How to Make Money as a Real Estate Agent
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Real estate can be a lucrative and rewarding career for those interested in the industry. While becoming a real estate agent requires completing pre-licensing education and passing a state licensing exam, the potential benefits of a career in real estate are numerous. From flexible work schedules to high earning potential, there are many reasons why someone may want to consider a career in real estate.
In this article, we'll explore the advantages of a career in real estate, and provide insight into what it takes to succeed in the industry. Whether you're considering a career change or starting out, read on to learn more about why real estate might be the right path.
In this article
What you need to become a real estate agent
If you're considering a career in real estate, you may be wondering what requirements you need to meet to become a licensed real estate agent. While the specific requirements vary by state and country, some general requirements apply to most areas.
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Education requirements
One of the first requirements to become a real estate agent is to complete a certain amount of education. Most states require aspiring real estate agents to complete a pre-licensing course covering real estate laws, contracts, property management, and ethics in the United States. The number of hours required for this course varies by state, but it typically ranges from 60 to 180 hours.
After completing the pre-licensing course, aspiring agents must pass a licensing exam. The exam covers topics related to real estate law, practice, and procedures. The exam format varies by state, but it is usually a multiple-choice test that can be taken online or in person at a testing center.
Background check
Most states also require applicants for a real estate license to pass a background check. This may include a criminal history check, credit check, or both. A negative history in either of these areas may result in denying the application.
Age and residency
You must be at least 18 to become a real estate agent in the United States. Some states may also require that you be a legal resident of the state where you plan to work.
Brokerage affiliation
To legally work as a real estate agent, you must be affiliated with a licensed real estate brokerage. You'll typically need to apply and be accepted by a brokerage before you can begin working as an agent. The brokerage will provide you with the support, training, and resources you need to succeed in the industry.
Continuing education
Once you've obtained your real estate license, you must take continuing education courses to keep your license active. These courses may cover topics such as ethics, fair housing laws, and recent developments in the real estate industry. The number of hours required varies by state.
How much money do real estate agents make?
According to the Bureau of Labor Statistics, the median annual wage for real estate agents in the United States was $48,340 as of May 2021, averaging $23.45 per hour.
Earnings can vary widely depending on location and other factors. For example, real estate agents in the top 10% of earners in the industry may earn upwards of $102,170 per year, while those in the bottom 10% may earn less than $28,270 per year.
Commission rates are also important when determining potential earnings as a real estate agent. Commission rates can vary widely depending on the brokerage and the location. Still, the standard rate is typically 6% of the sale price of a property, split between the buyer's and seller's agents. However, some brokerages may offer higher or lower commission rates or different commission structures for different properties.
The type of properties you specialize in can also impact your potential earnings as a real estate agent. For example, agents specializing in luxury or commercial properties may earn higher commissions than those focusing on residential properties.
Is it possible to work real estate part-time?
Yes, working as a part-time real estate agent is possible as a side hustle. In fact, many real estate agents start out part-time while maintaining other jobs or responsibilities and gradually transition to full-time as their business grows.
Working as a part-time real estate agent can offer greater flexibility and allow you to pursue other interests or responsibilities while still earning income from real estate transactions. However, it's important to remember that real estate can be a demanding and competitive industry, and working part-time may require extra effort and dedication to succeed.
To work as a part-time real estate agent, you'll need to be able to balance your real estate responsibilities with your other commitments. This may involve scheduling showings and client meetings outside of your regular work hours and staying organized to ensure you can meet your clients' needs.
Keep in mind that real estate is a commission-based industry, so your income as a part-time agent may be less predictable than a regular salary. It may also take longer to build up a steady stream of clients and transactions since you may have less time to dedicate to marketing and networking efforts.
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Training to be a real estate agent
One of the first requirements to become a real estate agent is to complete a certain amount of education. Most states require aspiring real estate agents to complete a pre-licensing course covering real estate laws, contracts, property management, and ethics in the United States. The number of hours required for this course varies by state, but it typically ranges from 60 to 180 hours.
Pre-licensing classes
The content of a pre-licensing course varies by state and jurisdiction. Still, it generally covers the fundamental knowledge and skills essential for a successful career as a real estate agent. The curriculum typically includes topics such as:
- Real estate principles and practices: This includes an introduction to the basic concepts of real estate, such as property rights, ownership, land use, and zoning.
