Is Real Estate Broker The Career For You?
Real estate brokers and sales agents help clients buy, sell, and rent properties. According to the Bureau of Labor Statistics, employment of real estate brokers and sales agents is projected to increase 11% between 2012 and 2022 – about as fast as the average for all occupations. By 2022, there should be about 380,300 sales agents and 88,300 brokers working in the industry.
Many people think being a successful broker or sales agent is easy. Part of this misconception is because it's a relatively easy field to enter. Although you need a license to work as either a broker or sales agent – and licensing requirements vary by state – it's very possible to take the required classes, sit for the exam and start working in under two months.
Getting the license is the easy part. Becoming successful and making a sustainable income as a real estate broker or sales agent is hard work – and, in most cases, requires a substantial commitment of time, effort and even money.
For one thing, although many of the job functions are similar, there are two different levels of real estate professional. Sales agent is the first step: Once licensed, which involves passing a state exam, sales agents must work for and under the umbrella of a licensed real estate broker. Brokers, who have to pass a second exam, can work independently and employ sales agents. Note that you'll also hear the term realtor, which can be used by a real estate agent or broker who belongs to the National Association of Realtors – the largest trade association in the U.S. – and subscribes to its strict Code of Ethics. (See Understanding The National Association Of Realtors.) For more information on these, see What are the differences among a real estate agent, a broker and a realtor?)
Like any career, it helps to be suited to the requirements of the job. Read on to see whether a real estate career is a good fit for you.Administrative Duties
Being a sales agent or broker requires handling a heavy load of administrative detail. Legal documents must be accurate, events must be coordinated for multiple listings. On any given day, you might have to:
Complete, submit and file real estate documents, agreements and lease records
Organize appointments, showings, open houses and meetings
Create and distribute flyers, newsletters and other promotional materials
Develop and maintain paper and electronic filing systems for records, correspondence and other material
Create monthly, quarterly and annual budgets
Develop marketing plans for listings
Create and build on client databases
Research active, pending and sold listings and draft comparative market analysis (CMA) reports
Respond to texts, emails and phone calls
Update websites and social media profiles
An established sales agent or broker might have the budget to hire an assistant to handle some or all of these administrative tasks. When you're just getting started in the industry, you'll probably have to take care of them yourself.
Are you detail-oriented and good at paperwork and working on the computer? Do you have the organizational ability and drive required to manage these administrative duties?Lead Generation
Finding clients is central to your success as a sales agent or broker: After all, without buyers and sellers, there would be no transactions and, therefore, no commissions. A common way to build contacts and generate leads is through a real estate sphere of influence (SOI) strategy that focuses on generating leads through people you already know, including family, friends, neighbors, classmates, business associates and other social contacts.
Because most people will buy, sell or rent property at some point in their lives, everyone you meet could someday be a client. That means your day might regularly include meeting and speaking with lots of people, handing out your business cards and filing away contact information to build out your SOI. After the first contact is made, you'll need to follow up with phone calls, emails, snail mail or text messages so that the people you have met remember your name for the future.
Are you comfortable meeting people, making phone calls (or sending messages) and advertising/promoting yourself on a daily basis? Do you have the diligence to follow up with potential clients, even if you feel they are just kicking the tires?Working With Clients
Whether you are working with buyers or sellers, you will typically spend part of each day working directly with clients – and it won't always be during business hours. As seller's agent, for example, you may spend time preparing a listing presentation, taking digital photographs of a client's property and staging the home so it shows well. As a buyer's agent, you may spend time combing through the Multiple Listing Service (MLS) to find suitable listings, printing or emailing the listings to the potential buyers, and showing the property to interested buyers. You may also accompany clients to inspections, meetings with loan officers, closings, and other activities where your presence is either required or requested.
Do you enjoy working directly with people and can you be patient when your clients are indecisive? Are you OK giving up your weekends to show house number 37 to a client who insists on finding the perfect home? Can you respond graciously to clients who have decided – after you've shown them many properties – that now is not the best time for them to move?Uneven Income Stream
Most sales agents and brokers make money through commissions, usually as a percentage of the selling price of the property, or, less frequently, as a flat fee. In general, commissions are paid only if and when you settle a transaction. Ultimately, this means that you could work hard for days, weeks or even months without taking home any money at all.
Of course, when you do close a sale, you don't always get to keep the entire commission since it is often shared among several people involved in the transaction. In a typical real estate transaction, for example, the commission might be split four ways, among the:
Listing agent – the agent who took the listing from a seller
Listing broker – the broker for whom the listing agent works
Buyer's agent – the agent who represents the buyer
Buyer's agent's broker – the broker for whom the buyer's agent works
To provide an example, let's assume a sales agent takes a listing on a $200,000 house at a 6% commission rate. The house sells for the asking price, and the listing agent's broker and buyer's agent broker each get half of the $12,000 commission, or $6,000.
The brokers then split the commissions with their sales agents – say 60% for the sales agent and 40% to the broker – so each sales agent receives $3,600 ($6,000 X 0.06), and each broker keeps $2,400 ($6,000 X 0.04). The final commission breakdown would be:
Listing agent – $3,600
Listing broker – $2,400
Buyer's agent – $3,600
Buyer's agent's broker – $2,400
Are you comfortable living without a regular paycheck? Are you OK sharing your commission with others, even if you feel you may have worked harder?The Bottom Line
Working as a real estate sales agent or broker can be a fulfilling and financially rewarding career, but it's not easy. Consider what a career in real estate is really like: drumming up business on a daily basis, promoting yourself, keeping track of leads, providing exceptional customer service to a wide variety of clients (some of whom may be very easy to work with; others, less so), and the potential of working for days, weeks or even months without a paycheck.
If you are comfortable with these realities – and you enjoy hard work, are a self-starter and like the idea of making your own schedule – a career in real estate might be right for you. The 2012 median income for brokers was $41,990, but if you sell enough properties, especially high-end ones, you can make significantly more.