“Should I get my real estate license? How do I find out how to become a real estate agent?”
These are among the most frequently asked questions… While having a license isn’t a prerequisite to investing in real estate, it can be a huge help. Being a real estate agent offers major benefits. No more waiting for someone else to schedule showings! Plus, agents receive MLS access—and all the resources and information that come along with that. Becoming a real estate agent and earning your license can greatly benefit real estate investors.
But becoming a real estate agent and being an agent isn’t a matter of simply declaring your intent, and then POOF!, you’re an agent. There’s a lot more involved, especially if you’re just starting out.
Every one of our 50 states (plus Washington DC) has their own agent licensing rules and requirements. They require different amounts of education. Here’s the website for Florida, FLORIDA REAL ESTATE APPLICATION.
Characteristics of the Best Real Estate Agents
When I first started thinking about becoming a real estate agent, I didn’t understand what could make a real estate agent great—not just passable. That’s probably because I found some of the worst real estate agents on the planet to work with. After paying cash for a home, I contacted my buyer’s agent and asked her to let me know if she found any similar properties. Her response? “Well, I can sign you up to get emails.” Gee, don’t strain yourself. I’ll go find an agent who likes it when their client pays cash and comes back multiple times.
There are a lot of little things—and some pretty big things—that great agents do behind the scenes.
The best real estate agents hustle
Agents should always be searching for more clients. Good ones are clever marketing geniuses, always on the lookout for new business leads and opportunities.
Think about your local market. Is there a face you see all the time? On billboards, shopping carts, yard signs, web site ads, and newspapers? That agent spends a significant amount of money on advertising. That agent also has a significant client base.
The best real estate agents are knowledgeable
They’re experts on their local market. They can recommend the best title companies and home inspectors, and always know a great lender, lawyer, or any other professional you need during the buying or selling process.
This isn’t the type of knowledge you get out of a book—this comes from experience. I know a newer agent in my area who has lived here his whole life. He knows this area. He knows the good towns and the good parts of those towns. Yes, he’s only been an agent for a short time, but his knowledge of the area puts him leaps and bounds above other agents, even if they’ve held their license longer.
The best real estate agents do this full-time
You have to be able to show a property to your client when it fits their schedule. If they’re only available after work and on weekends, guess when you work? If they’re here for a whirlwind house-hunting trip, guess what you’re doing for the next 24, 36, or 48 hours?
It’s difficult to do this while working a full-time nine-to-five. I have a super-lenient boss who understands real estate transactions and is willing to work with me when I have a closing, showing, or an inspection, but I do hate when real estate agenting and my day job overlap. I also don’t have many clients, and those that I do have are friends who know this isn’t my full-time gig. (I also don’t do it to support myself; I just really love real estate.)
Successful real estate agents can’t work part-time. Unfortunately, when you’re first starting out, agenting is kind of a catch-22. You only make money when you sell a property, so you need to keep your day job until you can support yourself with your real estate earnings. But you need to be available at the drop of a hat—especially in a hot market where properties go under contract instantly—to show houses to your clients.
(Notice I said a successful real estate agent is full-time. You can certainly do this part-time, but to truly be successful, you have to be available all the time.)
The best real estate agents treat this like a business
Thinking about becoming a real estate agent? Better have an entrepreneurial spirit. There are very few salaried opportunities for real estate agents. The traditional arrangement is that you work under a more experienced broker, and you actually pay them when you sell a property. The amount you pay them varies—and typically decreases as you sell more and more.
You have to be your own business. While you may get a referral here and there, the crux of your income will be a steady stream of new business, especially if you are working with retail clients.
How does that happen? Advertising, networking, more advertising, and more networking. The best agents are aggressive—they have to be, because there is so much competition. LEARN MORE
Agents have a number of responsibilities to their clients, including a fiduciary responsibility to hold their best interests above your own. If they find a property they love, but the seller isn’t offering the type of commission you want to earn, you can’t steer them in another direction.
You must work toward getting the highest price or best offer for your sellers and the lowest price or best offer for your buyers. You advise your clients and give as much information as you can about the property and any factors that may affect it.