- Real estate law: This covers federal, state, and local laws that govern real estate transactions, including contracts, agency, disclosure, and fair housing laws.
- Real estate finance: This covers the basics of financing real estate transactions, including mortgages, loans, and other financing options.
- Property management: This includes the principles and practices of managing residential and commercial properties.
- Ethics and professionalism: This covers the ethical and professional standards expected of real estate agents, including client confidentiality, conflict of interest, and fiduciary duty.
Licensing exams
After completing the pre-licensing course, aspiring agents must pass a licensing exam. The exam covers topics related to real estate law, practice, and procedures. The exam format varies by state, but it is usually a multiple-choice test that can be taken online or in person at a testing center.
The real estate exam typically covers both national and state-specific topics. The national portion of the exam usually covers fundamental concepts in real estate, such as property ownership, land use, property transfers, contracts, agency, fair housing laws, and real estate finance. The state-specific portion of the exam focuses on the laws and regulations that govern real estate transactions in the state where the exam is being taken.
The real estate exam is usually computer-based, although some states may offer a paper-based option. The exam typically consists of multiple-choice questions, and the number of questions and time allowed can vary by state. In general, the exam is designed to assess the candidate's knowledge of the key concepts and laws related to real estate.
To prepare for the real estate exam, it is important to review the content covered in the pre-licensing course, which typically provides the foundational knowledge needed to pass the exam. Many individuals also enroll in exam preparation courses or study guides that provide additional practice questions and tips for passing the exam.
Overall, the real estate exam is important in becoming a licensed real estate agent. By demonstrating a thorough understanding of the key concepts and laws related to real estate, individuals can become licensed to represent clients in buying, selling, and managing real estate transactions.
Brokerage affiliation
In most jurisdictions, becoming a licensed real estate agent without joining a brokerage is impossible. This is because a brokerage is responsible for supervising and managing the work of its agents, ensuring that all transactions comply with local, state, and federal laws and regulations.
Additionally, a brokerage provides real estate agents with support, training, resources, and administrative assistance, which can be critical to an agent's success. Working with a brokerage can also give agents access to networking opportunities and a positive reputation in the industry.
Working with a brokerage is important for a variety of reasons, and can be a key factor in the success of a real estate agent. Here are some reasons why:
- Legal compliance: To legally practice real estate, you must be affiliated with a licensed brokerage. The brokerage ensures that all transactions comply with local, state, and federal laws and regulations. This protects both the agent and the client.
- Training and education: Brokerages typically provide their agents with ongoing training and education, which can help agents stay up-to-date on industry trends, laws and regulations, and best practices. This can help agents improve their skills and provide better client service.
- Support and resources: Brokerages often provide agents with various support and resources, including access to marketing materials, technology, administrative assistance, and legal support. This can help agents focus on building their businesses and serving their clients rather than worrying about administrative tasks.
- Networking: Working with a brokerage can provide agents access to a network of other agents and industry professionals. This can help agents build relationships, learn from others, and find new business opportunities.
- Credibility and reputation: Being affiliated with a reputable brokerage can provide agents with credibility and a positive reputation in the industry. Clients may be more likely to trust and work with agents associated with a well-known and respected brokerage.
Here are some steps to take to become affiliated with a brokerage as a real estate agent:
- Research brokerages: Start by researching brokerages in your area. Look for brokerages with a good reputation, strong leadership, and a positive culture. Consider factors such as commission splits, training and education opportunities, and the types of properties and clients they specialize in.
- Attend information sessions: Many brokerages offer prospective agents information sessions or recruitment events. Attend these events to learn more about the brokerage and its culture, and to meet other agents and leadership.
- Interview with brokerages: Once you've identified brokerages that interest you, reach out to schedule an interview. Come prepared with questions about the brokerage's commission structure, training and support, and marketing resources.
- Choose a brokerage: After interviewing with multiple brokerages, consider which one is the best fit for you. Consider factors such as the commission split, support and resources offered, training and education opportunities, reputation and culture of the brokerage, and the type of properties and clients they specialize in.
In some rare cases, it may be possible to obtain a real estate license and work as a non-active agent, which means that the agent is not actively engaged in buying or selling real estate on behalf of clients. However, even non-active agents are typically required to affiliate with a brokerage and may be subject to certain requirements, such as continuing education.
