Do you want to start a property brokerage business and want to know the cost? If YES, here is a cost breakdown to open a real estate brokerage firm and the profit margin/ROI.

A real estate agency (brokerage firm) usually receives a payment called a commission for successfully matching a seller’s real estate with a buyer’s real estate need; such that a sale or rent/lease can be made. In most cases, the commission generated is shared with other real estate brokers or agents who played their parts in ensuring that the property was sold or rented out as the case may be.

The real estate industry is highly regulated in the united states of America and anyone who aspires to become a real estate agent or start a real estate agency (company) must apply and obtain a license before they can legally receive remuneration for services rendered.

But as a lawyer, you can handle real estate deals in some states in the US and make your commission without operating as a licensed real estate agent. In order to obtain a license as a real estate agent in the US, you are required to write and pass your state’s real estate exams.

The Estimated Cost Breakdown to Start a Real Estate Brokerage Firm

When it comes to starting a real estate brokerage firm – business the major areas that will you look towards spending the bulk of your cash is in renting or leasing an office facility in a conspicuous location. Aside from that, you are not expected to spend much except for paying of your employees, paying utility bills and fueling your official cars because of scouting.

This are the key areas where you are expected to spend your startup capital on;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand opening of the real estate brokerage firm in the amount of $1,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $1,580.
  • The total cost for hiring a business consultant including writing a business plan – $2,500.
  • The total cost for the purchase of insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • The cost for payment of rent for a small office space for 12 months at $1.76 per square feet in the total amount of $10,600.
  • The cost for remodeling the office facility (construction of racks and shelves, painting and beautifications) – $3,000.
  • Other start-up expenses including stationery ($100) and phone and utility deposits ($500) – $600
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $9,000
  • The cost for start-up inventory (printing of different “To Let” and “For Sale / Lease” signages et al) – $800
  • The cost for store equipment (cash register, security, ventilation, signage) – $750
  • The cost for the purchase of pool cars (2) – $10,000
  • The cost of purchase and installation of CCTVs: $800
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
  • The cost of launching a website: $600
  • Miscellaneous: $2,000

From the rough estimate as listed above, you would need a minimum of fifty – three thousand six hundred and eighty USD ($53,680) to establish a small – scale but standard real estate brokerage firm in any city in the United States of America. Please note that this amount includes the salaries of all the staff for the first three months of operation.

In Conclusion,

Please note that this is a rough estimate and we usually advise our readers who are interested in opening a real estate brokerage firm to have a clear picture of what they want to achieve. The truth is that, if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.

Joy Nwokoro