In this article, we take a look at how you can launch a successful career and join one of the three million real estate agents already active across the US.
Why Become A Real Estate Agent?
As with most industries, there are many reasons people get into real estate. The primary appeal is the fact that there are always new properties and clients to work with. Once you have a real estate license, you can often become your own boss within just a few years and decide when you work, which clients you take on, and how much commission you charge for your services.
The money can be good, too. The average real estate agent salary is $77,383 per year; if you move onto brokering, you could earn more than $89,000 per year, with top agents taking home pay packets of more than $200,000.
Getting into the field is relatively easy. You will need some qualifications, but not many – certainly not a college degree. And by the end of the process, you will have a salary that would take years to attain in other industries. You don’t have to work full time, either: A part-time real estate agent can still earn decent money.
Steps To Becoming A Successful Real Estate Agent
The path to becoming a real estate agent depends on the state you live in. However, here’s the general sequence in which you will need to do things.
Research Your State’s Licensing Requirements
The US does not have a national real estate license. Instead, such licenses, if they exist, are administered at the state level. You’ll want to begin the process by researching your state’s regulatory office website. You can either search for this directly on Google, or look for the relevant state via a directory.
States have specific requirements for agents concerning:
- Criminal record
- Background checks and fingerprinting
- Pre-licensing requirements
- Educational requirements
In some states, you might need a high-school diploma to begin the process. If you do not have one of these, you may need to pass the GED first.
Some states allow you to earn your license in one state and use it in another. However, you will need to check the rules for your particular state to be on the safe side, particularly if you plan to rely on demand from a neighboring state for business.
Take a Prelicensing Course
Checking state requirements and doing research are generally free. However, once you begin the licensing process, you’ll need to pay some fees, as most states require you to complete an accredited prelicensing course. Real estate agent training prepares you for the job and reduces your likelihood of making a severe mistake that harms your clients.
The number of hours you need to rack up to become eligible for an exam depends on the state. In Texas, for example, students must complete more than 180 hours of coursework before becoming eligible for the test. In New York, the figure is only 75 hours, and in Florida, just 63.
How you complete these hours is largely up to you. For instance, you can take courses online, at community colleges, or a dedicated real estate school. It’s possible to become a real estate agent with no previous experience at all.
Don’t accept the first course you come across. Instead, think carefully about which environment would suit you best. Do you prefer learning by yourself in peace and quiet online? Or is it easier for you to absorb knowledge if you’re surrounded by other people? Remember, the type of interactions you have will impact how much information and knowledge you retain.
Real estate agent classes typically begin by teaching you the basic principles of facilitating property transactions. You’ll learn the meaning of terms such as “escrow” and “lien,” which don’t usually feature in everyday language. You’ll also get an education in the essential legal aspects of the business and your responsibilities as an agent. By the end of the course, you should be able to estimate the value of a property, understand all the steps involved in a transaction, and be in a position to offer clients guidance.
The cost of prelicensing courses is fairly reasonable. In most states, you’ll pay somewhere between $350 and $800, depending on the number of training hours required by the state. However, you may need to pay more if your state has particularly stringent prelicensing requirements.
After taking your prelicensing course, you have a fixed period to complete your exams. For example, in Florida, you’ll have two years. If you aren’t successful within that timeframe, you will need to retake the prelicensing course all over again.
Take Your Licensing Exam
To complete the exam for becoming a real estate agent, you’ll need to pay a fee, usually between $100 and $300.
Your course instructors will explain how to schedule the exam, but in general, you’ll first need to register with the appropriate board, schedule the exam date, and pay the fee for administration and invigilation. You can check your real estate agent eligibility requirements online or with your instructor to ensure you have completed enough course hours.
Most exams are completed online, in two parts:
- A state-specific section covering your state laws
- A national-level section covering general real estate principles
Exams are typically multiple-choice. The amount of time you have to complete the test varies by state, but you’ll typically get between 90 minutes and three hours to answer all the questions. Some states’ exams are more rigorous than others, posing anywhere between 60 and 100 questions. States break up each exam into smaller sections, and you’ll most likely have to attain a passing grade on each to qualify. If not, you may have to retake the exam.
States have varying rules for how many times you can retake the exams, and there’s usually a mandatory waiting period between retakes. The failure rate in some states is relatively high, too: For instance, in Florida, 50% of candidates fail to make the cut the first time around.
Activate Your Real Estate Agent License
To start engaging with real estate clients, you’ll need to send all the required documents, along with your application and fees, to the state’s licensing or regulatory board. Even if you pass your exams, you must not start work until the real estate commission officially releases your license. If you’re intent on joining a brokerage, you should tell them whether you’ve already received your license or are still waiting for official confirmation.
