How to Become a Real Estate Agent Who Makes Money
If the real estate is your interest area and you like dabbling in the property market, then to become a real estate agent by far is one of the best job opportunities for you. It helps you remain within the ambit of your core interest area, and at the same time, you can work on something that is also profitable.
However, you have to keep in mind that a real estate agent income is strongly depends on the real estate market conditions. So, as a good realtor, you will make money only when the market is hot. It is the market that controls your income. You can make more money if you work harder, but only when the market allows you to do that.
Even if you make a lot of money as a realtor. Still there are a couple of things missing with this job: (1) location freedom, and (2) time freedom
As a realtor, you have to choose a special location and work on it. You will not be free to work anywhere you want, and you won’t make any money if you change the location from time to time.
And, as a realtor, you have to work hard and spend a lot of time. I know some real estate agents who work over 12 hours per day. Although they make a lot of money, but they have no time freedom. If they slow down, the competitors will take the clients.
Now, if you are wondering how to become a real estate agent, well it is a combination of right education coupled with appropriate training and detailed understanding of the various intricacies of trade. Here is a step by step detailing:
The Right Education
Getting the right education is no doubt the most important element in the journey towards becoming a real estate agent. If you are interested in understanding how to become a real estate agent, it is important to complete your basic level education first. Almost every state in the US has their own basic pre-licensing real estate courses.
This is the type of course that helps you gain knowledge about the different parameters that each state has specified. For example, some states like California needs real estate agents to complete three college-level courses while Idaho requires only two courses totaling 90 hours.
The best place to get these details is your state’s real estate commission’s office. This is one of the best and most authentic places to get all information about how to become a real estate agent. From course specification to licensing needs to overall dos and don’ts, this is the one-stop shop for all information with regards to becoming a real estate agent.
There are some specific real estate agencies that require its staff to have a specific academic background and need them to master a certain course. So, in case you join any of these organizations, you must look at completing this course after they hire you. In the long run, this works better as an additional course qualification always looks at making your resume look richer.
Choosing The Right Real Estate Agency
The next step in your journey towards how to become a real estate agent is no doubt zeroing on a real estate brokerage or agency. Working with a broker is one of the primary requirements if you want to make a career as a real estate agent. As an aspiring real estate agent, you would have to contact a broker before you graduate from the real estate agent’s training course.
On an average, a broker is someone who would have at least three more years of real estate training and can easily guide you through the various questions that you might have on your job front. They help you gain key work experience in terms of listing, selling as well as gaining on field experience.
But there is a possibility that you might be worried about making the right choice in terms of getting to work with the most appropriate brokerage in town. When choosing the broker, it is important to look for someone with a reasonable amount of experience, reputation and all round good will. Also, watch out for the additional training that you might be offered there and how that can help you in value adding your overall experience outlook.
You can also check on the internet about the kind of a reputation that a specific broker might have and the reviews and feedback that clients might have posted. If it is a relatively small town, you can also ask for a reference from neighbors, friends who might have had experience in dealing with the specific individual.
Another interesting and doubly beneficial methodology to deal with the situation would be to create a constructive list of questions for the interview that you have scheduled with them. Not only would your carefully curated questionnaire help answer your questions but it can also help in making the brokerage understand the depth of your knowledge and how good a fit you can be for the brokerage.
- Your questionnaire can help you identify key issues like what might be the broker’s
- Client contact style and developing leads
- How they go ahead with follow up cases
- Their expertise and area experience
- The overall quality of training you might receive
- The payment policies and by when can you expect to earn commission
All of these factors will no doubt help you in making the right choice in terms of getting associated with an appropriate brokerage. While there are a few who might go for the additional coursework, someone else may look at the opportunity of higher and enhanced field experience.
Apply For Your License
Well once you get the necessary academic qualification and work experience, don’t think you can start operating on your own. You would still need your license to start practice. In fact, applicants have to pass both state level and national level exams to qualify for these licenses. Additionally, an applicant also has to give evidence of the fact that they are suitable for the job. For this, they even have to provide a check on their criminal background if any.
The cost of taking this exam for your license as a real estate agent differs from state to state. On an average, you can expect to pay close to $200 for the various expenses included in the entire gamut. This includes fees for the course, exam and also making the license.
The Start-up Investment
All said and done, a real estate agent’s job is no less than a business. It has the same type of risks, challenges and requires a sufficient amount of fund to start the business. The only solace in this aspect is perhaps the fact that the amount required is far less than what you might need for starting other businesses.
The startup fees is estimated to be close to anywhere $1,500-2,000 and these can be easily divided between series of licensing courses that you have to pursue, the business cards that you have to print, look for signs and put out advertising. The real estate agent also needs to pay a certain amount of association fees and any other additional fees for the courses that they might choose to pursue going forward.
