What You Need to Consider Before Starting a Real Estate Business in California



Starting a real estate business is one of the most financially rewarding jobs worldwide, and choosing to operate one in California makes it even more noteworthy. The value of properties in California keeps on increasing, making it home to the third-highest home values in the whole country. Compared to brokers operating in other regions, real estate brokers in California have mean annual earnings of $80,820, which can go up to $102,380 depending on your city. This makes starting a real estate business very attractive for anyone pondering the idea, but it also makes you wonder if there is anything else you need to consider. 


Before taking a huge step such as starting a business, here’s what you need to consider:

The state of the market

No matter how attractive the job and its compensation are, the real indicator of whether or not it’s worth it comes from studying the market. The job might pay extremely well, but if the market is fully saturated, then you’ll find entering the market almost impossible to achieve.  The good news is that the brokerage market in California is in high demand for more businesses. Despite the fact that it’s one of the top markets on the country-level, California has the highest employment rates for real estate brokers. Since California only employs 0.33 brokers per thousand jobs, this places an even higher demand for new real estate businesses. 

What experience should you have?

To start your own business, you’ll have to gain experience first. This is true for any kind of business, but brokerage firms in California have their own requirements. You take the ladder approach into the business; after gaining sufficient experience working as a real estate agent, you’ll be able to pursue your license easily. Individuals with no previous experience in real estate can still start their own businesses, but they’ll have to earn a degree in real estate or provide equivalent proof of experience. The next step is to complete the pre-license education requirements, which they can achieve after finishing 8 college-level broker courses. 

How to get a license?

You won’t be able to start a business unless you get your broker license, which you’ll get from the California Department of Real Estate. To qualify for a license, you need to fulfill the following requirements:


  • You’re 18 years of age or older. 

  • You’re a resident of California. 

  • You have an honest character with no criminal records. 

  • You’ve completed pre-license education. 

  • You’ve passed your real estate broker exam in the duration of two years after submitting your application. 

The legal work

There is some legal work that comes with starting a real estate business. First of all, you’ll have to make a decision on whether you’ll have sole proprietorship of the business or you’ll register it as a corporation, each of which comes with its own pros and cons. Next, in the case of hiring real estate agents working for you, you’ll also have to get an error and omission insurance. After getting your license, choosing your legal structure, and deciding on a name for your business, you’ll have to register it with the California Department of Real Estate. 

The kinds of services you’ll offer

There’re a lot of things that go into operating a successful real estate business, and one of the main factors depends on what you provide to your customers and clients. In such a competitive market, you’ll have to find an edge that sets you apart from your competition. This is exactly how the business owners in SoCal Home Buyers at https://socalhomebuyers.com/los-angeles/ decided to operate their business. They like to describe their operation as a private investment rather than being realtors. A successful real estate business helps their clients in selling their homes at the best prices, quickly, and without charging any commission fees. 

Your operational plan

Finally, you’ll have to create a solid plan for your business to find success. Your plan will start with a rough visualization of how you’ll operate, after which you’ll keep refining it to achieve deliverable tasks. In your plan, you’ll include everything you’ll need to focus on, starting from your finances, operations, and business structure, and all the way into your services, marketing, and expansion goals. 



Starting a real estate business in California is one of the most tempting endeavors. The job is certainly very rewarding and the requirements are pretty straightforward. However, before jumping right into it, there are a few factors to consider. What’s the state of the market? What are the requirements for education, experience, and eligibility? How do you get a license and what are the legal requirements? You’ll also need to find a competitive edge and create a solid operational plan to ensure your success.