To start a real estate business, get licensed in your state, decide whether you will work under a broker or open your own brokerage, and choose a legal structure. Then separate your finances, plan for quarterly taxes, follow fair housing and Do Not Call rules, and put errors and omissions coverage in place early.
Here are the six steps in order:
- Choose your niche and market. Decide which clients and property types you will serve, then research your local market.
- Get licensed. Every state requires real estate brokers and sales agents to be licensed1. Most candidates complete prelicensing courses and pass an exam.
- Pick a brokerage or business model. Sales agents must work with a broker, according to the US Bureau of Labor Statistics. Compare brokerages on total cost and on the insurance they provide.
- Set up your structure and finances. Choose a legal structure and open a separate business account. Plan for quarterly taxes from your first commission.
- Build a lead system that follows the rules. Market your services within federal fair housing, Do Not Call, and referral fee rules.
- Protect your business. Put errors and omissions coverage and basic data security in place before your first client.
A real estate business lets you build a career helping clients buy, sell, or rent property. However, success requires more than earning a license and finding your first client.
You need to understand your market, meet state licensing requirements, and build a steady client base. You also need to manage your finances and protect yourself from the risks that come with professional real estate services.
Learning how to start a real estate business can help you put those pieces in the right order. Whether you work as an agent, become a broker, or build your own firm, a strong foundation can help you grow.
The Bureau of Labor Statistics reported approximately 530,600 real estate broker and sales agent jobs in 2025. It projects about 40,400 openings for these professionals each year, on average, from 2025 through 2035.
The Bureau also reports that most brokers and sales agents are self-employed, including about 54 percent of sales agents in 2025. Even inside a brokerage, you will usually run your own small business with its own income, expenses, taxes, and risks.
Understanding the Real Estate Industry and Your Role
Your first business decision is which clients and property types you will serve. That choice shapes your marketing, your contracts, and your risks.
The real estate industry includes much more than residential home sales. Professionals may work in residential or commercial sales, rentals, property management, and other areas of the industry.
Before launching your business, decide what role you want to play and which clients you want to serve.
The Bureau of Labor Statistics explains that brokers and sales agents commonly help clients buy, sell, and rent properties. Their work may include finding clients, advising on market conditions, promoting and showing properties, and presenting offers. It can also include negotiating between buyers and sellers and preparing transaction documents.
Choose Your Real Estate Niche
Your niche can influence everything from your marketing strategy to your professional network. For example, you might focus on:
- First-time homebuyers
- Luxury properties
- Commercial real estate
- Investment properties
- Rentals and leasing
- Property management
- Relocation services
You can expand your services as your business grows. However, starting with a defined market can make it easier to establish your brand and reach the right clients.
Your niche also shapes your risk, because managing rentals for other owners can mean handling tenant screening, security deposits, and repairs. Commercial work often brings larger contracts and more money at stake.
Your location also matters. Real estate markets can vary by city, neighborhood, property type, and economic conditions. The Small Business Administration recommends using market research to identify customers. It also recommends competitive analysis to learn what makes a business different from its competitors2.
Research local inventory, pricing trends, competitors, and potential clients before developing your business strategy.
Getting Licensed and Choosing a Brokerage or Business Model
A real estate license gives you the legal right to practice in your state. Starting the business also means choosing how you will operate, who you will work under, and your legal structure.
Real estate licensing is handled at the state level. According to the Bureau of Labor Statistics, every state requires real estate brokers and sales agents to be licensed. Prospective professionals generally need to complete real estate courses and pass a licensing exam, although the specific requirements vary by state.
Check your state’s real estate commission or licensing board for current rules before you enroll in a program or apply.
Some states also tie insurance to the license itself. In Colorado, for example, Real Estate Commission Rule 3.9 requires every active real estate licensee to carry errors and omissions insurance. Licensees can buy coverage outside the state’s group policy. If they do, the Colorado Division of Real Estate requires a certificate of independent coverage with the license application3. Ask your state commission whether proof of coverage is part of activating your license.
Decide How You Want to Operate
There is an important difference between a real estate sales agent and a broker.
The Bureau of Labor Statistics explains that brokers are licensed to manage their own businesses, while sales agents must work with a broker. States also typically require agents to gain experience before becoming eligible for a broker’s license.
If you are starting as an agent, compare brokerages on total cost and protection. Look past the commission split to every fee you will pay, such as desk, technology, and transaction fees.
Next, find out whether the brokerage’s errors and omissions policy covers your work. Ask what the deductible is and who pays it if a client files a claim. It is also worth asking what happens to your listings and client contacts if you leave.
If you plan to open your own brokerage later, research the extra licensing and regulatory requirements in your state.
You will also need to consider your business structure. The Small Business Administration explains that the structure you choose can affect taxes, paperwork, fundraising, and personal liability. Common structures include sole proprietorships, partnerships, limited liability companies, and corporations4.
The Internal Revenue Service notes that most real estate professionals operate as sole proprietorships5. Sales agents also typically earn their commissions through the broker they work with, according to the Bureau of Labor Statistics. Check your state’s license law before you form a limited liability company or corporation to receive that income.