You have the duty of honesty. Pretty self-explanatory—don’t lie, misrepresent or defraud your client. Really, this should be a no-brainer in all aspects of your life.
You also have the duty of accounting. You must timely and accurately account for all money received and provide records of such upon request.
You have the duty of confidentiality, obedience, and loyalty. Meaning: You keep their information secret, obey their directions as long as they are legal and ethical, and hold their interests first.
In addition to all the legal stuff, your day-to-day duties are always different, yet always the same. No two properties are the same, so no two transactions are the same. But they have similar component
Buyer’s agent duties
CONFER, THEN TRANSLATE
You need to know what your clients are looking for. Narrow it down to what type of property—are they seeking a single family or condo? Are they house-hacking a duplex, or buying an investment property? For retail clients, you must set realistic expectations. A client looking for a four-bedroom penthouse apartment overlooking Central Park with a budget of $150,000 isn’t going to find too much.
I like to ask my clients questions about their minimums. What is the minimum number of bathrooms they can tolerate? What about bedrooms, square footage, yard size, garage space? Next I ask about their max—the maximum amount they want to spend, and their maximum monthly payment.
Then I plug those basic parameters into the multiple listing service (MLS) and see what shows up. Realistic expectations will have a longer list of results, while unrealistic expectations may turn up nothing. If the list is too long, then we can narrow down further. “I’d like two bathrooms, but three would be even better.”
After you have narrowed down what your client is looking for, run a list of all properties that fit their needs and let them browse. My local MLS allows me to send listings to a sister site called MySite. There, my client can view all the pictures from the MLS, read the property’s basic information, and categorize properties into “Favorites,” “Maybes” and “Trash.” Your local MLS may feed to something similar—there are a number of programs with similar offerings.
Once they’ve sorted the listings, I double-check their favorites actually have the criteria my clients said they want and see if any of their maybes or trash might be better in person. Retail clients have a difficult time getting past the pictures, and sometimes agents try to highlight a feature in a way that makes it far more attractive than it happens to be in real life. (Think wide-angle lens.) For example, your client may have said they want a house with three bedrooms on one level because they have small children. That won’t stop them from adding a home to their list of must-sees that has two upstairs bedrooms upstairs and two downstairs. A quick check of the listing sheet can save you a half hour of showing time.
A big part of becoming a real estate agent is learning to correctly read people. While you are showing properties, pay attention to what your client is really after. Body language is so much more telling than what they say to you.
An agent’s duty is to their client. You must help them get the best deal. Knowing why an owner is selling can help your buyer make the best, most attractive offer.Understanding your market comes into play here yet again. What aspects of the contract can be negotiated? Knowing this—and then negotiating them for your client’s favor or for the seller’s favor, if they aren’t important to your client, is a mark of a great negotiator.You’ve heard the term “real estate is local.” Local is relative. It isn’t always a city, or even a neighborhood—sometimes it’s block by block. But not all agents get this and may use inappropriate properties to arrive at an initial asking price for a home.
EXPLAIN THE CONTRACT
Buying a home is not something regular people do frequently. They don’t know the steps, and if it’s been a few years since their last purchase, they have probably changed anyway. You can bet the contract has changed. Good agents stay on top of contract, process, and legal changes that affect buying and selling properties.
Your client may completely trust you and not question any part of the contract. Or you may get a client who questions everything. Having a thorough understanding of the contract and being able to answer questions quickly will help gain your client’s trust and help the transaction go smoothly. It will also go a long way toward having them refer you to their friends and family—one of the best ways to get new business.
Seller’s agent duties
PREPARE A CMA
A CMA, or a comparative market analysis, is when you analyze the market immediately surrounding your subject property. For the most part, houses appraise for what other, similar houses in the area sold for recently. No two houses are the same, so no two appraisals will come back the same. One home may have better carpet or a newer kitchen. Another might have more bedrooms or a finished basement.
Preparing a CMA for your sellers will help give them a more realistic expectation of what they can sell their home for.
