Are you thinking of becoming a real estate agent? If so, this post is for you.
What is a Real Estate Agent?
A real estate agent is a licensed professional who assists in real estate transactions. They’re also small business owners who set their own schedules and have the freedom to grow their income exponentially. It also offers a lot of variety because no two clients, properties, or days are the same.
How much do Real Estate Agents Make?
According to Indeed, the average annual salary for a real estate agent in the U.S. is $94,031. That’s not bad for a career that doesn’t require a college degree.
What’s more, Indeed reports that real estate agents earn a typical commission is 5-6% of the home’s listing price. Real estate agents specializing in a luxury niche or working in an expensive market could earn more than $94,000 per year.
The real estate industry offers many benefits and opportunities for real estate agents. These include the ability to make more money and be in control of your schedule. Who doesn’t want that
Below are the steps you’ll need to take to become a real estate agent.
5 Steps to Become a Real Estate Agent
1. Know Your State’s Requirements
Real estate licenses, like medical or law licenses, are issued at the state level. There is no national real estate license. The first step to becoming a real estate agent is learning your state’s licensing requirements. The Association of Real Estate License Law Officials (ARELLO)’s has a great directory you can use.
State-specific licensure requirements include:
- Years of age
- Education requirements (usually, a minimum of a high school diploma or GED is required)
- Approved pre-licensing courses
- Necessary exams
- Exam eligibility
- Application process and fees
- Background checks, fingerprinting, and criminal history
- Post-licensing courses and continuing education
As you research your state’s specific requirements, it’s important to note that some states have reciprocity with other states. That means they recognize the real estate license of others states, and you can use it there without taking an additional license examination. For example, Alabama, Colorado, Maine, Mississippi, and Virginia have full license reciprocity. They recognize real estate licenses from all 50 states. New York has reciprocal licensing agreements with nine states. And 17 states have no real estate license reciprocity. For a complete list, check out this Real Estate License Reciprocity Guide.
2. Complete a Pre-Licensing Course
Every state requires real estate agents to complete a pre-licensing course. There are a ton of in-person and online courses out there. We recommend selecting an ARELLO-accredited real estate school that also offers exam prep.
Real estate course requirements vary by state, so you want one that meets your state’s requirements. For example, California requires 135-course hours. New York requires 75 hours. And Florida? It only requires 63 hours.
ARELLO regulates real estate practice and enforces real estate law. A real estate school with an ARELLO accreditation ensures your coursework will be up-to-date and prepare you to pass your state’s real estate licensing exam.
3. Pass Your State’s Real Estate Licensing Exam
After you complete your pre-licensing course and pass your pre-licensing exam, it’s time to study for, schedule, and pass your state’s licensing exam. You should receive information on how to schedule, register, and pay for this exam during your pre-licensing course.
Again, it’s essential to know your state’s requirements.
Some states require applicants to get fingerprinted and complete a background check before taking the state exam. Additionally, some states require applicants to have Errors and Omissions Insurance beforehand.
Most state real estate licensing exams are administered by third-party testing centers and charge an application fee and a test fee.
The exams are usually computerized and consist of two parts. The first is a national portion comprising general real estate principles and practices. The second is a state-specific section of the state’s real estate laws. The sections are scored separately, and you must pass both portions to obtain your real estate license.
All questions are multiple-choice. The number of questions and time allotted for the exam vary by state.
Additionally, if you don’t pass, each state has its own rules for how and when you may retake the exam.
Once you pass the exam, you’ll need to submit your real estate license application. This is done through your state’s real estate regulatory organization and requires another fee.
You will receive your real estate license once your application is approved. You will also be listed on the licensee’s section of your state’s real estate authority. You cannot work as a real estate agent until you receive your license.
4. Find a Real Estate Brokerage
A real estate broker is a licensed real estate professional who is also a licensed real estate agent. They typically work for a brokerage firm or company. Their primary job is to serve as a middleman between buyers and sellers in real estate transactions. They oversee the entire process and ensure all laws are followed.
Real estate agents are required to work under real estate brokers. That’s why finding a real estate broker is essential to becoming a successful real estate agent.
Real estate brokers influence how you get paid, your commissions, and the resources available to help you in your real estate career.
Generally, brokers pay you a percentage of the real estate commissions it collects from your real estate transactions. How much you earn will depend on years of experience, the real estate market, and whether you work as a part-time or full-time real estate agent.
Some brokers may charge desk fees, tech fees, referral fees, and marketing materials. That’s right! Many brokers will help you launch and market your real estate business. Services can include business cards, social media content, and professional headshots. Choose a broker with resources for new agents who can help set your real estate business up for success.
And be mindful of other expenses you’ll have when negotiating your commission. These include annual license renewals, post-licensing courses, continuing education, lockbox feels, and Multiple Listing Service (MLS) memberships). These fees can add up, so do your research before signing on with a broker.
Note: Some states require you to find a sponsoring broker to take the real estate license exam.
5. Consider Becoming a Realtor
Real estate agents and realtors are often used interchangeably, but they’re two very different things.
A real estate agent is a licensed professional who helps people buy and sell real estate.
A realtor is a National Association of Realtors (NAR) member who subscribes to the organization’s strict Code of Ethics. The Realtor Code of Ethics encompasses every aspect of real estate transactions and requires realtors to operate with the highest integrity.
Realtors may be real estate agents. They may also be home appraisers, property managers, counselors, and brokers who are active members of NAR.
Becoming a realtor isn’t a requirement for being a real estate agent. But it does have its perks.
Membership costs roughly $185 per year and gives you access to the following:
- Realtors Property Resource (RPR)
- Continuing education opportunities
- Discounts on items you need to build your business
RPR is the largest real estate database in the U.S. It uses public records and assessment information to provide comprehensive data and statistics for each real estate market and property. The data includes zoning, permits, mortgage, liens, schools, and foreclosure information.
The Bottom Line
Becoming a real estate agent offers a lot of potential to earn more money while having greater flexibility and freedom than other careers. However, it takes time and money to become a real estate agent. And once you have your real estate license, it takes time and money to invest in building a successful real estate business.