estimated taxes. Consulting a tax advisor specialized in real estate is advisable to navigate the complexities.
In conclusion, the decision to hang your real estate license is a multifaceted one, involving careful consideration of brokerage type, compensation, educational requirements, and even tax implications. Make sure to consult with professionals and conduct thorough research to make an informed decision best suited for your career aspirations.