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How to make the most money in real estate
Real estate can be a highly lucrative career, but earning a high income as a real estate agent requires hard work, dedication, and strategic thinking. Here are some ways that real estate agents can make the most money in their careers:
- Specialize in a specific market: One way to make more money as a real estate agent is to specialize in a specific market, such as luxury properties or commercial real estate. By becoming an expert in a specific niche, you can develop a reputation as a go-to agent in that market and attract high-end clients willing to pay a premium for your services.
- Build a strong network: Building a strong network of clients, industry professionals, and referral sources is essential for real estate agents who want to maximize their earning potential. This involves actively marketing yourself and your services, attending industry events and networking opportunities, and developing relationships with other agents and professionals in the industry.
- Focus on high-demand areas: Real estate markets vary widely depending on location and other factors. Focusing on high-demand areas can help real estate agents attract more clients and close more deals. Researching local market trends, analyzing data on sales and rental prices, and staying up-to-date on new developments and opportunities can help agents identify areas of high demand and capitalize on them.
- Stay up-to-date on technology: Technology has revolutionized the real estate industry in recent years, and real estate agents who stay up-to-date on the latest tools and platforms can gain a competitive advantage. Using technology to automate administrative tasks, streamline client communication, and analyze data can help agents work more efficiently and effectively and focus on generating more business.
- Offer exceptional service: Offering exceptional service to clients is one of the most important ways to build a successful real estate career. Real estate agents can build a loyal client base and generate more business through referrals by providing personalized attention, responding quickly to client needs, and going above and beyond to meet their expectations.
Pros and cons
Pros
- Flexibility: Real estate agents often can set their own schedules and work from home or remotely. This can offer greater flexibility and work-life balance than some other professions.
- Earning potential: Successful real estate agents can earn a high income through commission-based earnings. This can provide financial stability and the potential for substantial income.
- Helping people: Real estate agents have the opportunity to help people find their dream homes or sell their properties, which can be very rewarding and fulfilling.
- Constant learning: Real estate agents must stay up-to-date on market trends, laws and regulations, and new technologies. This can provide ongoing opportunities for learning and personal and professional growth.
- Independence: Real estate agents have a degree of independence and autonomy in their work, which can be appealing to some individuals.
Cons
- Commission-based earnings: The commission-based nature of real estate earnings means that income can be inconsistent and unpredictable, creating financial instability for some agents.
- High competition: Real estate can be highly competitive, with many agents competing for the same clients and properties. This can make it challenging to build a successful business.
- Irregular work hours: Real estate agents often work evenings and weekends to accommodate clients' schedules, making work-life balance difficult.
- Client management: Real estate agents must manage client relationships, which can be challenging if clients are difficult or demanding.
- Industry demands: Real estate agents must stay up-to-date on market trends, laws and regulations, and new technologies. This can require significant time and effort to maintain a successful business.
FAQs
What are the requirements to become a real estate agent?
The requirements to become a real estate agent vary by state, but typically include completing pre-licensing education, passing a state licensing exam, and affiliating with a licensed brokerage.
How long does it take to become a real estate agent?
The time it takes to become a real estate agent can vary depending on how quickly you complete the pre-licensing education and pass the licensing exam. Some individuals can complete the process in a few months, while others may take longer.
How much does it cost to become a real estate agent?
The cost to become a real estate agent can vary depending on the state and the specific pre-licensing course and exam fees. Additionally, there may be additional expenses such as association fees, MLS fees, and brokerage fees.
Can I work as a part-time real estate agent?
Yes, it is possible to work as a part-time real estate agent as a side hustle. However, it's important to keep in mind that real estate can be a demanding and competitive industry, and working part-time may require extra effort and dedication to succeed.
How do I choose a brokerage to work with as a real estate agent?
When choosing a brokerage, it's important to consider factors such as the commission split, support and resources offered, training and education opportunities, reputation and culture of the brokerage, and the type of properties and clients they specialize in.
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The bottom line
Becoming a real estate agent can be a challenging but rewarding career path. To succeed in real estate, agents must build relationships with clients, market themselves and their properties effectively, and provide high-quality service. While the income of a real estate agent can vary widely depending on various factors, such as location and experience, those who are successful can potentially earn a high income through commission-based earnings. Ultimately, a career in real estate can provide flexibility, independence, and the opportunity to help people find their dream homes or sell their properties.
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