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Susan, Other/Just Looking in Los Angeles, CA

what are the expenses involved for a new real estate agents? do all the agents have to have E& O insurance?

Asked by Susan, Los Angeles, CA Mon Jul 18, 2011

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David Brauner’s answer
Hi Susan,

According to NAR's most recent Realtor survey, only about 23% of Agents/Brokers carry E&O Insurance--and typically brokers are more likely to carry insurance than agents--it's often the case that agents are covered under their broker's policy.

I've been serving real estate professionals as an insurance broker at for over 11 years now. Our minimum annual premium starts at $708 in CA ($369 in other states), taxes and fees not included.

A bit of advice for Agents:
We recommend that agents carry their own E&O insurance, even if covered under a brokerage policy. The reason for this is if your Broker retires or non-renews his policy, your "Prior Acts" coverage, i.e. the coverage that you had under your Broker's policy is discontinued and you are left with a potential liability risk. If it's possible, sometimes a broker will let you opt out of their policy and you can purchase your own. Not only does it put you in a better position, in that YOU get to control your liability/risk by keeping your insurance current, but it can also save you money.

If you're looking for a quality program, or you have questions regarding insurance in general, I encourage you to give us a call at 888-347-5273.

Our application process is quick and easy.

David Brauner…
0 votes Thank Flag Link Thu Feb 14, 2013
E&O, State License fees, Brokers cut of the deal, Realtor Board fees, MLS fee, Supra access key fees, Additional auto insurance coverage, training to actually learn the things you need to know, advertising, websites, cards, signs, sign riders, phones, and don't forget to set money aside to pay your taxes on your income. Then you have to allow for the salesman a day that will call you and try to take more money from you by promising you the world if you use their advertising or gimmick.
Susan do you know how many deals most agents do in a year?
Do you know how many agents / competitors you will have within a 25 mile radius? Go meet with any two agents and have them show you on their computer.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Thu Jul 21, 2011
Dear Susan,
Yes indeed you must have E&O insurance. Actually there are many expenses in starting a new business and maintaining one. There is training expense, everything you need to set up your office including a cell phone and office phone, plus all the printing of business cards, letterheads envelopes and so on. There are membersip fees, supra fees, Realtor Association fees. Some offices have additional expenses to consider as well.
0 votes Thank Flag Link Mon Jul 18, 2011
having E & O insurance would be for the Brokerage as it covers the errors and omissions of the agents who complete the many transactions done in the office. Now, as stated below many offices pass this cost on to the agents. The cost per transaction makes sense since those who are DOING TRANSACTIONS are opening the office to liabilities. It is also a good deal for new agents as this expense is not charged monthly/quarterly...But as someone else pointed out some offices may charge hidden fees, which actually may be to cover this expense. E & O is not cheep but a definite must for RE business.
you might enjoy this blog

best of luck
0 votes Thank Flag Link Mon Jul 18, 2011
Yes, absolutely get E & O insurance. You will also need to join your local board of REALTORS or Association of REALTORS. In my area of LA county, the south bay area, that runs about $600-650/yr. Then you need to pay MLS fees. I think that cost is about $500/yr. There are costs for the Supra key that opens lock boxes. For my, because mine is connected to my iphone, I pay about $15.00/month. Most companies have a monthly desk fee. This can be anywhere from $0 to over $1,000/month depending on whether you have a private office, and what your commission split is, among other things-like being able to negotiate your Broker down or not. There can be monthly processing fees, transaction coordinator fees ( about $300-325 per file), software fees, etc. This is a business where you definitely need to put in the dollars before you make the dollars. Good luck with your decisions!
Web Reference:
0 votes Thank Flag Link Mon Jul 18, 2011
Yes, it is recommended that all agents have E&O insurance. At my company, I pay an E&O fee of $169.00 per transaction.

As a beginner in real estate, you will need business cards, badge and pay your state license fee... in California, every 4 years.

It will also depend on which company you join, so make sure to ask how their E&O is deducted and what other hidden fees they have.Be careful, because some companies charge upfront fees which can be hard for beginning agents.
0 votes Thank Flag Link Mon Jul 18, 2011
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