Planning to start a new career or a side hustle to earn extra money? You might be thinking about real estate. Those who take the leap will join the nation's estimated three million active real estate licensees.
Compared to other careers with similar earnings potential, it's relatively easy to become a real estate agent or broker. There are lots of perks, too—like being your own boss, meeting new people, and helping people through one of life's biggest milestones. Still, building a successful real estate career is more work than many people imagine. Here's a closer look at the job to help you decide if a career as a real estate agent or broker is right for you.
Key Takeaways
- Working as a real estate agent or broker can be fulfilling and financially rewarding, but it’s not easy.
- A career in real estate requires drumming up business, promoting yourself, tracking leads, handling complex paperwork, providing customer service, and much, much more.
- Most real estate agents are paid on a commission-only basis, so there is the potential of working without a paycheck.
Job Outlook for Real Estate Agents and Brokers
Real estate agents and brokers help clients buy, sell, and rent properties. According to the Bureau of Labor Statistics (BLS), the number of real estate agent and broker jobs is projected to increase by 3% between 2022 and 2032, which is slower than the average for all occupations.
Still, the BLS notes that "there will be a continued demand for real estate brokers and sales agents, because people turn to these workers when looking for a new home, relocating, or purchasing property for a business, among other reasons. Employment is projected to grow along with the real estate market."
Pros and Cons of Selling Real Estate
Some of the pros may be the very reasons someone chooses to go into selling real estate. You can often set your own hours and be your own boss. The potential to earn substantial commissions is also tempting, and for those who enjoy selling and meeting people, selling real estate can be an engaging way to spend your workday.
Earning a living selling real estate is hard work. You have to be organized in order to keep track of legal documents, meetings, and all the tasks that go into multiple listings. You may go without a paycheck for periods of time because the work is often commission-based. If you don’t sell, you don’t earn anything.
Real Estate Agent Job Duties
Of course, getting a license is the easy part. Becoming successful and making a sustainable income as a real estate agent or broker is hard work. In most cases, it requires a substantial commitment of time, effort, and even money.
Administrative Duties
For starters, being a sales agent or broker requires managing a heavy load of administrative tasks. Legal documents must be accurate and 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.
Consider whether you're detail-oriented and good at paperwork. Do you have the organizational skills and drive to handle these administrative duties on a regular basis? Are you able to juggle multiple tasks on a deadline?
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. One common way to build contacts and generate leads is through a real estate sphere of influence (SOI) strategy, which focuses on generating leads through people you already know, including your:
- Family
- Friends
- Neighbors
- Classmates
- Business associates
- Other social contacts
That means your day might regularly include meeting and speaking with many people, handing out business cards, sharing contact details, and filing away contact information to build out your SOI. After you make first contact, you’ll need to follow up with phone calls, emails, snail mail, or text messages so the people you meet remember your name for the future.
Because most people buy, sell, or rent property at some point in their lives, everyone you meet may be a client someday. Are you comfortable selling yourself? Are you willing to drum up business with family, friends, neighbors, and other social contacts?
Working With Real Estate Clients
You'll spend part of each day working directly with clients, whether they're buyers, sellers, or renters. And keep in mind that it won’t always be during business hours. That means you may have to sacrifice some of your personal time—time you spend with family and friends. If something pops up at the last minute, it may mean canceling your existing plans.
A seller's agent represents the person selling the home and you'll spend time preparing listing presentations, taking digital photographs of properties, staging homes so they show well, marketing properties, and hosting open houses.
A buyer's agent represents the person buying a home and you may spend time combing through the Multiple Listing Service (MLS) to find suitable listings and sending them to potential buyers. You'll also show the property to interested buyers and accompany your clients to inspections, meetings with loan officers, closings, and other activities for which your presence is either required or requested.
Are you comfortable working with the public? Can you maintain enthusiasm and professionalism, even when you have a tricky or demanding client?
How to Become a Real Estate Agent
There's no national real estate license, so you'll have to meet your state's unique licensing requirements. Visit your state's real estate regulatory office website for information, or check out the regulatory agency directory from the Association of Real Estate License Law Officials (ARELLO).
These are the general steps to becoming a real estate agent:
- Take a prelicensing course
- Take (and pass) the licensing exam
- Activate your real estate license
- Join a real estate brokerage
Real estate agents always work under the umbrella of a licensed real estate broker. Eventually, you may want to become a broker yourself, in which case you'll need to meet additional educational and experience requirements. When you have acquired your broker license, you can work independently and hire sales agents to work for you.
