There are many reasons you may be considering a career in real estate. The flexible schedule and potential to make buckets of money are alluring for sure. If this describes your goals, you’re probably wondering how to become a real estate agent!
- The Licensing Process
- Who Should You Work For?
- Agent Vs Realtor
- How Much Does It Cost?
- How to Budget
- The Day-to-Day Life Of An Agent
- Do You Have What It Takes?
Real estate is an industry packed with potential, but it’s also an industry where the term “you have to spend money to make money” takes on a whole new meaning. Still, if you’re really interested in becoming a real estate agent, then read on to find the steps you need to take to launch your new career.
How To Become A Real Estate Agent
There are a few basic steps everyone must go through in order to become a real estate agent, no matter what state you’re in. Get started by taking these basic steps:
1. Research The Real Estate Licensing Process
Every state is a little bit different in what it requires for you to become a full-fledged real estate agent. The state-specific requirements and details for your state must be searched out beforehand because it’ll influence the path you take.
Research the proper method to become licensed in your state. You can do an online search or contact your state’s Real Estate Commission Office to find out more. Satisfying your state’s requirements usually involves a mix of classes, getting on board with a brokerage, and then passing state exams. Oh, and you’ll need to pay membership fees too.
Tip: Simply click on your state to learn about the real estate license requirements specific to your area.
2. Find Pre-Licensing Classes
Before you are eligible to take your licensing exam, you’ll need to take real estate courses. These courses focus on the several different sides of the real estate world to help put together the real estate puzzle for you as an agent.
Of course, where you live determines what the coursework should look like, but in general, coursework will include classes that teach you about:
- Real estate law
- Real estate brokerage
- Real estate fundamentals
- Property management
- Real estate principles
- Business law
- Real estate finance
- Law of contracts
There are many real estate institutes, online programs, and even colleges that offer these courses. Simply remember to get all the info you need to confirm the courses after you’ve finished so you can apply to take the licensing exam.
Our favorite real estate exam prep is made by Real Estate Express. Courses are online and their study tools are second to none. Still want more? Check out our real estate glossary to make sure you know your lingo.
3. Take The Licensing Exam
When all the coursework is done and you’re prepped, you can take the mandatory real estate exam in your state and apply for your license. The sooner you can take the test after finishing classes, the better off you’ll be.
Completing the test quickly is recommended because not only will the information be fresh in your mind, but also because if you happen to fail the exam, you’ll have two years to retake and pass it in most states. If more than two years go by, then you may have to take the coursework all over again before you can retake the exam.
Are you worried about passing the first time you take it? If you diligently complete your coursework and prepare for the test, then you have a very good chance of passing the first time you have a go at it – so don’t sweat it!
Tip: After passing the test, familiarize yourself with the home buying process by reading our complete guide on buying a home.
4. Get Errors And Omissions Insurance
Errors and Omissions Insurance (also called E&O) is a critical piece of the real estate licensing process. Essentially, this is a policy most states require you as an agent to carry. This policy protects you from inadequate work, negligence, or simple mistakes.
5. Work With A Broker
Once new agents have completed the exam, passed it, and have their real estate license in hand, then it’s required to work with a broker to complete their real estate education. In most states, you’re required to be sponsored and managed by a broker for the first two years.
You may even be required to find this broker before you take the exam – it really boils down to the requirements in your state. You should start looking for a broker to sponsor you as soon as you can.
Typically, the broker you work with doesn’t pay you. Instead, you’ll make commissions from listings and sales. Commissions are usually split between four parties: the buyer’s agent, the listing agent, and their brokers. It’s not unusual for brokers to let their agents keep all of the commission, but they may ask you to pay a monthly “desk fee” for utilizing the resources of their brokerage.
6. Create New Connections
The broker who mentors you may be able to help you learn the ins and outs, as well as a few experienced tips, to help you get started and flourish in real estate. It’s important to understand that being a real estate agent is about the networks you can cultivate.
Ultimately, it’s these connections that can help you succeed in the long run. Networking is all about casting your net wide, and a solid marketing plan is critical for success. To start you off on the right foot, make sure to check out our complete guide on marketing for agents.
7. Don’t Forget Continuing Education
If you thought passing your exam is all you need to do for licensing, you’re not alone. However, you must continually improve upon your knowledge in what are known as continuing education hours.
While your local real estate school probably has a great program, you can also do this online with McKissock Learning. Click the button below to find out how you can save time and money with their program.
Who Should You Work For?
There are many different ways to be a real estate agent. You can go it alone or you can work for a brokerage – or find the best of both worlds at a virtual brokerage. Many people choose a brokerage. If you’re interested in that, then what type of should you work for? The different types include:
A national franchise brokerage is probably the type you’re most familiar with. These national companies sell the rights to their name, business model, and branding to agents. After they sell a franchise, they charge a percentage for every deal the office closes.
Many national franchises are independently owned, but they must still follow regulations and rules set by the main office of the franchise. There are pros and cons to working for a national franchise. The biggest pros are instant credibility and name recognition.
The hard work of building up the brand has already been done, all the technology systems are in place and the offices are fully stocked. All you need to do is slide right in and start selling! These franchises often attract new real estate agents and it’s easy to understand why.
Of course, there are drawbacks to working for a national franchise. The biggest is that they can feel impersonal and don’t invest much in development as smaller brokerages tend to.
Boutique brokerages are owned by small companies and run by individual brokers. Don’t be fooled into thinking that smaller means less successful because there are some very successful boutique brokerages out there.
