Planning to start a new career or a side hustle to earn extra money? You might be thinking about real estate. After all, some 17,000 people in the U.S. alone Google "how to become a real estate agent" each month. And those who take the leap join the nation's estimated 2 million active real estate licensees.
Compared to other careers with similar earnings potential, it's relatively easy to become a real estate agent or broker. There are lots of perks, too—like being your own boss, meeting new people, and helping people through one of life's biggest milestones. Still, building a successful real estate career is more work than many people imagine. Here's a closer look at the job to help you decide if a career as a real estate agent or broker is right for you.
- Working as a real estate 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, handling complex paperwork, providing customer service, and much, much more.
- Most real estate agents are paid on a commission-only basis, so there is the potential of working without a paycheck.
Job Outlook for Real Estate Agents and Brokers
Real estate agents and brokers help clients buy, sell, and rent properties. According to the Bureau of Labor Statistics (BLS), the number of real estate agent and broker jobs is projected to increase by 2% between 2019 and 2029, which is slower than the 4% average for all occupations.
Still, the BLS notes that "Demand for these workers will continue, because people turn to real estate brokers and sales agents when looking for a home, such as to buy a larger home or to relocate for a job."
How to Become a Real Estate Agent
There's no national real estate license, so you'll have to meet your state's unique licensing requirements. Visit your state's real estate regulatory office website for information, or check out the regulatory agency directory from the Association of Real Estate License Law Officials (ARELLO).
These are the general steps to becoming a real estate agent:
- Take a pre-licensing course
- Take (and pass) the licensing exam
- Activate your real estate license
- Join a real estate brokerage
Real estate agents always work for an under the umbrella of a licensed real estate broker. Eventually, you may want to become a broker, in which case you'll need to meet additional educational and experience requirements. Once you have your broker license, you can work independently and hire sales agents to work for you.
In most cases, you can expect to spend about four to six months getting your real estate agent license. And you'll need some cash, too. Between the licensing course, exam, and start-up expenses (think: MLS fees, business cards, sale signs, open house signs, websites, etc.), you might want to budget anywhere from $1,000 to $3,000 to get started.
When deciding if a career in real estate is right for you, be sure to consider if you have the time and cash to get your license and cover your start-up costs.
Being a Real Estate Agent
Of course, getting a license is the easy part. Becoming successful and making a sustainable income as a real estate agent or broker is hard work and, in most cases, it requires a substantial commitment of time, effort, and even money.
For starters, being a sales agent or broker requires managing a heavy load of administrative tasks. 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.
Consider whether you're detail-oriented and good at paperwork. Do you have the organizational skills and drive to get these administrative duties done on a regular basis? Are you able to juggle multiple tasks on a deadline?
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, which focuses on generating leads through people you already know, including your:
- Business associates
- Other social contacts
That means your day might regularly include meeting and speaking with lots of people, handing out business cards, sharing contact details, and filing away contact information to build out your SOI. After you make first contact, 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.
Because most people buy, sell, or rent property at some point in their lives, everyone you meet may be a client someday. Are you comfortable selling yourself? Are you willing to drum up business with family, friends, neighbors, and other social contacts?
Working With Real Estate Clients
You'll spend part of each day working directly with clients, whether they're buyers, sellers, or renters. And keep in mind that it won’t always be during business hours. That means you may have to sacrifice some of your personal time—time you spend with family and friends. If something pops up at the last minute, it may mean canceling your existing plans.
As a seller’s agent, you'll spend time preparing listing presentations, taking digital photographs of properties, staging homes so they show well, marketing properties, and hosting open houses.
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 show the property to interested buyers and accompany your clients to inspections, meetings with loan officers, closings, and other activities where your presence is either required or requested.
Are you comfortable working with the public? Can you maintain enthusiasm and professionalism, even when you have a tricky or demanding client?
Real Estate Agent Earnings
Most real estate agents and brokers don't earn a salary. Instead, they make money through commissions, which are usually a percentage of the selling price of the property, or, less frequently, a flat fee.
In general, commissions are paid only 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. Like other commission-based jobs, it can be feast or famine.
The average annual pay for a real estate agent. For real estate brokers, the figure is $57,274.
Of course, when you do close a sale, you generally don’t keep the entire commission. That's because commissions are usually shared with the other agents and brokers. 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 the listing agent works for
- Buyer's agent: The agent who represents the buyer
- Buyer's agent's broker: The broker the buyer's agent works for
Here's an example. Say a sales agent takes a listing on a $200,000 house with a 6% commission. The house sells for the asking price, so the listing agent's broker and buyer's agent broker each get $6,000—half of the $12,000 commission.
Next, the brokers 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 broker—$2,400
Do you have the financial reserves to go weeks or months without a paycheck? Are you OK with an uncertain income? While many real estate agents and brokers work part-time, the most successful ones are available whenever their clients need them—whether that's during business hours, evenings, or weekends. Are you OK giving up your nights and weekends? Are you in a position to dedicate that much time to your career?
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, you can earn a very comfortable living.
A career as a real estate agent or broker can be both challenging and financially rewarding. But keep in mind that there are many different unique opportunities for anyone who wants to work in the industry. You could be an agent or appraiser, or a professional or investor. You might decide to work strictly with residential properties or perhaps you're more interested in commercial buildings. Whatever you choose, be sure you meet the job requirements and are prepared for hard work.