Understanding how to start a real estate business means looking beyond your real estate license. You are also building a business that needs the appropriate legal and financial structure.
Building Your Network and Finding Clients
Finding clients takes steady networking and marketing, and that marketing must follow federal rules on housing ads, sales calls, and referral fees.
Real estate businesses depend heavily on relationships. Your first clients may come from people who already know you, but sustainable growth requires a larger network and consistent marketing.
Networking is also a regular part of the profession. The Bureau of Labor Statistics notes that many brokers and agents spend significant time networking and attending community events to meet potential clients.
Create a Reliable Lead Generation Strategy
Start by letting your personal and professional network know about your services. Former coworkers, friends, family members, local business owners, lenders, attorneys, contractors, and other professionals may become clients or referral sources.
From there, create several ways for new prospects to discover your business. Your strategy could include:
- A professional website
- Local search optimization
- Social media
- Email marketing
- Open houses
- Community events
- Referral programs
- Networking groups
- Partnerships with complementary businesses
Consistency matters more than trying every marketing channel at once. Choose a few strategies that fit your target clients and track which ones generate qualified leads.
The Small Business Administration recommends researching your target market and competitors when developing a business plan. This research can help you understand your potential customers and determine how your business can stand apart in the market.
What Marketing Rules Apply to New Real Estate Agents?
Real estate marketing comes with its own legal rules. Three federal rules matter from your first ad or call:
- Fair housing ads. Federal fair housing rules ban ads and statements that show a preference for or against certain groups of people. Protected traits include race, color, religion, sex, disability, national origin, and familial status, which covers families with children. The rule applies to what you write and what you say, including flyers, signs, and brochures6. Keep your ads focused on the home and its features.
- Sales calls. The National Do Not Call Registry lists the numbers of people who do not want sales calls. The Federal Trade Commission, the Federal Communications Commission, and state officials enforce it. It covers calls within your state as well as calls across state lines. If you must use the registry, check your call list against it at least every 31 days7. This matters if you plan to call homeowners about listing their homes.
- Referral fees. A federal law bans giving or accepting fees, gifts, or anything of value in exchange for closing business referrals. That law, Section 8 of the Real Estate Settlement Procedures Act, covers referrals to lenders and title companies. It applies when a sale involves a federally related mortgage loan, and the Consumer Financial Protection Bureau’s Regulation X spells out the rule8. Keep your partnerships free of any payment for referrals.
Ask your broker how these rules apply under the brokerage’s own policies. Following them from day one helps protect your license and your reputation.
Build Trust With Every Interaction
Real estate transactions can involve significant financial decisions and sensitive client information. Clear communication can help establish credibility from the first conversation.
The Bureau of Labor Statistics says brokers and agents need strong people skills and must be pleasant, respectful, and dependable.
Set expectations about your services, respond to questions promptly, document important communications, and maintain organized transaction records.
Referrals can become especially valuable as your business grows. A client who has a positive experience may return for a future transaction or recommend your services to someone else.
Managing Legal, Tax, and Financial Responsibilities
Commission income arrives unevenly, so your financial system needs to cover slow months, quarterly taxes, and fixed costs before a sale closes.
Once commissions start coming in, you need a system for managing business finances. The Bureau of Labor Statistics notes that self-employed agents must manage every part of their business, from billing to advertising.
Separate personal and business finances when appropriate for your structure. Maintain accurate records, track business expenses, and plan for taxes throughout the year.
You will also need a plan for gaps between paydays. The Bureau also notes that earnings may be irregular, especially for beginners, and that agents sometimes go weeks or months without a sale. A cash cushion for brokerage fees, license renewals, marketing, and insurance premiums can carry you through a slow stretch. Consider working with an accountant or tax professional who understands real estate businesses.
Understand How Real Estate Income Is Taxed
Federal tax treatment can differ from a traditional employee arrangement.
For federal taxes, the Internal Revenue Service treats licensed real estate agents as self-employed “statutory nonemployees” when two conditions are met. First, your pay must be based on sales or other output rather than hours worked. Second, you must work under a written contract that says you will not be treated as an employee for federal taxes9.
That can make tax planning especially important. You may need to pay income and self-employment taxes yourself, since no employer withholds them from your pay.
The Internal Revenue Service says individuals, including sole proprietors, generally must make estimated tax payments during the year. That applies if they expect to owe $1,000 or more when they file10. Setting aside part of each commission check can keep those payments from becoming a surprise.
Keep organized records of your income and business expenses. A tax professional can help you understand which federal, state, and local requirements apply to your specific business.
Protect Client Information and Professional Records
Real estate professionals can handle contracts, contact information, financial documents, and other sensitive information. Protecting that data should be part of your day-to-day business operations.
The Federal Trade Commission recommends several cybersecurity practices for small businesses11. They include regularly updating software, backing up important files, encrypting sensitive data, limiting access to sensitive information, and using multifactor authentication.
Fraud is also a real risk in real estate deals. The Federal Bureau of Investigation’s Internet Crime Complaint Center received 12,368 real estate fraud complaints in 2025. Those complaints reported more than $275 million in losses.
