Want to be a real estate agent? The promise of a flexible schedule and the potential to determine your own income draws many to the real estate industry. The National Association of Realtors, the industry's largest trade association, reports it has more than 1.3 million members.
Becoming a licensed real estate agent is relatively simple, although the requirements vary from state to state. You’ll want to look up the specific prerequisites for your state, which are often determined by the state’s real estate commission. But state requirements are often similar, and the guidelines below apply throughout most of the U.S.
Here’s what you need to do to begin a career and succeed as a real estate agent:
Working as a licensed real estate salesperson is an ideal job for many, with flexible hours, high earning potential and a relatively quick process to become an agent.
Before jumping into a new career, however, know that your success in real estate may be tough to achieve. It’s beholden to the ebb and flow of the local economy, a strong understanding of the market and your willingness to put yourself out there to connect with consumers and other professionals.
Carefully weigh the pros and cons that come with being a real estate agent. While the potential income may seem limitless, in tough times for the housing market you may need additional funds to fall back on. Success in the industry is also dependent on your willingness to become a market expert, helping guide clients who are looking for the right neighborhood, negotiating a sale or even deciding whether to hold off on selling for the time being.
Meet the Minimum Age and Education Level
No real estate license in the U.S. requires a bachelor’s degree, but in many cases you need either a high school diploma or a GED. Even if high school equivalency isn’t required for the license, many colleges that offer real estate education courses do require equivalency to enroll. All 50 states require you to be either 18 or 19 years old, depending on the state, to become a licensed real estate agent.
Take Real Estate Education Courses
Most states require a minimum number of hours of instruction time, often either through an approved classroom or online course. Depending on the state, the requirement can be as few as 40 hours or as many as 300. Companies such as Kaplan Real Estate Education, Real Estate Express and Fit Small Business offer prelicense courses across multiple states. You can also inquire with your local college or even a local real estate brokerage that offers classes. Various branches of Better Homes and Gardens Real Estate, Coldwell Banker and Re/Max throughout the U.S. offer classes, sometimes with a reimbursed or discounted fee if the agent works for the broker after receiving his or her license.
Pass the Exam
Your prelicense courses should all lead up to your real estate license exam, which is issued by the state and covers working with clients, negotiating, closing a deal and following real estate law. Your state sets the minimum score to pass the test – in Michigan and California, for example, a 70% or higher score is required to pass, while in New Mexico a score of 75% is required. Most states allow you to retake the exam if you don’t pass the first time, although there may be a maximum number of attempts or time period between retakes.
Work for a Licensed Broker
In most states, you can’t get your license and immediately set up your own firm – you need to work under an experienced broker to gain experience. There’s a wide variety of employment options, however, whether you choose a traditional brokerage where you're placed on a team to gain experience from a top-producing agent or a nontraditional brokerage where you could work independently or specialize in a part of the transaction process that pays a salary.
At Richardson Properties, an independent brokerage and affiliate of Christie’s International Real Estate and Luxury Portfolio International in San Luis Obispo, California, the real training takes place when you work with an experienced agent. Charles Richardson, founder and broker at Richardson Properties, says new agents work under a seasoned agent for anywhere from six months to a year, learning the ropes when it comes to meeting client needs, holding open houses, connecting with potential future clients, negotiating and getting a deal to the closing table. During that time, he says, “There’s somebody there watching you and helping you.”
Once you become a licensed real estate agent, you’re able to be a part of the transaction itself, whether you’re representing a buyer, seller, renter or landlord. Of course, the key is in how you gain experience and work to grow your business as an agent. Here are four things seasoned agents recommend for a successful start to your new career.
If you’re working on commission, which most real estate agents are, you likely won’t be bringing home the big bucks right away because you don't get paid until you close a deal. Michael and Rebecca Straley, Realtors with eXp Realty in Stafford, Virginia, recommend looking at your assets before getting started. Be ready to feel your wallet tighten as you spend the first six months to a year establishing yourself on your own as an agent before you can feel comfortable that you’ll be closing enough deals to cover your cost of living without having to dip into savings. You may want to look at alternative options, like working for a brokerage that pays a salary rather than commission, or even taking on a second job while you’re getting started.
