So You Want To Be a Real Estate Agent
Real estate agents help buyers and sellers in the process of selling or renting residential property. Some agents work with buyers, helping them find places to live and negotiating with sellers. Other agents work with the sellers. Agents rarely represent both buyers and sellers; for property rentals, almost all agents represent property owners. It's a popular field; there are close to 500,000 real estate brokers and agents in the United States.
Agents are usually independent sales professionals who contract their services to sponsoring real estate brokers in exchange for a commission-sharing agreement. The commission on a home sale varies by market but is roughly five to six percent of the sale price. This commission is split four ways among the seller's agent, buyer's agent and the sponsoring brokers with whom each agent is associated. Many agents work solely on commission and don't get much in the way of benefits. Agents are expected to cover most of the overhead necessary to perform their jobs.
In order to sell real estate services you must be a licensed professional in the state where you do business. To become a realtor, all states require that you pass a written exam focused on real estate law and transactions, and that you're affiliated with a broker. Most states require that you be at least 18 years old, a high school graduate and have completed a minimum number of classroom hours. Some states waive the classroom requirements for active attorneys and offer correspondence course credit options in lieu of the classroom hour requirement. The license fee depends on the state, but expect to pay around $100 for the exam and $400 for the classes.
There are different organizations through which you can receive your classroom instruction, however the state government issues and oversees licenses. If you visit the National Association of Realtor's web site at www.realtor.org, you can find information about residential real estate as well as licensing requirements and where you can take classes in your state.
This industry attracts all types of personalities. There's a potpourri of career switchers, from lawyers to housewives, who end up in residential real estate. If you like being your own boss and interacting with people, being a realtor can be very rewarding.On the Job
Real estate agents generally focus on buying and selling (or renting) homes and land for building residential developments. The job involves matching what clients are looking for in a house with homes available in the marketplace, or to sell the client's house in a timely manner at his or her asking price. Agents make most of their paycheck from commissions.
To be a good agent you need a thick skin, strong interpersonal/networking skills and a good sense of finance. The need to find clients and properties to sell or rent through cold calls, constant schmoozing and mass mailings tend to discourage some from residential realty.
Hours are flexible - to a point. You must realize that many people like to house hunt after work or on weekends, so if you cherish this time, this job isn't for you. Also, since you're not on a set schedule, you need to be disciplined about getting your work done.
You should have at least a basic knack for figures and calculation - you'll be working with a variety of budgets, mortgage rates and other figures. But if you're not a math whiz, don't worry. While it helps to be analytical, it's not crucial to the job as dedication, organizational skills and a talent for schmoozing.The Workday
If you're sick of being held to a schedule, then residential real estate may be the field for you. You set your own hours, and have no need to stop into the office, except to file paperwork, or perhaps for the occasional staff meeting. At the same time, your time may not be as flexible as you might imagine. Open houses - when you show a property to the general public, are almost invariably held on evenings or weekends. Your clients may be unable to see properties during the traditional workweek as well.
Residential real estate agents are responsible for a variety of tasks. Some days are reserved for marketing homes for sale. Others are spent making networking calls and advertising for new clients. Even after a sale is concluded, the work of the agent is not done. Agents must organize a final home inspection prior to closing, to make sure that the home is in good working order and that all the work the buyer asked to be done prior to the closing has, in fact, been done. agents must communicate between the buyer and the seller to make sure all this work occurs in a timely and orderly fashion.Training
If you're looking to residential realty for thorough training, you're going to be disappointed. Only the largest residential real estate brokers offer a formal training program. For everyone else, training is on the job. To pick up the tools of the trade, "Be aggressive about asking questions and shadowing senior agents, suggests Nellie MacDiarmid McCarthy, a licensed sales agent with Century 21 Sussex and Reilly in Chicago. "Developing a relationship with a mentor is one of the better ways to learn. Shadow him or her at open houses and showings."
As you become more senior the only changes in your day-to-day role may be management responsibility and/or mentoring a new agent. Essentially, the job will stay the same. The top dogs in the business get a lot of notoriety and perks from their brokers. At this point, you'll have business come to you because your name is so well known. Many top agents invest in real estate and some agents have left their brokers to start their own agency.
On the one hand, realty is an exquisitely flexible field. Realtors can set their own hours, for the most part. The problem arises when clients aren't free to meet during those hours! To meet client needs (showing properties on evenings and weekends, for example) many realtors find themselves working between 50 and 60 hours a week, especially when they are first learning the business and establishing themselves in the real estate community.
Good agents need to be organized, knowing enough about each phase of the buying and selling process to keep things moving smoothly (and legally.) Handling clients is also of vital importance. People get very emotional when buying or selling a house, and are often very nervous about the large sums of money spent or acquired. Because of these emotional factors, managing clients and their expectations is of crucial importance to the successful realtor.Compensation
Since agents work on commission rather than on salary, it's difficult to predict compensation. . The gross commission on the home sale is divided between the broker representing the seller and the broker representing the buyer. As mentioned before, the gross commission is roughly five or six percent of the sale price in most markets. The brokers then divide their shares with the agent(s) involved in the transaction.
Agents have different commission agreements with their sponsoring brokers (effectively, their employers.) . As a new agent, expect to have at least a 50/50 commission split arrangement with your broker. Therefore, as the agent you would expect to make half of the commission paid to your side of the deal, while your sponsoring broker will collect the other half. As you gain seniority you can negotiate for a higher commission split and other privileges. Many brokers have a tiered commission split in place based on volume. For example, a broker may pay better splits once an agent gets past $100,000 in gross commissions. Of course, this all depends on pre-negotiated agreements and firm policy - so ask before you take that job!
One thing to consider is that it takes a while to start making money. "You can look at it in phases," McCarthy adds. "First you have to build your client base and then you have to wait for the closing. Hit the ground running hard and use your network of friends."
Often there's a system in place so agents can pay their bills while they wait for commissions. Brokers will pay agents a draw, which is an interest free loan that the broker expects to be repaid from the agent's commission. Draws are negotiable but are reconciled every quarter. If the agent falls too far behind in paying back the draw, the he or she will be expected to repay the draw or may even be released from the brokerage.
If you're good at this job and work full-time, you can expect to make $80,000 in your first year upwards $100,000 as you gain more experience. Remember that you're making a commission based on the sale price of the house. Average home prices will influence your commission. Therefore, if you're working a market where homes are expensive you will make more money than if you sell the same amount of property in a less expensive housing market. Also, keep in mind that agents are independent contractors and not employees, so they aren't entitled to benefits.