You’ll also need to sign up for a multiple listings service (MLS) membership. This is extremely important, because that will be your system for listing and disseminating properties among popular websites, such as Realtor.com and Zillow.
Activating your license through your state’s real estate commission carries a fee of somewhere between $200 and $400. They use this money to process your application and make your name searchable on their database so that clients can find you and check your credentials.
Become a Realtor
Real estate agents and realtors are not the same. A real estate agent is a professional with a license allowing them to facilitate the purchase and sale of properties in their area under the guidance of a broker. A realtor has the same qualifications, but they are also a member of the National Association of Realtors (NAR) and follow its code of ethics.
Joining the NAR provides real estate agents with a host of benefits. It increases your credibility, so you’re much more likely to get lucrative clients. Plus, you get access to vast real estate market statistics, a knowledge base, and host of business tools. For instance, members get access to Realtors Property Resource (RPR), a database with practically all the information you could ever want about permits, zoning, mortgage and lien data, foreclosures, and local schooling options.
The NAR is highly popular among real estate agents. The organization currently has more than 1.3 million members, and is growing all the time. Members operate in multiple roles: Appraisers, counselors, property managers, and salespeople. There are also ample educational opportunities and, occasionally, discount programs designed to help you further your career.
Join A Brokerage
The last step is to join a brokerage. There, you’ll work under the direction of a broker – a licensed professional with the legal authority to oversee real estate transactions.
Working for a brokerage typically costs you a monthly fee – anywhere from $25 to $500. However, in return, you will get legal protection, a monthly paycheck, and commission. In most cases, you won’t earn an hourly wage.
Arrangements between real estate agents and brokers differ considerably by brokerage. You may have to pay for:
- Marketing materials
- Real estate CRM subscriptions
- Business cards
- Desk fees
- Technical assistance
- License renewals
- Continuing education
- Use of lockboxes for keys
- MLS access
- Other costs of doing business
While the costs might seem high, the benefits are generally worth it. By being part of a brokerage, you can start earning a significant income from the get-go, instead of having to do further training and building up a client base. What’s more, you’ll receive a healthy commission for each sale you make – it’s not uncommon for agents to make thousands of dollars in a single transaction.
Real Estate Agent vs. Broker
Real estate agents and brokers are different. While both perform the same task types, a broker is a real estate agent who continues training and eventually obtains a state real estate broker license. Unlike regular agents, brokers can start their own brokerages, work independently, and hire other agents to work alongside them. However, both types of professionals spend most of their time matching buyers with sellers and ensuring everything goes through before the closing date. For instance, they can:
- Help buyers find properties matching their criteria
- Assist buyers with legal issues before the closing date
- Help both buyers and sellers in their negotiations
- Determine the value of client properties
- List properties online, including luxury properties, if they are a luxury real estate agent
- Help buyers make and communicate offers
Brokers can also take on different levels of responsibility. For instance, associate brokers typically work under the direction of another broker, while managing brokers oversee the entire transaction process, work for themselves, and ensure that agents perform well. A principal broker is a professional who ensures a brokerage complies with state and federal laws.
Becoming a broker can take a while. Most aspiring real estate professionals work in a brokerage for several years to fully understand the industry before taking the plunge and branching out by themselves.
Once you become a broker, you may be able to double or triple your pay. You’ll also have an opportunity to scale your business and begin earning incomes significantly above conventional pay brackets.
Becoming a real estate agent is a lucrative option for many people because it doesn’t require going through years of college and racking up large debts. Most people can learn how to be a real estate agent in a matter of months and spend less than $1,500 on training, examination, and licensing.
What’s more, even entry-level agents can earn a respectable salary. The average salary is over $89,000 a year, with top earners making hundreds of thousands of dollars annually.
Of course, there are downsides. For one, you won’t get paid an hourly or daily rate. Virtually all of your pay will come from the commission you would earn from each transaction. If you don’t make sales, you won’t earn any money. Second, you’ll need to pay a fee to work in a brokerage. The money goes to cover the expenses both you and your employer incur during your work.
If you’re not happy with the level of flexibility working under a conventional real estate broker offers, you can apply for a broker license. With these, you can set up your own brokerage, work for yourself, oversee the entire property transaction process independently, and hire agents to work for you. Becoming a broker in a specific field can also make you more desirable in certain sectors, such as commercial property, or property management.
In summary, learning how to be a real estate agent is relatively straightforward and an excellent option for anyone who doesn’t want to go through college, but needs to start earning as soon as possible.