SET REALISTIC EXPECTATIONS
Go through your client’s home and give them pointers on how best to declutter and stage it to get top dollar. However, it’s best to set their expectations at a realistic level. If they have an outdated kitchen, they can’t hope to get the same price as their next-door neighbor with a completely remodeled home. Likewise, if there is an unpleasant odor in the home, they will be receiving lower offers. (Pro tip: Don’t suggest masking the scent—buyers can smell through that.)
The seller is ultimately responsible for determining the asking price, but if they want to list it higher than you think is realistic, it’s best to let them know this up front.
TAKE GREAT PICTURES
I like to take multiple photos of each room of the house and choose the ones that best represent the home. Or—I say I like to take them, but actually my husband takes the pictures. He takes high-quality pictures that rival a professional photographer’s.
Be honest with yourself. If you take bad photos, hire this job out. One podcast guest suggests going through Craigslist and asking all the photographers for a quote. Remember, take honest pictures. Wide angle lenses might make the house look better, but no one is going to buy a house that looks great in pictures and terrible in real life.
FILL OUT ALL THE FORMS
There are a multitude of forms that need to be completed before listing a house. Houses built before 1978 need a Lead Based Paint Disclosure. Sellers who have occupied the home should fill out a Seller’s Property Disclosure. Source of Water is required in Colorado. Know what forms your state and metro area require, and ensure your sellers complete them.
MARKET THE PROPERTY
Listing a house isn’t just taking the information and pictures and posting it on the MLS, then sitting back and waiting for offers to roll in. You must learn about marketing—and practice what you preach. That includes websites, signs, postcards, flyers, social media, email, newspaper ads, open houses, yard signs, and much, much more.
COMPARE AND TRANSLATE OFFERS
In my local market, real estate is hot, hot, hot. Almost every property receives multiple offers within days of being listed. As a seller’s agent, you need to be able to translate these offers to your clients to give them the entire picture. Know the difference between an FHA loan and a conventional loan, and why one is better than the other. Know the benefits of having a no-contingency offer. If you can’t explain the differences between offers, your clients may make a decision against their best interest.
Your seller might be super experienced, organized and on top of everything. But probably not. The contract is a legally binding agreement with dates and deadlines that must be met. You must stay on top of your sellers—a missed deadline can cost them quite a bit of money, and the buyer is under no obligation to extend deadlines.LEARN MORE
This is probably the part you are most interested in—because who wants to spend hours and hours driving clients around to see houses for free? You are thinking of becoming a real estate agent because you want to make money, right?
Unfortunately, there’s no typical real estate agent salary. Real estate is local. Your market and your competition will help determine your clients and your end results.
Essentially, you own your own business. The amount of marketing you do is a huge factor in your success and your salary. If you choose to sell only one house a year, you’re not going to be bringing in a ton of cash, unless you sell to the rich and famous.
But you can estimate your commissions, right? Not really. It’s a violation of the Sherman Antitrust Act to state a going rate for real estate agent commissions—it’s called price fixing. Real estate agent commissions are negotiable as far as the agent wishes to negotiate. But a good estimate is 2.5 to 3 percent for both the buyer’s and seller’s agent.
But wait, there’s more! When becoming a real estate agent, you have a couple of different ways to work under an employing broker. There are the commission-split brokers, with whom you share your commission. I’ve seen splits as high as 60 percent to the employing broker—meaning that $10,000 commission is now $4,000 to you, before your costs. I’ve also seen splits as low as 10 percent, meaning that same commission puts $9,000 in your pocket. Typically, those lower splits are going to agents who are producing more volume.
With a flat-fee brokerage, you pay a set dollar amount no matter the commission. I work for a brokerage like this. I pay $499 per transaction for any home where the list price is less than $3 million.
There are advantages and disadvantages for working for both types of agencies, so you’ll have to decide which one is right for you.
Do you want the numbers? Unfortunately, salaries vary so dramatically that they’re not really helpful. The average real estate agent salary is $39,800. Or $43,860. Or $76,000. But it might also be $33,000. These are the results I got back when I Googled “What is the average real estate agent salary?” But the thing is, you get out of real estate what you put into it. Are you willing to be on call round the clock? You’re probably not going to be getting phone calls at 2 a.m., but you might get one at 5:30 or 6:00 a.m. from a client who is dying to see a house that just popped up on the market. You might also get one at 10 p.m. at night for the same reason.Remember this when considering becoming a real estate agent. The agents making top dollar in their real estate salary are the agents answering their phones all the time.
