If you’re reading this article, then chances are you want to learn how to become a real estate agent. I don’t blame you. All you have to do is watch a promo for Million Dollar Listing to see just how exciting and lucrative a career in real estate can be.
In this guide, I’m going to give you the advice I wish I had when I started my career in New York City real estate five years ago. I’ll walk you through each step as well as (hopefully) help you answer your most important question once and for all— Is becoming a real estate agent the right career move for you? And if it is, what’s the best route to success? Ready to get started? Here are the six steps you need to take to become a real estate agent in 2018.
We would like to thank Kaplan Real Estate Education, a provider online real estate courses, for sponsoring this article. Kaplan offers a great e-book on “Launching Your Real Estate Career” which can be downloaded for free here. All views expressed in this article belong exclusively to Fit Small Business.
Step 1. Find Out if You Have The Skills You Need to Become a Great Real Estate Agent
If Hollywood actually reflected reality, then all you would need to succeed as a real estate agent would be dashing good looks, a 1,000 watt smile, a (preferably convertible) Mercedes, and a willingness to abandon ethics and morals at the drop of a hat.
Luckily, Hollywood’s portrayal of real estate agents is about as accurate as their portrayal of spies. Let’s take a look at what soft and hard skills you’ll need (and what you don’t need) to thrive as a real estate agent.
You DON’T Need to be a “People Person”
People who are buying or selling houses are embarking on one of the most expensive and important journeys of their lives. When there are hundreds of thousands or even millions of dollars at stake, most people weigh trustworthiness, competence, and strategy far more heavily than personality. In order to land your first clients, you need to be sociable enough to approach them, but WHAT you say is often more important than how you say it.
You DO Need to be Self Motivated
As a real estate agent, you’re not technically an employee of anyone. Instead, you’re an independent contractor, an empire of one. That means your sponsoring broker isn’t technically your boss, and though they generally have a vested interest in your success, at the end of the day your success rests squarely on your shoulders. By law, your sponsoring broker can’t even force you to come into the office. Since they’re not paying you a salary, they have little incentive to motivate you to work hard enough to get ahead.
You DON’T Need to Have a Professional Background to Succeed in Real Estate (but it helps)
Contrary to what many people will tell you, you don’t necessarily need a certain professional background to succeed in real estate. Barbara Corcoran, founder of The Corcoran Group as well as star of Shark Tank, was a waitress before she decided to become a real estate agent. While a professional background may help, it’s far from a prerequisite. That said, here are some hard skills that will give you a slight advantage over other beginning real estate agents.
Marketing and Advertising Skills
While hard skills in graphic design, or increasingly in technology, will be a huge leg up in getting leads you should at least understand the basic concepts of advertising, marketing, copywriting, and public relations.
Business and Negotiation Skills
You need to be able to communicate by email, phone, and text professionally and efficiently. You’ll also need to be able to assess the value of homes by creating comparative market analyses, weigh the value of different homes or offers for your clients, and interact with coworkers and colleagues in a professional manner.
Customer Service Skills
At the end of the day, your primary function as a real estate agent is to help your client buy or sell a home. That means you need to attend to their needs, allay their worries and concerns, and help them buy or sell a home. Customer service skills can go a long way in the real estate industry.
You DO Need to Work Evenings and Weekends
Not willing to sacrifice your evenings and weekends to get ahead? Look elsewhere. Success in real estate will be virtually impossible for you. Why? In order to close deals, you need well qualified buyer and seller clients. The vast majority of well qualified buyer and seller leads have jobs. That means when you’re sitting in the office ready to go look at 5 new homes, they’re sitting in meetings at work and won’t be able to come meet you until 6:00 pm at the earliest. So yeah, you’re going to be working the weekends. Get used to it.
You DO Need be Able to Support Yourself For a Few Months Without an Income
While the barrier to entry for real estate is much lower than many professional careers, you will still need to be able to support yourself without any income for at least 3-6 months. Let’s take a look at some of the expenses you’ll incur as a brand new real estate agent.
First, you need to factor in the costs to become a real estate agent. You need to pay for pre-licensing courses, application fees, and NAR membership. This can easily cost between $200 and $500 before you even make a dime as a real estate agent. Then you’re probably going to need to buy business cards, real estate signs, a good CRM, as well as leads from lead sources like Zillow Premier Agent.
Then, you need to find a great brokerage to work for and cut your teeth in the industry and make the beginner mistakes you need to make to grow. Even if you get some clients right away, deals can take months to close. Add it all up and you need to have a means to support yourself without an income for at least three months, preferably six. Yes, you can get a decent free CRM , and there are plenty of ways to save money, you still need to be prepared to survive for at least a few months with no income. If you think you can make that work, read on for step two.
Step 2: Register for a Real Estate Pre-Licensing Course
The next step to becoming a real estate agent is to sign up for your real estate pre-licensing course. All states require you to pass a certain number of real estate classes before you can take the exam. Registration costs anywhere from $99 to $649 or higher depending on your state and the real estate school you enroll at. If you’d like to learn about more about real estate schools, check out our in-depth guide of the best real estate schools here. We recommend Kaplan.
The exact real estate licensing requirements vary by state. They range from 24 credit hours in Massachusetts to 210 credit hours in Texas. Most states fall in between, however, requiring 50 to 100 credit hours.
Pre-licensing classes teach you the basics of real estate, such as legal issues, mortgages, contracts, and valuing properties. While the topics covered will vary slightly from state to state, all states require courses in fair housing law.
You can take these classes in person at a local college, or from an online school like Kaplan Real Estate Education. The benefit of taking classes online is that you get to work at your own pace and set your own hours, which is especially helpful for those who need to continue working their day jobs.The downside is that it can be more difficult to ask questions and interact with your instructor.
