Want to be a real estate agent? Working as a licensed real estate salesperson is an ideal job for many, with flexible hours, high earning potential and a relatively quick process to become an agent.
Before jumping into a new career, however, know that your success in real estate may also be tough to achieve. It’s beholden to the ebb and flow of the local economy, your ability to master an understanding of the market and your willingness to put yourself out there to connect with consumers and other professionals.
The National Association of Realtors, the largest trade association for the real estate industry, reports it has more than 1.2 million members, about 65 percent of which are licensed real estate agents. That makes at least 780,000 licensed agents in NAR, which only make up a portion of the total number of real estate agents throughout the country.
Becoming a licensed agent is relatively simple, although the requirements vary from state to state. You’ll want to look up the specific requirements for your state, which are often determined by the state’s real estate commission. But the requirements from state to state largely mirror each other, and the guidelines below represent the overlap that applies to most of the U.S.
Here’s what you need to do to begin a career and succeed as a real estate agent:
— Meet your state’s minimum age and education requirement.
— Take real estate education courses, meeting minimum number of instruction hours.
— Pass the state exam.
— Work under a licensed broker.
— Study your market.
— Have savings on hand in first year on the job.
— Keep learning.
— Adapt to changes in your market.
Meet the minimum age and education level. No real estate license in the U.S. requires a bachelor’s degree, but in many cases you need either a high school diploma or a GED. Even if high school equivalency isn’t required for the license, many colleges that offer real estate education courses do require equivalency to enroll. All 50 states require you to be either 18 or 19 years old, depending on the state, to become a licensed real estate agent.
Take real estate education courses. Most states require a minimum number of hours of instruction time, often either through an approved classroom or online course. Depending on the state, the requirement can be as few as 40 hours or as many as 300. Companies such as Brightwood Real Estate Education, Real Estate Express and Fit Small Business offer prelicense courses across multiple states. You can also inquire with your local college or even a local real estate brokerage that offers classes. Various branches of Better Homes and Gardens Real Estate, Coldwell Banker and Re/Max throughout the U.S. offer classes, potentially with a reimbursed or discounted fee if the agent works for the broker after receiving his or her license.
Pass the exam. Your prelicense courses should all lead up to your real estate license exam, which is issued by the state and covers working with clients, negotiating, closing a deal and following real estate law. Your state sets the minimum score to pass the test — in Michigan and California, for example, a 70 percent or higher score is required to pass, while in New Mexico a score of 75 percent is required. Most states allow you to retake the exam if you don’t pass the first time, although there may be a maximum number of attempts or time period between retakes.
Work for a licensed broker. In most states, you can’t get your license and immediately set up your own firm — you need to work under an experienced broker to gain experience. There’s a wide variety of employment options, however, whether it’s a traditional brokerage where you may be placed on the team to gain experience from a top-producing agent or opting to go with a nontraditional brokerage that pays a salary, like Redfin. At Richardson Properties, an independent brokerage and affiliate of Christie’s International Real Estate and Luxury Portfolio International in San Luis Obispo, California, the real training takes place when you work with an experienced agent. Charles Richardson, founder and broker at Richardson Properties, says new agents will work under a seasoned agent for anywhere from six months to a year, learning the ropes when it comes to meeting client needs, holding open houses, connecting with potential future clients, negotiating and getting a deal to the closing table. In that time, he says, “There’s somebody there watching you and helping you.”
Once you become a licensed real estate agent, you’re able to be a part of the transaction itself, whether you’re representing a buyer, seller, renter or landlord. Of course, the key is in how you gain experience and work to grow your business as an agent. Here are four things seasoned agents recommend for a successful start to your new career.
Have the funds to get started. If you’re working on commission, which most real estate agents are, you likely won’t be bringing home the big bucks right away because you don’t get paid until you close a deal. Michael and Rebecca Straley, Realtors with eXp Realty in Stafford, Virginia, recommend looking at your assets before getting started. Be ready to feel your wallet tighten as you spend the first six months to a year establishing yourself on your own as an agent before you can feel comfortable that you’ll be closing enough deals to cover your cost of living without having to dip into savings. You may want to look at alternative options, like working for a brokerage that pays salary rather than commission, or even taking on a second job while you’re getting started.
Know your market well. Taking a real estate course will help you understand local real estate law, but as a professional you’ll have clients relying on you to help interpret real estate market changes, assess the value of a property and know how to negotiate effectively. But that can’t all be taught in an online course. “You’ve got to get in the business and learn from there,” Richardson says. He adds that the biggest success stories come from new agents who aren’t afraid to get out and introduce themselves to people they don’t know, an effective technique he discovered when he started in the business more than 50 years ago: “I learned really quick that I needed to get out and see the people.”
Keep learning. Real estate agents who get repeat customers, positive reviews and high commission are often those who manage to specialize so they can meet different consumers’ needs. As members of NAR, many Realtors take courses through the association that certify them in specific fields, like military relocation or investor representation. The Straleys teach courses for NAR for the Accredited Buyer’s Representative and Pricing Strategy Advisor certifications. “These two courses provide basic steps similar to on-the-job training with real-life applications. Real-life applications lead to anticipation, and then solutions, and then mastery,” Rebecca Straley wrote in an email.
Be ready to adapt. The real estate industry is greatly affected by the local economy, construction, employment rates, local government policy and interest rates. Problems in one area can make the life of a real estate agent tough, and you have to be ready to change the way you do business. “You have to adapt to the market,” Richardson says. He recalls how national economic downturns have always had a devastating effect on how many agents can stay in business. In the early 1980s, he says, “When (interest rates were) 17, 18 percent, we lost around a third of Realtors in California.” Whether it’s teaming up with specific banks to help qualified buyers, which Richardson did in the 1980s, or partnering with investors interested in house flipping, which many agents did during the Great Recession, you have to adjust your strategy to find the right clients you can work with.
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Update 01/18/19: This story was previously published on Nov. 9, 2018, and has been updated with new information.