Step 1: Get Educated
Every state requires real estate coursework, which covers state-specific and national laws.
I’m licensed in the state of Florida.
Choose your school
Not everyone learns the same way, and online classes may not be right for you. Because I took classes online, there was no way to ask questions on the spot. I had email support, but since I was doing the bulk of my studying at night and on the weekends, it took a couple of days to get my email answered. Be sure to check out the options in your area.
Many local community colleges offer real estate coursework in a physical classroom, and if you have a question or need clarification, you can ask right then and there. But you are bound to their schedule and missing a day can be a huge loss.
Whether online or in person, these classroom hours are designed to cover the legal basics of buying and selling real estate. While they do teach you the basics, it turns out that much of the work you perform as an agent on a day-to-day basis isn’t actually taught in school. Your true education begins after you pass your courses and tests and start working as an agent.
Step 2: Decide on a Brokerage
While you take your coursework, start looking for a brokerage to work for after you are licensed. With the exception of attorneys, all newly-licensed agents must hang their license under a more experienced agent—called a broker or employing broker—for a period of time, typically two to three years.
The employing broker is responsible for your actions during your first few years. Your broker will review all your documents before you pass them along to clients to check for errors and omissions. There are so many nuances, and filling out a contract wrong can have huge consequences. My managing broker has told me of several newly licensed agents who had to buy appliances for their client, or replace this or that out of their own pocket because they didn’t fill out the contract properly.
Deciding on a brokerage
There are many different brokerage philosophies, so start thinking about what’s most important to you. Some brokerages offer significant training for new agents. Others cater to established agents, and some smaller firms may be more receptive to investor-agents. There are flat-fee firms, where you pay one flat fee per transaction—these brokerages typically lack some of the education opportunities available at other agencies.
Traditional, national-brand brokerage firms will typically have a large initial commission split. A split of 50-50 is not uncommon, translating into 50 percent of your commission going to your employing broker until you hit a certain level of sales. As your sales increase, your commission split decreases, with top agents paying as low as five to 10 percent of their commission to their employing broker. The benefit of working for a large brokerage firm is name recognition.
Once you decide what type of real estate you wish to practice, ask your instructor for recommendations that fit your goals. An established educator has taught thousands of students how to become a real estate agent, has a good grasp of what is going on in your local area, and can recommend a few different brokerage firms to interview.
Another thing to remember while you are searching for a broker is that you are the one doing the interviewing, not the other way around. Talk to the broker, and ask as many questions as possible in your initial interview. You should ask about:
Errors and omissions insurance
Payment terms and timelines
What the brokerage provides and what you are responsible for.
Step 3: Pass the Exam
After finishing your coursework, you take two exams—one state-specific and one national exam—to prove your knowledge. Most states allow up to a year to take the test after completing school.
The test questions are designed to examine how well you absorbed the information. They are worded with twists and turns and must be read very carefully. Some questions are looking for the best answer; they have more than one answer that could be technically right.
In my home state of Colorado, the latest statistics show a 62 percent pass rate. Study, study, study. My education provider offered practice tests and suggested taking them multiple times after you have finished and passed the coursework. I followed their advice and took each practice test about 10 times—and was surprised at how closely the practice test followed the actual exam.
What happens on exam day
At the exam facility, you are not allowed to bring anything with you other than a government-issued ID and proof that you have taken and passed the required coursework. No purses, no phones, no calculators, nothing. Check with your testing facility to make sure you bring only what you need—many don’t offer a place for you to store your things.
Aim to arrive at least 15 minutes before the start of your exam, and allow plenty of time to get there. My exam center had a zero tolerance late policy. If you were late, you forfeited your exam fees and were denied admittance. If you didn’t bring the proper paperwork with you, same thing. Plus, my state had a waiting list to take the exam. Being late would have cost me weeks in delays.