Know Your Market Well
Taking a real estate course will help you understand local real estate law, but as a professional you’ll have clients relying on you to help interpret real estate market changes, assess the value of a property and know how to negotiate effectively. But that can’t all be taught in an online course. “You’ve got to get in the business and learn from there,” Richardson says. He adds that the biggest success stories come from new agents who aren’t afraid to get out and introduce themselves to people they don’t know, an effective technique he discovered when he started in the business more than 50 years ago: “I learned really quick that I needed to get out and see the people.”
Real estate agents who get repeat customers, positive reviews and high commission are often those who specialize so they can meet different consumers’ needs. As members of NAR, many Realtors take courses through the association that certify them in specific fields, like military relocation or investor representation. The Straleys teach courses for NAR for the Accredited Buyer’s Representative and Pricing Strategy Advisor certifications. “These two courses provide basic steps similar to on-the-job training with real-life applications. Real-life applications lead to anticipation, and then solutions, and then mastery,” Rebecca Straley wrote in an email.
Be Ready to Adapt
The real estate industry is greatly affected by the local economy, construction, employment rates, local government policy and interest rates. Problems in one area can make the life of a real estate agent tough, and you have to be ready to change the way you do business. “You have to adapt to the market,” Richardson says. He recalls how national economic downturns have always had a devastating effect on how many agents can stay in business. In the early 1980s, he says, “When (interest rates were) 17%, 18%, we lost around a third of Realtors in California.” Whether it’s teaming up with specific banks to help qualified buyers, which Richardson did in the 1980s, or partnering with investors interested in house flipping, which many agents did during the Great Recession, you have to adjust your strategy to find the right clients you can work with.
The generation that's taken over homebuying
The Great Recession delayed many millennials from being able to buy a home, but the generation isn’t locked out of property ownership the way it was a few years ago. The National Association of Realtors defines the millennial generation as people born between 1980 and 1998, and according to the 2019 NAR Home Buyer and Seller Generational Trends report, they make up 37% of all homebuyers in the U.S., the largest share of any generation. Over the past five years as millennials have become a significant portion of U.S. homebuyers, they’ve also helped shape trends in location and home type preference, helped usher in technological advances and embraced new platforms that make a home purchase feel more user-friendly. Here are 10 ways millennials are changing the homebuying process.
Updated on Feb. 26, 2020: This story was published at an earlier date and has been updated with new information.Text communication is key.
Text communication is key.
The telephone was once the primary form of communication between real estate agents and their clients, but the younger generation that has grown up with internet and cellphones will likely prefer more text-based modes that make it easy to multitask. “A lot of my clients already work in tech, so their expectation is they’re going to work with an agent that can at least keep up with them in terms of communication,” says Dana Bull, a Realtor with Harborside Sotheby’s International Realty in Marblehead, Massachusetts, who specializes in working with homebuyers. She says millennial homebuyers prefer to text and email their agent more often than older generations, and it’s reasonable to expect they’ll be comfortable using real estate-related apps.Research is a natural part of the process.
Research is a natural part of the process.
When it comes to researching neighborhoods, checking out listings online and doing a deep dive into the fine print of a pending deal, millennial homebuyers are known for doing their homework. Jill Levin, a Realtor with Coldwell Banker Legacy in Albuquerque, New Mexico, says she recently represented some buyers in a deal that went particularly smoothly because the buyers read every disclosure and document sent to them and asked questions beforehand – something she doesn’t see from older buyers who feel experienced enough that they don’t need to read into the details. “There’s way more information today now, and (homebuyers) really, really should be paying attention,” Levin says.The hub for advice is online.
The hub for advice is online.
While apps and online search tools are an integral part of the homebuying process for all consumers these days, millennials are the first generation to grow up using technology broadly in everyday life. The familiarity with smartphones, social media and the internet make communication, finding out information and contacting professionals easier. Millennials are also inclined to shop around for everything from real estate agents to mortgages to contractors. In HomeAdvisor’s State of Home Spending report released in June 2019, the majority of millennials, