How to Become a Real Estate Agent
Finding out how to become a real estate agent is a great idea if you are a self-starter who wants to embark on a career path that puts you in charge of your own success. Along with wondering how to get into real estate, you may also be asking questions like, "Is real estate a good career?" To help you decide whether it is a good option for you, we will address how you can get your career started and cover other areas like salary, career outlook, and tips for success. Let's start out by examining the real estate market itself.
According to a 2015 survey, 88 percent of U.S. households believe that becoming a homeowner is a good financial decision. And of the renters that were surveyed, 83 percent of them aspire to own a home in the future.* Owning a home is said to be part of the American dream, and many citizens are pursuing that dream.
As of January 2016, residential home sales were up by 11 percent from the previous year. And the rate of first-time homebuyers is also slightly increasing; they made up 32 percent of home purchasers in 2015. Additionally, the last quarter of 2015 saw a rise in commercial real estate sales. In fact, commercial sales were up more than seven percent, and sales prices were up four percent from 2014.*
Despite what many see as trying economic times, the real estate market is remaining strong and steady. And that's good news for people like you who are aspiring real estate professionals. So let's dig in deeper and see what it really means to be a real estate agent and what you need to do to get going.
What Does a Real Estate Agent Do?
Real estate agents assist people with buying and selling residential and commercial properties. They are on top of current market conditions and forecasted trends, and tend to be experts within the geographic areas where they work. When selling properties, real estate agents market their listings through every avenue possible in order to reach the most interested buyers. And when helping clients buy property, real estate agents research current listings and search for the best properties that could meet their clients' needs.
Negotiation is an important skill in real estate, whether you are trying to achieve a higher price for a seller or a lower price for a buyer. You also must be comfortable working with technology and databases. You could be taking care of a lot of business through a smartphone or tablet, and you will spend a lot of time taking pictures and videos that you will upload to websites. You will also need to complete legal paperwork and documentation pertaining to your listings and sales.
Some real estate agents choose to specialize in property management. This involves managing properties like condominium units, apartment buildings, or commercial office spaces that the owners do not want to manage themselves. When working in property management, you could be responsible for everything from grounds maintenance to strata compliance to dispute resolution.
What Are the Differences Between Real Estate Agents, Brokers, and REALTORS®?
There are legal differences between the terms real estate agent, real estate broker, and REALTOR®. It essentially comes down to the services that they offer and the types of licenses that they hold.
A real estate agent, as described above, is a licensed professional who assists homebuyers and sellers in purchasing and selling their properties. A licensed real estate agent must work underneath a broker. Real estate brokers have to meet more extensive education requirements than agents do, and they have achieved broker licensing. Real estate brokers can work on their own, and they can have one or more real estate agents working underneath them. That said, some states refer to sales agents as brokers, and others only issue single licenses in which all agents are brokers.
REALTOR® is a registered trademark, and when someone holds that title, it means that he or she is a licensed real estate agent who is also a member of the National Association of REALTORS® (NAR). Once you have achieved real estate agent licensing, you must agree to specific standards and a code of ethics in order to join the NAR and become a REALTOR®.
How Long Is Real Estate School and What Will I Learn?
The education requirements for becoming a real estate agent vary by state, so it really depends on the state in which you want to work. The requirements can range from 20 hours to 200 hours. However, all states require pre-licensing courses, so you will have to participate in some level of education whether you are only taking a few courses or are opting for a full bachelor's degree program.
A basic education will likely familiarize you with real estate governance and licensing, as well as real estate and contract law. You may learn about industry best practices and the factors that influence market conditions. You could also develop an understanding of financial markets and financing as it pertains to real estate.
Specific topics you may learn about include the following:
- Real estate principles
- Real estate agent job functions
- Real estate law
- Property management
- Property appraisal
- Commercial real estate
- Real estate business management
Most real estate courses are available in an online format so that you can continue working in your current career and manage other life commitments while working toward earning your license.
Can You Tell Me How to Get a Real Estate License?
When figuring out how to get your real estate license, it is important to understand that every state has different licensing requirements. Your first step is to research the requirements within the state in which you intend to work.
In general, you will need to complete state-approved training followed by a state real estate exam, which you must pass with a minimum grade (typically around 70 percent). You may also need to obtain sponsorship from another currently licensed agent or broker. Once you have met your education, exam, and sponsorship requirements, you will submit an application and fee to your appropriate state department.
Note that your application could require you to include fingerprints in order for a background check to be conducted. Certain misdemeanors or felonies, such as a drug or tax evasion conviction, may prevent you from obtaining a license. Such charges are reviewed on a case-by-case basis once your application has been submitted. Once you have completed all necessary steps and your application is approved, you will receive your license.
Below are the licensing requirements for a few states to give you an idea of what you might expect:
- California—Complete three predetermined college-level courses (total of 135 hours), submit an application with your fingerprints for a background check, and pay a $245 licensing fee. Renewal is required every four years, and 45 hours of state-approved continuing education must be completed within that time.
- Colorado—Note that there is no distinction between agents and brokers in Colorado; it is a single-license state. Licensing requirements include 168 hours of approved training, submission of an application with your fingerprints for a background check, and payment of a $630 fee. You must also obtain an errors and omissions insurance policy prior to applying. Renewal is required every three years, and you must complete 24 hours of approved continuing education before your renewal date.
- Nevada—Complete an application form and include a fingerprint card along with a $125 fee. You also need to include documentation showing that you have completed 90 hours of approved pre-licensing education within the past 12 months. Licenses are valid for two years, and 30 hours of continuing education are required in order to renew.
- New York—Finish 75 hours of state-approved education and obtain sponsorship from a licensed real estate broker in order to submit your licensing application with a $50 fee. License renewal is mandatory every two years, and 22.5 hours of approved continuing education must be completed prior to the renewal deadline.
- Oregon—Note that in Oregon, a real estate agent is referred to as a broker, and a broker is referred to as a principal broker. Becoming a licensed broker involves completing 150 hours of pre-license education, submitting an application with fingerprints for a background check, and paying a $230 fee. License renewal is required every two years, and it requires completion of 30 hours of continuing education.
Note that the licensing requirements mentioned above and within each state may vary if you intend on becoming a licensed real estate broker or property manager.
How Much Do Real Estate Agents Make?
Along with wondering about the average salary of a real estate agent, many people ask, "How do real estate agents get paid?" Real estate agents typically work on a commission basis. When they successfully close a deal, whether assisting with buying or selling, they receive a commission from the sale, which is a predetermined percentage of the sale price.
According to 2015 data, real estate agents earned yearly pay of $58,410, on average. And the top ten percent of earners brought in $110,560 and higher. It is also worth noting that much higher average pay can be found in certain states. For example, New York, Hawaii, Massachusetts, Illinois, and Colorado, respectively, had the highest pay. The annual average pay in these states ranged from $76,590 to $100,090.**
Real estate brokers tend to earn higher wages than agents do, which is partially due to the extensive licensing requirements that they face. In 2015, real estate brokers earned average pay of $80,210, and the top ten percent of brokers earned $166,940 and higher. The best-paying jobs were found in the District of Columbia, New Hampshire, Nevada, Ohio, and Hawaii, respectively, where the average annual pay ranged from $118,630 to $148,730.**
Property, real estate, and community association managers' salaries fall in between the average pay of agents and brokers. In 2015, property managers earned $68,240, on average. And the top ten percent of earners brought in $123,790 and higher. The highest-paying jobs were found in New York, Maryland, Texas, Massachusetts, and Virginia, respectively. The average annual salaries across these states ranged from $86,540 to $107,920.**
What Are the Career Prospects for Real Estate Professionals?
As previously mentioned, the real estate market is relatively strong and growing. That in itself can be seen as promising for those considering a career in real estate. And by 2017, the economy is expected to improve, bringing with it an increase in consumer confidence. Additionally, interest rate increases are expected to be minimal, house listings are expected to grow, and median house prices are projected to increase as well.*
Although some people choose to buy and sell homes without the assistance of an agent, the large majority of buyers and sellers opt for a real estate agent or broker. In fact, in 2015, 87 percent of homebuyers used the services of real estate agents and brokers. And when potential buyers were searching for a home, 87 percent of them turned to real estate agents or brokers as information sources. On the selling side, 89 percent of sellers used real estate agents or brokers to help sell their homes.*
According to current projections, job growth is expected within the real estate professions over the 2014-to-2024 period. Here are the estimates:***
- Real estate agent job growth is projected at three percent, which represents the addition of approximately 9,400 positions.
- Real estate broker job availability is expected to increase by two percent, or approximately 1,500 positions.
- Property, real estate, and community association manager occupational growth is projected at eight percent. That's an addition of roughly 25,300 positions.
What Are the Continuing Education Requirements for Real Estate Professionals?
All states have continuing education requirements for real estate professionals who want to renew their licenses. The specifics vary between each state, including the types of courses that are approved and the number of training hours that are required. The courses you are required to take could cover topics related to agencies, contracts, ethics, laws, and legislation. You may also be able to choose from other personal and professional development courses. Continuing education courses are sometimes offered online, but some states require some or all of your training hours to be completed in a more traditional classroom-like setting.
Are There Any Tips for Succeeding in the Real Estate Industry?
Real estate is a competitive business, and it requires a lot of dedication and perseverance in order to succeed. Loving your job, developing your own personal style, paying attention to details, and providing exceptional customer service are the cornerstones for success in many careers. But are there other items you should consider that can help you achieve great things in the real estate market? Check out eight tips that could help you stand out.
- Be responsive. You need to make sure that all of your clients and potential clients feel like they are important. Being a real estate agent means being available at all hours, including weekends and evenings.
- Stay current on technology. From spreadsheets to databases to smartphones, successful real estate agents know how to use modern technology to their advantage.
- Know your sales market inside and out. Knowledge is power in the real estate market. It is in your best interest to keep up on the trends and forecasts for the neighborhoods where you are selling in order to provide the best services to your clients.
- Communicate everything. Many property buyers and sellers do not understand the complexities of real estate transactions. They are going to feel more confident in your abilities and trust that you are serving their best interests if you take the time to explain every little detail as needed.
- Go after leads in any way that you can. Successful real estate agents rely on leads. You need to make yourself known through advertising and promotions. And that should include a website and social media presence. You should also pursue client referrals as much as you can. This is critical. Many real estate agents report that the majority of their listings come from client referrals.
- Network and then network some more. If there is one profession where networking is critical, it is real estate. You need to attend a variety of events, join professional associations, and conduct as many other networking activities as you can in order to interact with potential clients, other real estate agents, brokers, and other professionals like mortgage brokers, appraisers, investors, and home inspectors. These are all people that can refer clients to you.
- Get involved in your community. Having a positive presence can help you build a good reputation. Consider getting involved with local charities, sponsoring local events, and attending as many local events as possible.
- Pay attention to your appearance. It sounds vain, but in this industry, some people may judge your competency based on your outward appearance. So it is advised that you maintain a professional look.
How Do I Pursue My Desire for a Brighter Career?
Now that you have discovered how to become a real estate agent, you may be ready to move toward achieving your professional goals. It's quite simple for you to take that first step right now. All you need to do is enter your zip code into the search tool below. You can quickly generate a list of real estate schools offering programs in your area. Take a look and see if there is one that can help you prepare for success in the real estate sector!
* National Association of REALTORS® (NAR), website last visited on December 6, 2016.
** Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Statistics, website last visited on April 29, 2016.
*** Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2016-17 Edition, website last visited on March 2, 2016.