Why on earth would you want to become a real estate agent to buy a home??? I assume you think you’re going to keep the commission for yourself.

First, you’re going to spend several hundred dollars and at least a hundred hours taking the necessary classes and then sitting for the exam. Let’s call that $1,000 in hard costs and $3,000 in lost time if you make $30 an hour. Then you’ve got to join the local Board of Realtors for $2,000 and pay your errors and omissions insurance for $1,500.

Then it will take you at a minimum of 100 hours of study to be competent enough to buy your own home so another $3,000 of your lost time. Then it’s going to take you yet another 100 hours to find and close your home, if you’re lucky, so another $3,000 in lost wages. So far your total is $13,500.

Let’s say you’re buying a $500,000 home and there’s a 5% commission split between the listing broker and your broker who gets $12,500. They will take about 25% “broker split” so you’re left with $9,375. After expenses of $13,500 you’ve lost $4,125 IF you don’t get sued along the way.

But wait, let’s say the home you’re buying cost $1,000,000. Isn’t it worth it then?

If there’s a 5% commission split between the listing broker and your broker who gets $25,000. They will take about 25% “broker split” so you’re left with $18,750. After expenses of $13,500 you’ve netted $5,250 IF you don’t get sued along the way.

But wait, now you’ve got to pay tax on your net income of 26% federal, 7% state (if applicable) and 15.3% self-employment for a total of 48.3%, So on $5,250 you net $2,714.25 after tax to buy a million-dollar home from a brand new agent. Congratulations!

So, why again do you want to become a real estate agent to buy a home? I think you can see why you want to hire the best agent rather than getting a license. They’re well worth it!