In most cases, you can expect to spend about two to five months completing school and getting your real estate agent license. And you'll need some cash, too. Between the licensing course, application fee, fingerprint/background check, and exam, you might want to budget anywhere from $550 to $1400 to get started, depending on the state. Not to mention the startup expenses such as Multiple Listing Service fees, business cards, sale signs, open house signs, website, and other miscellaneous costs, which can add up fast.
The term Realtor can only be used by real estate agents, brokers, and other industry professionals who are members of the National Association of Realtors (NAR)—the largest trade association in the U.S. All Realtors must pay an annual membership fee and subscribe to NAR's strict Code of Ethics.
When deciding if a career in real estate is right for you, be sure to consider whether you have the time and cash to get your license and cover your startup costs.
Real Estate Agent Earnings
Most real estate agents and brokers don't earn a salary. Instead, they make money through commissions, which are usually a percentage of the selling price of the property, or less frequently, a flat fee.
In general, commissions are paid only 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. Like other commission-based jobs, it can be feast or famine.
$49,980
The average annual pay for a real estate agent. For real estate brokers, the figure is $62,190.
Of course, when you do close a sale, you generally don’t keep the entire commission. That's because commissions may be shared with the other agents and brokers. For example, the commission might be split four ways:
- Listing agent: The agent who took the listing from a seller
- Listing broker: The broker the listing agent works for
- Buyer's agent: The agent who represents the buyer
- Buyer's agent's broker: The broker the buyer's agent works for
Here's an example. Say a sales agent takes a listing on a $200,000 house with a 6% split commission. The house sells for the asking price, and the listing agent's broker and buyer's agent broker each get $6,000, half of the $12,000 commission.
Next, the brokers 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 0.6), and each broker keeps $2,400 ($6,000 X 0.4). The final commission breakdown would be:
- Listing agent—$3,600
- Listing broker—$2,400
- Buyer's agent—$3,600
- Buyer's agent broker—$2,400
A 2024 settlement by the National Association of Realtors (NAR) is shaking up commissions for buyers agents. If terms of the settlement are approved, the decades-long practice of advertising buyer's agent commission splits on the MLS will end. After the changes take effect (which is scheduled to be July 2024), buyer's agents will have to negotiate their fees directly.
Do you have the financial reserves to go weeks or months without a paycheck? Are you OK with an uncertain income? Though many real estate agents and brokers work part time, the most successful ones are available whenever their clients need them—whether that's during business hours, evenings, or weekends. Are you OK giving up your nights and weekends? Are you in a position to dedicate that much time to your career?
How Long Does it Take to Become a Real Estate Agent?
While every state has its own specific requirements to earn a real estate license, the most time-consuming requirement is prelicensing education. And every state varies in the number of required education hours. California, for instance, requires 150 hours of prelicensing education for a residential license. Depending on the time you are able to dedicate, online or home-study courses may take less time.
How Much Does it Cost to Become a Real Estate Agent?
Prepare to pay several fees and costs in order to become a real estate agent: prelicensing education fees, real estate exam fees, and application and fingerprinting fees. In order to begin working, you might also need to plan for the expenses of marketing and business costs.
Does My Real Estate License Need to Be Renewed?
Each state has specific requirements for keeping your credentials up to date. Real estate professionals in New Hampshire, for example, need to renew their licenses every two years from the date their licenses were issued. California real estate licenses must be renewed every four years from the date on the license.
Can I Use My License to Practice in Other States?
Real estate commissions and boards across the country are adopting policies for a real estate agent in one state to more easily become licensed in another state. Check online to see if your state has implemented reciprocity agreements with other states. The Connecticut Real Estate Commission, for example, has entered into reciprocal agreements with 13 other states, including Alabama, Colorado, Florida, Massachusetts, and Oklahoma.
The Bottom Line
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. If you sell enough properties, you can earn a very comfortable living.
A career as a real estate agent or broker can be both challenging and financially rewarding. But keep in mind that there are many different unique opportunities for anyone who wants to work in the industry. You could be an agent or appraiser, or a professional or investor. You might decide to work strictly with residential properties or perhaps you're more interested in commercial buildings. Whatever you choose, be sure you meet the job requirements and are prepared for hard work.