Step 4: Get a Background Check
I’m starting to sound like a broken record, but each state has their own rules for getting a license and most require a background check. My state offered two different ways to collect fingerprints and submit them. I could go to a participating police station and get fingerprinted using ink and paper—just like a real criminal! Or I could go to the testing facility and be fingerprinted electronically. (I chose the less expensive criminal experience.)
There’s a good reason for this. Agents are trusted with the keys to a home and all the possessions inside. The real estate commission wants to make sure you are a trustworthy individual. If you have been convicted of a felony or pled no contest to a felony, misdemeanor or petty-theft offense, your chances of getting a license are significantly diminished.
Recent felony convictions for things related to showing houses, such as theft or embezzlement, are automatic disqualifiers. Felony convictions not related to selling homes and fiduciary responsibility may be allowed, but you must petition the real estate commission for approval. It’s best to do this before you take the coursework and discover your past indiscretions make you ineligible. Be sure to learn the restrictions in your area.
Step 5: Submit Your Application
Once you have passed your real estate exam, you must submit the application for your license. Your application will require proof that you passed your coursework and your tests. Depending on the state, it will require you to answer various questions and possibly need a signature from your employing broker, along with proof of errors and omissions (E&O) insurance. Don’t forget the application fee.
If the real estate commission has waived any past felony convictions, those waivers should also be submitted with your application.
Remember that background check you sent fingerprints in for? It will be submitted to the real estate commission once it’s completed, which may happen before you finish your coursework and submit your application. Don’t worry: The commission stores each portion of the application until all parts have been received. They’ll match them together and then review the entire application. My state takes a week or two once all sections have been matched up.
Again, the process may differ in your area, so be sure to check out the specifics.
After my application was approved, the real estate commission notified my employing broker, who in turn informed me. It took about a week to receive my official license, but they emailed my license number right away so I could get started with setup.
If you don’t choose an employing broker, your license becomes approved but inactive until you have an employing broker.
Step 6: Become a Realtor (…If You Want)
Learning how to become a Realtor and how to become a real estate agent: It’s all the same thing, right? Nope. It’s kind of like Kleenex or Band-Aids. Those are both name-brand items that are so well-known, the name is also the thing. People routinely ask for a “Band-Aid” when they mean “bandage.” “Tissue” and “Kleenex” are interchanged all the time.
When this happens, the trademark has become generalized. No big deal, right? Nope, it can be a very big deal. When a company trademarks a name and then does not vigorously defend their trademark, it becomes watered down, and they can lose their trademark status and all the legal protections that go along with it.
A Realtor is not the same thing as a real estate agent. Every Realtor is a real estate agent, but not every agent is a Realtor. The word REALTOR® is a federally registered collective membership mark that identifies a real estate professional who is member of the National Association of Realtors and subscribes to its strict Code of Ethics. Only members of NAR can call themselves Realtors.
So how to become a Realtor? It goes beyond how to become a real estate agent. To become a Realtor, you must join the association and pay dues to your local, state and national organizations. There is a four-hour code of ethics class that must be completed and upheld. Agents who are not members of NAR are not held to these ethics.
How to Find Clients
Finding a client takes work. Everyone already knows an agent or twelve. Clients don’t bust down your door—why would they? They’re inundated with flyers, mailers, magnets, and postcards. You have to make yourself memorable. What can you offer that another agent can’t? Why should someone hire you?
Your marketing budget can make or break you. In the beginning, your success literally depends on it.
One of the top tips I have seen is also one of the simplest. Get a name tag proclaiming your real estate agent status and wear it everywhere. People won’t know what you do until you tell them.
Treat your listings like marketing tools, too. Your “For Sale” sign that you plant in the yard is an advertisement. And an open house is one of the best ways to put your face in front of potential buyers, many of whom are not currently working with a real estate agent. When they walk in your door, be prepared to wow them with your expertise.
There are all manner of clever marketing ideas online. One agent passes out water bottles printed with her name and information at the gym. Another one puts 9-volt batteries in a bag, along with a note to change their smoke detector batteries around the time the clocks go back.Whatever smart strategy you choose, make marketing the centerpiece of your real estate agent business. After all, none of the other steps matter if you can’t close the deal.