Are you looking to make a change in your career? Or start a side business to make extra income? Real estate might be a possibility. According to the New York Times, “How to become a realtor” was the most searched job term between Jan. 2021 and Jan. 2022. Those who make the leap will join the estimated 3 million real estate licensees in the country.
It’s easy to become a broker or agent in real estate, compared to other career options with similar earning potential. There are many perks to this career, including being your own boss, helping others through life’s most important milestones, and meeting new people.
Building a successful career in real estate is not as easy as many people think. Let’s take a look at what it takes to be a successful real estate broker or agent.
Real estate agents and brokers have a bright future.
Brokers and real estate agents help clients rent, buy, and sell properties. According to the Bureau of Labor Statistics (BLS), the projected growth in real estate agent and broker employment is slower than that for all occupations.
The BLS says that there will still be demand for real estate agents and brokers because people look to them when they are looking for new homes, moving, or buying property or a business. The real estate market is expected to see an increase in employment.
The pros and cons of selling real estate
Selling real estate may have its pros. You are able to set your own hours and work for yourself. Selling real estate is a great way to meet people and earn large real estate commissions.
It is hard work to make a living selling property. To keep track of legal documents and meetings, as well as all tasks related to multiple listings, you must be organized. Because the work is often commission-based, you may not receive a paycheck for a while. You don’t get anything if you don’t make any sales.
Real estate agent Job duties
The easiest part is getting your license. It takes hard work to become a successful broker or real estate agent and make a steady income. It requires a significant commitment of time, effort, and even money in most cases.
Administrative duties
Being a broker or sales agent requires you to manage a lot of administrative tasks. Multiple listings require accurate legal documents and coordination. You may be required to:
- Complete, submit and file all real estate documents, agreements and lease records
- Organize meetings, shows, open houses, appointments, and other events
- Flyers, newsletters, and other promotional materials can be created and distributed.
- Maintain and develop paper and electronic filing systems to store records, correspondence, or other materials.
- Make monthly, quarterly and annual budgets
- Plan marketing strategies for listing listings
- Build and maintain client databases
- Reports on draft comparative markets analysis (CMA), as well as active, pending, and sold listings can be accessed.
- Respond to emails, texts, and phone calls
- Keep your social media profiles and websites up-to-date
A broker or salesperson might have the resources to hire an assistant to help with administrative tasks. If you are just starting out in the industry, it is likely that you will have to handle these tasks yourself.
You should consider whether you are detail-oriented and skilled at handling paperwork. Are you able to manage these administrative tasks on a daily basis and have organizational skills? Do you have the ability to manage multiple tasks within a tight deadline?
Lead generation
Your success as a broker or sales agent is dependent on your ability to find clients. Without buyers and sellers, transactions would not be possible and commissions would not be paid. A real estate sphere-of-influence (SOI) strategy is a common way to make contacts and generate leads. It focuses on getting leads from people you already know.
- Family
- Friends
- Neighbors
- Classmates
- Associate business people
- Contacts on other social media
This means that you might meet many people every day, exchange contact details, and hand out business cards. You’ll need to keep in touch with people after you have made your first contact.
Everybody you meet could be a potential client, as most people will buy, rent, or sell property sometime in their lives. Are you comfortable selling yourself? Do you feel comfortable selling yourself to family, friends, and neighbors?
Working with real estate clients
Part of your day will be spent working directly with clients, buyers, sellers, or renters. It won’t always happen during business hours. This means that you might have to give up some personal time, which could affect your relationships with family or friends. You may have to cancel your plans if something unexpected happens.
The seller’s agent is responsible for preparing the listing presentation, taking digital photos of the properties, staging the homes to make them stand out, marketing the properties, and hosting an open house.
The buyer’s agent represents the buyer of a home. You may spend some time searching through the Multiple Listing Service (MLS), looking for suitable listings, and then sending them to potential buyers. Your clients will also be shown the property and you’ll accompany them to closings, meetings with loan officers, inspections, and any other events for which you are required.
Do you feel comfortable working with the public Are you able to maintain enthusiasm and professionalism even with a difficult client?
How to become a real estate agent
You will need to comply with your state’s licensing requirements. There is no national real estate license. For more information, visit your state’s website regarding real estate licensing or the Association of Real Estate License Law Officials directory (ARELLO).
These are the steps you need to take in order to become a real estate agent.
- Prelicensing courses available
- Pass the licensing exam
- Activate your real estate license
- Join a real estate brokerage
A licensed broker is required to supervise real estate agents. You may eventually want to be a broker. In that case, you will need to complete additional education and experience requirements. Once you have your broker license you can start working independently or hiring sales agents.
You can expect to spend between two and five months in school to complete your education and get your license as a real estate agent. You’ll also need cash. Between the licensing course, application fee, fingerprint/background check, and exam, you might want to budget anywhere from $550 to $1400 to get started, depending on the state.
You need to consider startup costs such as multiple listing fees, business cards, and open house signs. These can quickly add up.
Consider whether you have the cash and time to obtain your license and pay for your startup costs before you decide if real estate is the right career path.
Real estate agent earnings
Many real estate brokers and agents don’t make salaries. They make their money by commissions. These are typically a percentage of the sale price or, less often, a flat fee.
Commissions are generally paid when you settle a transaction. This means you can work for many days, weeks, or even months and not earn any money. It can be feast and famine, just like other commission-based jobs.
You don’t usually keep all of the commission if you close a sale. Because commissions are often shared with other brokers and agents, this is because they can be split. For example, a typical real estate transaction might see the commission split in four ways.
- Listing agent: An agent who obtained the listing from a seller
- Listing broker: This is the broker that represents the listing agent
- Agent for the buyer: This is the agent representing the buyer
- Broker for the buyer’s agent: This is who the broker works for
Here’s an example. Let’s say a sales representative takes a listing for a $200,000 house and receives a 6% commission. The house is sold for the asking price. So the listing agent’s brokerage and the buyer’s agent broker get $6,000 each, half of the $12,000 commission.
The brokers then split the commissions between their sales agents. For example, 40% for the broker and 60% for the sales agent. Each sales agent gets $3,600 (6,000 X 0.6) and each broker receives $2,400 (6,000 X 0.0.4). This would give you the final breakdown of commissions:
- Agent listing–$3,600
- Listing broker – $2,400
- Buyer’s agent–$3,600
- Broker for buyers agent – $2,400
Are you able to live for weeks or even months without receiving a paycheck? Do you mind an uncertain income? Although many brokers and real estate agents work part-time, the most successful ones can be reached whenever their clients require them.
Whether that be during business hours, weekends, or evenings. Do you feel comfortable giving up your weekends and nights? Are you able to devote that much time to your job?
What is the average time it takes to become a real estate agent?
Each state has its own requirements for obtaining a real estate license. However, prelicensing education is the most difficult requirement. Each state has its own requirements for the required number of education hours.
California, for example, requires 150 hours of education to obtain a residential license. Online or home-study courses can take less depending on how much time you have available.
What does it cost to become a real estate agent?
You will need to pay a number of fees to become a licensed real estate agent. These include prelicensing education, real estate exam fees, and application and fingerprinting fee. You might need to budget for marketing and business expenses in order to get started.
Is it necessary to renew my real estate license?
Each state has its own requirements regarding maintaining your credentials current. For example, New Hampshire real estate professionals must renew their licenses every 2 years starting from the date they were issued.
California real estate licenses need to be renewed every 4 years starting on the date printed on the license.
Can I use my license to practice in other states?
All across the country, real estate boards and commissions are adopting policies that allow real estate agents in one state to be licensed in another.
You can check online to find out if your state has entered into reciprocity agreements. For example, the Connecticut Real Estate Commission has signed reciprocal agreements with 13 states including Alabama, Colorado, and Florida.
The bottom line: Should I become a real estate agent?
Becoming a realtor may be the right career for you if you can accept these realities, enjoy hard work, are self-starters, and like the freedom of setting your own hours. You can make a good living if you are able to sell enough properties.
It can be challenging but rewarding to work as a broker or agent in real estate. There are many unique opportunities available to anyone who is interested in working in this industry. An agent, appraiser, professional, or investor could all be possible. You may choose to only work with residential properties, or you might be more interested in commercial buildings.
No matter what you decide, make sure you are able to meet the job requirements.