The center tracks scams aimed at closing wire transfers in a separate category, called business email compromise. In one 2025 case, buyers closing on a home got an email that pretended to be from their attorneys. They wired more than $449,000 to a fraudulent account. The funds were frozen after the fraud was reported to the Internet Crime Compliant Center.
Tell clients early, in writing, to confirm any wire instructions by phone using a number they already know. Ask them to treat any emailed change to those instructions as a warning sign.
Good security practices can help protect your clients while reducing the risk of costly disruptions to your business.
How Gild Insurance Helps Real Estate Professionals Protect Their Business
Learning how to start a real estate business also means preparing for situations that could create an unexpected financial loss.
A client could allege that you made a professional error during a transaction. Someone could be injured at an open house or showing. A cyberattack could compromise sensitive information. Even careful real estate professionals can face risks while serving clients.
Build Coverage Around Your Real Estate Business
Real Estate Agent Insurance can help you find coverage built around the risks of working with buyers, sellers, owners, and other clients.
One important option is Professional Liability Insurance, sometimes called errors and omissions insurance. Depending on the policy, this coverage can help respond to certain claims involving alleged professional mistakes, negligence, or failure to provide promised services. The Small Business Administration lists professional liability insurance among the common coverages for businesses that provide services to customers.
Real estate businesses should also consider their digital risks, from hacked email accounts to stolen client files.
Cyber Insurance can provide another layer of financial protection. Depending on the policy, it may help a business respond to covered data breaches, cyberattacks, and related recovery costs.
Additional policies may be appropriate based on your business model, employees, property, vehicles, and contract requirements.
Gild Insurance Agency makes it easier to compare business insurance options online and find coverage that fits the way you work. You can put protection in place as you build, before a brokerage, contract, or client asks for proof of insurance.
Ready to protect your real estate business? Get a quote online and find coverage built for the risks that come with serving clients and growing your business.
Frequently Asked Questions About How to Start a Real Estate Business
Do I need a real estate license to start a real estate business?
It depends on the work you plan to do. The Bureau of Labor Statistics says every state requires brokers and sales agents to be licensed. It also describes renting or managing property for a fee as part of a broker’s work. Investing in your own property is a different business, so check your state’s rules first.
How much does it cost to start a real estate business?
Startup costs vary based on your state, business model, brokerage, and marketing plan. Expenses may include prelicensing courses, exam and application fees, brokerage fees, and multiple listing service access. You may also pay for technology, marketing, business registration, and insurance. The Small Business Administration recommends calculating startup costs as part of the business-planning process.
Is a real estate business profitable?
It can be, but income is often uneven at first. The Bureau of Labor Statistics reports a May 2025 median wage of $52,830 for real estate sales agents, a figure that excludes self-employed agents. Earnings can also be irregular, especially early on. Profit depends on your market, your niche, and how well you manage costs.
Can a real estate agent form a limited liability company?
A limited liability company may be an option for some agents. However, state real estate and business laws can affect how an agent may structure a business. The Small Business Administration notes that business structure affects taxes, paperwork, and personal liability. Check your state’s rules and talk with a legal or tax professional first.
Sources
- Bureau of Labor Statistics, United States Department of Labor, “Real Estate Brokers and Sales Agents,” Occupational Outlook Handbook. Updated August 27, 2026. https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-agents.htm ↩︎
- Small Business Administration, “Plan Your Business.” https://www.sba.gov/counseling/plan-your-business/ ↩︎
- Colorado Division of Real Estate, “Errors and Omissions Insurance Requirements.” https://dre.colorado.gov/sites/dre/files/documents/E%26O%20Insurance%20Instructions.pdf ↩︎
- Small Business Administration, “Launch Your Business: Choose a Business Structure.” https://www.sba.gov/counseling/launch-your-business/#business-structure ↩︎
- Internal Revenue Service, “Licensed Real Estate Agents: Real Estate Tax Tips.” https://www.irs.gov/businesses/small-businesses-self-employed/licensed-real-estate-agents-real-estate-tax-tips ↩︎
- Electronic Code of Federal Regulations, Title 24, Part 100, “Discriminatory Conduct Under the Fair Housing Act” (see Section 100.75). https://www.ecfr.gov/current/title-24/subtitle-B/chapter-I/part-100 ↩︎
- Federal Trade Commission, “Questions and Answers for Telemarketers and Sellers About the Do Not Call Provisions of the Telemarketing Sales Rule.” https://www.ftc.gov/business-guidance/resources/qa-telemarketers-sellers-about-dnc-provisions-tsr-0 ↩︎
- Consumer Financial Protection Bureau, “Prohibition Against Kickbacks and Unearned Fees,” Regulation X, Title 12, Code of Federal Regulations, Section 1024.14. https://www.consumerfinance.gov/rules-policy/regulations/1024/14/ ↩︎
- Internal Revenue Service, “Estimated Taxes.” https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
↩︎ - Federal Trade Commission, “Cybersecurity for Small Business.” https://www.ftc.gov/business-guidance/small-businesses/cybersecurity ↩︎
- Federal Bureau of Investigation, Internet Crime Complaint Center, Internet Crime Complaint Center 2025 Annual Report. https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf ↩︎ ↩︎
