Real estate “reality” shows and a hot market make real estate an attractive option for people looking for a new career. Real estate agents do report a high degree of job satisfaction due to unlimited earning potential and a flexible work schedule. But success is a process, and in this case, it’s not always as easy as it looks.
What Is a Real Estate Agent?
A real estate agent helps clients buy and sell property. Although most agents are self-employed, they work under the supervision of a broker, representing the broker in their transactions with buyers and sellers. The specific duties agents have depend on their role in a given transaction:
- Buyer’s agent: A buyer’s agent searches for and shows available properties to prospective buyers. When the buyer is ready to purchase, the agent helps them prepare an offer, and once the offer is accepted, the agent manages the buyer’s side of the transaction.
- Seller’s agent: A seller’s agent, or listing agent, consults with sellers on preparing their home for sale and determining the optimal listing price. Once the property is listed, the seller’s agent markets it to other agents and to potential buyers and helps the sellers evaluate buyers’ offers. After the seller accepts an offer, their agent manages the seller’s side of the transaction.
How To Become a Real Estate Agent
Real estate is unique in that you don’t need a degree or real estate experience to be hired as an agent, and getting started requires a relatively low financial investment compared to other businesses. But you do need a real estate salesperson’s license. Most of the steps you’ll take to become an agent are based on your state’s licensing requirements.
1. Take pre-licensing classes.
To be eligible for the licensing exam, you’ll have to take and pass state-approved pre-licensing classes covering general real estate practices and principles and your state’s real estate laws. Education requirements vary by state. Maryland, for example, requires 60 hours of instruction, whereas New York and Pennsylvania both require 75 hours.
You can take the classes through any course provider approved in your state. Community colleges are one source. Privately owned schools and schools operated or sponsored by local real estate boards offer classes as well. And some large real estate brokerages have their own schools where you can take classes even if you’re not joining that brokerage. If your state allows it, you can do your coursework online.
Good To Know
Pre-licensing course tuition varies widely from one school to another. A brokerage-owned school might charge less than $200, including required textbooks, whereas a national online school can charge $300-$400 for tuition alone.
2. Sit for the licensing exam.
The exam consists of two portions: a national portion based on your real estate practice and principles course and a state portion based on the state law course. Although many candidates prepare on their own, using their textbooks and course notes, others enroll in a review course or purchase exam study guides and practice tests.
Exams are administered by state-approved providers such as PSI. You must pass both the state and national portions of the exam to qualify for licensure. Candidates who don’t pass on the first try can register again to retake one or both portions at a later date.
You should receive your results on testing day, along with instructions for applying for your salesperson’s license. The testing center also reports exam results to your state’s real estate licensing authority. Candidates who pass may receive a certificate of licensure, but you’ll have to affiliate with a broker before your license can be activated.
3. Decide whether to join the National Association of Realtors.
“Realtor” is a trademark that refers to members of the National Association of Realtors, which is a professional organization. Agents become NAR and state association members automatically when they join a local Realtor association. Whether or not to join NAR is an individual business decision, but it’s important to decide before you start interviewing with brokers. You can only join if your broker already is an association member, and if your broker is a member, you must be one as well.
4. Choose a broker.
You must affiliate with a broker before you apply for your license — or have your license activated, depending on the state.
In addition to asking brokers about their Realtor association membership, you’ll want to discuss training, fees, office policies and commission splits.
Because you’ll work on your broker’s behalf, your sales are actually your broker’s sales, and the broker will compensate you for each one you close according to the commission split. Whereas a typical split for new agents might be 50-50, agents with relevant experience, such as a successful sales record in another industry, might negotiate a split earning them 70% or more of each broker commission.
Keep in Mind
Brokerage fees also deserve careful consideration because they can have a significant impact on your earnings. Weigh the costs and benefits for each broker you interview with. A brokerage that charges agent fees but provides useful business tools, marketing support and free career coaching might be a better value for a new agent than a brokerage that charges no fees but does little to help you build your business.
Once you’ve entered into a contract to affiliate with a broker, you can apply for your license or license activation.
5. Apply for your license.
You’ll apply to your state’s licensing authority for your real estate license. As part of the application process, you will likely undergo a background check and will answer questions about any criminal history and prior professional licenses you’ve held. In addition, you’ll submit a licensing fee with your application.
How long your license takes to process depends on a number of factors, but it could be several weeks. You can start practicing as soon as the broker receives your license.
Is Being a Real Estate Agent Right for You?
Real estate can be stressful, and the hours are often long and somewhat unpredictable — you’ll eventually be juggling several deals at once, each worth hundreds of thousands of dollars to your clients. But for detail-oriented individuals who like working with the public and want the challenge of building a business from the ground up, it’s also a rewarding and potentially lucrative career choice.