The pros of these agencies are that they’re more personalized and give more individual attention. Since there are fewer real estate agents to contribute to the bottom line of the agency, you’re more likely to get more mentoring and coaching. There’s also less competition for leads, more flexibility, and the opportunity for you to put your own personal spin on marketing.
Unfortunately, it’s not all puppy dogs and real estate rainbows. The cons of working at a boutique brokerage include smaller budgets for marketing, not as much brand recognition, and less technological resources for their agents.
If you want to be independent, then a virtual brokerage may be for you. With so many real estate software systems available, and the increased popularity of social media, this is an option that’s becoming more and more popular.
The biggest pro of this type of brokerage is that there are lower overhead costs since you don’t have to pay for office space. This gives them the ability to offer some very attractive commission splits to their agents.
There also tends to have really great tech tools you can use to create your own websites, manage your clients, and manage all your transactions – right from the comfort of your own home.
The only con to virtual brokerages is that, believe it or not, that much independence isn’t for everybody. Many people miss going to an office and having coworkers to share your successes and letdowns with. If you’re considering a virtual brokerage, give this aspect a lot of thought. Your significant other may not appreciate being your office sounding board!
No matter which you choose, you should interview a brokerage you’re interested in joining. Make sure to ask how they work their commission splits, what kind of leads they provide, and what expenses will be your responsibility.
Agent Vs Realtor
It’s not unusual to hear the term Realtor and real estate agent used interchangeably, but there is a difference between the two that’s important to understand.
Realtors are real estate professionals that members of the National Association of Realtors. They observe a strict code of ethics and pay membership fees that grant them access to several benefits.
These benefits include discounts on continuing education courses as well as access to marketing resources. It’s not required you become a Realtor, but it is a professional designation that’s worth exploring.
How Much Does It Cost?
It’s important to sit down and create a budget before you start to pursue a career in real estate. Make a list of potential costs you may encounter, such as:
- Testing fees
- Pre-licensing courses
- Continuing education courses
- Multiple Listing Service (MLS) fees
- Professional development
- Errors and omissions insurance
- Association fees
- Self-employment income taxes
- Health insurance
- Broker costs (and desk fees)
- Office supplies
- Cell phone service
- Internet service
- Marketing materials
- Technology products and services
- Expenses related to transportation
How To Budget
If you want to become a real estate agent, then it’s important to put a plan in place to support yourself financially. Don’t panic – it looks expensive but with some financial planning, it can be smooth sailing. You should create a budget that includes:
When launching your real estate career, don’t overlook how you’ll support your own household expenses while you’re reaching your goal. You’ll earn commissions, but you’ll be a lot more comfortable if you save enough before you launch into this new career to support your household for a while without any money coming in.
Track Your Expenses and Savings
It’s good to get into the habit of tracking your expenses and savings on spreadsheets to help monitor your cash flow. This will come in handy for both your business and your personal finances.
You may want to consider using a money management app to help, such as Mint or YNAB. Additionally, you can write off things like mileage and marketing expenses, and you’ll want to have your ducks in a row at tax time.
Have an Emergency Cash Fund
Experts agree that you should have an emergency cash fund budgeted into your personal and professional finances. This can help if something unexpected happens, such as an unexpected computer replacement or paying additional taxes you didn’t count on.
These cash reserves can mean the difference between real estate success and ruin. Remember, too, that the real estate market frequently changes, so you must be prepared.
Make time regularly to go over your budget, even going as far to create a reminder on your phone or computer to do it monthly. This is all a part of running your own business and you must do this to stay on track.
Your budget needs to stay firm in to be able to adapt to your ongoing business needs, so try not to be too flexible with it or you could get into hot water – especially when you’re first starting out as a real estate agent.
Tip: Want a great way to save money? Get a Costco membership and buy office supplies in bulk.
The Day-To-Day Life Of An Agent
There may not be a typical day in the life of a real estate agent, but that’s what appeals to a lot of people. You can expect, however, that you will be working every single day to promote yourself and your business, as well as planning how you can best advertise your services.
In fact, planning is one of the things real estate agents get very good at. You must be able to determine where the money is best spent when it comes to promoting properties both online and in print.
You can also spend a lot of time researching potential properties and following up on leads. Open houses and showing houses are also very routine for real estate professionals. This all can be very stressful. For that reason, we suggest having a laugh with our real estate memes.
Do You Have What It Takes?
So, what kind of qualities make for a successful real estate salesperson anyway?
A lot of it involves drive. The hard work you put into your business is directly proportional to how successful you are. If you want to be a residential agent who buys and sells homes on behalf of everyday people, then you have to have a passion for bringing buyers and sellers together.
Most of the time, residential real estate agents are very good at handling the emotional side of real estate. After all, a home is more than just a commodity to many people – it’s where memories are made.
If you want to become a commercial real estate agent who buys and sells business properties, then you need to have a knack for numbers. That’s because commercial real estate transactions can be worth millions of dollars and your clients need to know that you’ll be on top things when handling such large transactions.
For every real estate agent, being friendly, tenacious, transparent, and charismatic are all great qualities to have. The ability to sell yourself and market your services also comes in handy since self-promotion is key to real estate victory.
Should You Become A Real Estate Agent?
There’s a reason that there are currently over 2 million active real estate agents in the United States – it’s a great career. But as with any career you have to really consider if it’s right for you and for your financial future. If you’re interested, go ahead and dip your toe into the real estate pool. You might find the water is perfect and jump right in!
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