Real Estate Licensing Requirements in all 50 States for 2018
The only problem is that real estate pre-licensing courses and the general requirements to become a real estate agent differ widely from state to state. For example, the laws in California are very different than the laws in New York. Click your state below to find out the exact real estate licensing requirements in your state.
Step 3: Take (and Pass) the Real Estate Licensing Exam in your State
As soon as you finish your real estate courses, you’ll want to sign up to take the real estate licensing exam. We recommend doing this right away so (1) the concepts from the pre-licensing courses are fresh in your head and (2) because the paperwork to register for the exam can take a while to process. The sooner you sign up, the shorter the gap between finishing classes and earning your license.
To sign up for the exam, you need to fill out an application. In New York, this comes with a $15 fee. In California, it’s a $60 fee. You also need to provide a transcript from your real estate school that proves you passed the required pre-licensing courses.
The test format varies from state to state, but it’s typically a multiple-choice test that takes 1.5 to 3.5 hours to complete. The test covers state and national real estate laws and principles. In order to pass, you have to answer 70 to 75% of the questions correct.
Since you’re going to be committing time and money toward your real estate pre-licensing courses, you’re going to want to take this test seriously. If you want to increase your chances of passing on the first try, you might want to consider adding exam prep to your study regimen. To learn more about real estate exam prep, including plenty of free resources, check out our guide on real estate exam prep here.
Step 4: Find a Sponsoring Broker, and Join a Real Estate Brokerage
So you took the exam and passed with flying colors. Now you’re ready to buy that Mercedes convertible and start on your first million right?
Not so fast. Before you can get legally work as a real estate agent, you’re going to need to find a real estate broker to sponsor you, as well as join a brokerage.
What is a real estate broker? A real estate broker is somebody who has a lot of experience in the real estate industry and took extra courses to receive their brokerage license. This license grants them the right to manage or run a real estate business. All agents are required to “work under” a broker, since the broker will oversee their transactions and take some liability off their shoulders. If you want to learn more about the role of real estate brokers, check out our article Real Estate Agent vs. Broker: What’s the Difference?.
There are a lot of different kinds of brokerages to choose from, from national franchises to small boutique brokerages. Since they will determine your commission splits and desk fees, this will have a huge impact on how much money you make as a real estate agent. For more guidance on what to think about when choosing a brokerage, check out our in-depth guide on how to choose a real estate brokerage to work for here.
Luckily finding a brokerage is pretty easy. Ask other agents that you know and trust if their brokerage is hiring. You can also go to your favorite job search website like Indeed or Craigslist and look for brokerages seeking agents. If you don’t find any that you like, run a quick Google search for brokerages in your area, and reach out directly.
Step 5: Submit Your Real Estate License Application 7 Start making $$$
Once you’ve found a broker who will you sponsor you, you can finally submit your application for a real estate license. On the application, you’ll include your pre-licensing course transcripts and proof of passing the licensing exam. You’ll also need to provide your broker’s ID number, as well as your own state ID (e.g. a driver license) and Social Security Number.
The application requires an additional fee – In New York, it’s $50. In California, it’s $245, plus a $49 fee for fingerprinting. Other states will require you to submit to a background check, along with fingerprinting, so there may be additional fees.
Step 6: (optional) Purchase Errors and Omissions Insurance (E&O) and Join the National Association of Realtors (NAR)
Depending on the state you live in and/or the brokerage you join, you may have to do two more things before you can start selling homes.
Errors and Omissions Insurance (E&O)
E&O insurance is a type of liability insurance that can protect real estate agents if they make a mistake during a transaction. A classic example involves two Pennsylvania-based real estate agents who failed to disclose a home they sold was the scene of a gruesome murder-suicide. As told by the Wall Street Journal, this resulted in a 7-year legal battle after they were sued by their client.
Currently, 12 states, mostly in the South and Midwest, require agents to be covered with bare-minimum E&O insurance. The rest of the states do not have a requirement, although individual brokers might. The cost is about $600 per year for an individual policy. In most cases though, your broker will provide coverage through their office account. Before you sign on with a real estate brokerage, make sure to ask if E&O insurance is included. Even if it’s not provided by your firm or required, it can be a good idea to get coverage.
Join the National Association of Realtors (NAR)
NAR is an optional trade association for real estate agents. Although the word “Realtor” is sometimes used interchangeably with “real estate agent,” Realtor actually refers exclusively to NAR members. By joining the NAR, you get the privilege of becoming a “Realtor.”
You join NAR through your local real estate board. The cost (called dues) are roughly $200 to $500 per year.
Main Benefits of Joining NAR
The main benefit of joining the National Association of Realtors is that you will have automatic listing sharing agreements with all other members of your local association of realtors. That means when one member signs an exclusive home for sale, all other members are allowed to show that house to their buyer clients, and collect a commission on the sale if they decide to buy it. NAR also has a code of ethics that all member agents must follow, as well as shared legal contracts, documents, and discounts on goods and services.
While it is possible to work as a real estate agent without joining NAR, if you live in any other city besides New York City, you would be making a big mistake not to. Membership is cheap, and the benefits far outweigh the cost.
In New York City Join REBNY Instead of NAR
The only place where joining NAR is probably not worth your time is in New York City. Instead of NAR, we have REBNY (The Real Estate Board of New York) that offers shared listings and legal documents and a code of ethics. If you’re planning on working in New York City, joining REBNY is a must.
The Bottom Line
With the final requirements completed, you should be well on your way to selling and buying homes. If you’re looking for more information on how to become a real estate agent, check out this free ebook from Kaplan on Launching Your Real Estate Career.
Once you’ve become a real estate agent, check out the rest of our Realtor section in order to learn everything you need to know to succeed as an agent.