A career in real estate can be both challenging and financially rewarding. But if real estate agent is the first thing that comes to mind when you think of professionals in the industry, think again. There are many different unique opportunities for anyone who wants to work in this sector. You may be an agent or appraiser, or a professional or investor. You may decide to work strictly with residential properties or perhaps you're more interested in commercial buildings. Whatever you choose, you have to make sure that you meet the requirements of the job and are prepared for hard work. This article looks at the ins and outs of becoming a real estate broker. Read on to see whether becoming this is the right career you.
- Working as a real estate sales agent or broker can be fulfilling and financially rewarding, but it’s not easy.
- A career in real estate requires drumming up business, promoting yourself, tracking leads, providing customer service, and much, much more.
- Most realtors are paid on a commission-only basis, so there is the potential of working without a paycheck.
Brokers and Agents: An Overview
Real estate brokers and sales agents help clients buy, sell, and rent properties. According to the Bureau of Labor Statistics (BLS), the employment of real estate brokers and sales agents is projected to increase by 7% between 2018 and 2028, faster than the average for all occupations. By 2028, there are estimated to be about 394,800 sales agents and 103,000 brokers working in the industry.
Many people think being a successful broker or sales agent is easy. Part of this misconception is because it’s a relatively easy field to enter. Although you need a license to work as either a broker or sales agent—and licensing requirements vary by state—it’s very possible to take the required classes, sit for the exam, and start working in under two months.
How to Get Started
Getting the license is the easy part. Becoming successful and making a sustainable income as a real estate broker or sales agent is hard work and, in most cases, requires a substantial commitment of time, effort, and even money.
For one thing, although many of the job functions are similar, there are two different levels of a real estate professional. Becoming a sales agent is the first step. This requires getting passing a state exam and getting licensed. Sales agents must work for and under the umbrella of a licensed real estate broker. The next step is becoming a broker. These professionals have to pass a second exam. After that, they can work independently and employ sales agents. Note that you'll also hear the term realtor, which can be used by a real estate agent or broker who belongs to the National Association of Realtors—the largest trade association in the U.S.—and subscribes to its strict Code of Ethics.
The median income for a real estate broker in the U.S., according to Payscale.com
Being a sales agent or broker requires handling a heavy load of administrative detail. Legal documents must be accurate and events must be coordinated for multiple listings. On any given day, you might have to:
- Complete, submit, and file real estate documents, agreements, and lease records
- Organize appointments, showings, open houses, and meetings
- Create and distribute flyers, newsletters, and other promotional materials
- Develop and maintain paper and electronic filing systems for records, correspondence, and other material
- Create monthly, quarterly, and annual budgets
- Develop marketing plans for listings
- Create and build on client databases
- Research active, pending, and sold listings and draft comparative market analysis (CMA) reports
- Respond to texts, emails, and phone calls
- Update websites and social media profiles
An established sales agent or broker might have the budget to hire an assistant to handle some or all of these administrative tasks. When you're just getting started in the industry, you’ll probably have to take care of them yourself.
But remember to ask yourself whether you're detail-oriented and good at paperwork. Do you have the organizational ability and drive to get these administrative duties done on a regular basis?
Finding clients is central to your success as a sales agent or broker: After all, without buyers and sellers, there would be no transactions and, therefore, no commissions. A common way to build contacts and generate leads is through a real estate sphere of influence (SOI) strategy that focuses on generating leads through people you already know including family, friends, neighbors, classmates, business associates, and other social contacts.
Because most people buy, sell, or rent property at some point in their lives, everyone you meet may be a client someday. That means your day might regularly include meeting and speaking with lots of people, handing out business cards, and filing away contact information to build out your SOI. After the first contact is made, you’ll need to follow up with phone calls, emails, snail mail, or text messages so the people you meet remember your name for the future.
Working With Clients
You'll spend part of each day working directly with clients, whether they're buyers or sellers. And keep in mind, it won’t always be during business hours. This means you may have to sacrifice some of your personal time—time you spend with family and friends. And if something pops up at the last minute, it may mean canceling a social event.
As a seller’s agent, for example, you may spend time preparing a listing presentation, taking digital photographs of a client’s property, and staging the home so it shows well. As a buyer’s agent, you may spend time combing through the Multiple Listing Service (MLS) to find suitable listings and sending them to potential buyers. You'll also be showing the property to interested buyers. You may also accompany clients to inspections, meetings with loan officers, closings, and other activities where your presence is either required or requested.
Becoming a broker may mean living without a regular paycheck and sharing your commission with others.
Uneven Income Stream
Most sales agents and brokers make money through commissions, usually as a percentage of the selling price of the property, or, less frequently, as a flat fee. In general, commissions are paid only if and when you settle a transaction. Ultimately, this means that you could work hard for days, weeks, or even months without taking home any money at all.
Of course, when you do close a sale, you don’t always get to keep the entire commission since it is often shared among several people involved in the transaction. In a typical real estate transaction, for example, the commission might be split four ways:
- Listing agent: The agent who took the listing from a seller
- Listing broker: The broker for whom the listing agent works
- Buyer's agent: The agent who represents the buyer
- Buyer's agent's broker: The broker for whom the buyer's agent works
Let's assume a sales agent takes a listing on a $200,000 house at a 6% commission rate. The house sells for the asking price, and the listing agent's broker and buyer's agent broker each get half of the $12,000 commission, or $6,000.
The brokers then split the commissions with their sales agents—say 60% for the sales agent and 40% to the broker—so each sales agent receives $3,600 ($6,000 X 0.6), and each broker keeps $2,400 ($6,000 X 0.4). The final commission breakdown would be:
- Listing agent – $3,600
- Listing broker – $2,400
- Buyer's agent – $3,600
- Buyer's agent's broker – $2,400
The Bottom Line
If you are comfortable with these realities and you enjoy hard work, are a self-starter, and like the idea of making your own schedule, a career in real estate might be right for you. If you sell enough properties, especially high-end ones, you can make a significant income.