Another cost that you need to account for as a real estate agent is the overall amount of commission that needs to be paid. Remember that this business is, after all, a commission based business and when you set up shop, you should have enough to pull on for a few months before the actual income starts trickling in. Of course, you also need to remember that all these cost outlines are approximate values and it keeps changing state wise.
How to Become a Realtor
It goes hand in hand with your overall pursuit of how to become a real estate agent is also the quest for how to become a Realtor. You must understand that as a real estate agent, you must join the NAR or the National Association of Realtors to utilize the title of the Realtor.
You can do so quite simply by choosing one amongst the affiliated brokerage and also attend a select number of meetings that might be decided by the designated local chapter of the Association.
Building Your Portfolio
This is perhaps the most important part of the overall steps involved to help you understand how to become a real estate agent. It is all about building a portfolio of clients and creating a list of referrals who would help spread your name and achievements through referrals.
While the portfolio grows by gradual addition, getting the initial list in place is essential. In this context, the best way to move forward is creating your own network apart from taking advantage of your mentor’s contact list. Perhaps in this context, work experience in a real estate brokerage, before you start on your own, becomes so important in the overall game plan.
Additionally, a mentor also helps you to guide in the final splits and commission break-up depending on the nature and quality of various types of work and real estate deals. Even as you start earning your first commission checks, you understand the most difficult part of the real estate business, hard negotiation and how to go about it is extremely crucial.
Remember that networking is one art form where it does not matter who your acquaintances might be. So feel free to network and create referrals from contacts made via friends, family and neighbors.
Remember to start off with, these are going to be some of the most crucial lists of contacts that you might be able to work with. It is only much later that you can grow a reasonable size of clients from the businesses you generate and work towards broadening your portfolio horizon eventually. For starters, this list from friends and family come in very handy.
How Much Do Real Estate Agents Earn?
That brings us to the key point in your pursuit of how to become a real estate agent.
The question that might bother a lot of starters is how much money would you make on an average?
Are real estate agents very highly paid? Or perhaps also what kind of commission can you charge as a real estate agent?
Another question that may intrigue you a lot is, does the commission structure change as you move up in the experience cycle and start handling more higher budget properties on a sustained basis?
1) Well, the hard truth is that most real estate agents earn very less in the first year. They are struggling to set up business and create a sizeable client base.
2) It is only gradually that they learn to attract more clients.
3) The annual remuneration of most real estate agents range between $34,000-45,000 annually. On the whole, the top ranking agents make a lot more money and so does the part-time real estate agent who also has a full-time day job to support expenses.
4) The total money that an agent makes depends on the actual deal closures. The commission is paid accordingly to the brokerage they might be associated with, and then, it is split with the sponsoring broker.
5) The newcomers in this business earn a lot less commission than the veterans.
6) A back of the hand calculation reveals that first-time real estate agents make anywhere close to 50% of the commission paid to the broker
Listing brokers in general receive more than the selling broker.
7) On an average, it is noticed that listing commission can vary from a flat fee to even 1-10% of sales price.
8) When you look at the low remuneration outlook, you might wonder how it is possible despite the high prices. Well, the fact is that a real estate agent is able to sell only 4-6 houses quite contrary to popular belief.
This is mostly because of the overall ratio of the active and not so active players. Most real estate market studies reveal that 20% of the real estate agents often go on to do 80% of the net business leaving very little opportunity for the relatively low profile and new entrants in this profession.
9) Top rung agents are essentially the high profile real estate agents who sell as many as one house a month and go on to make a neat $200,000 a year or even more.
10) Most of these top players are also predominantly listing agents more than selling agents. So for them, if they sell $50 million worth of houses, the average money they would earn in commission would surely exceed a million dollars.
11) Additionally, once you become a team leader and have a team of real estate agents under you, you also earn a commission from every sale that happens from your team irrespective of what you achieved personally.
Therefore, in your pursuit to understand how to become a real estate player, it becomes very important to consider the overall prospects and duration of the initial struggle phase.
First and foremost, an aspiring candidate must do a series of introspection. They must understand if they have the time and money to get licensed and pursue the courses required for completion of the license process.
A certain amount of start-up capital is also important before you take the final plunge towards making a career as a real estate agent. You must remember that income starts to trickle in only eventually with deal closures.
However, the most important lesson of all in steps on how to become a real estate player is perhaps the growing role of networking. Networking and a strong client base can often be a game changer for beginners and veterans alike in this field.
As a new comer, you must make the most of any access that you get into client profiling, and irrespective of when you need them, keep a healthy communication channel with all your clients.
This ensures that whenever they are indeed in need of a real estate agent, you are the first to be approached. It is needless to mention, the more sales you handle, the better you get in your job.
Learn more: 7 Tips to Become a Successful Real Estate Agent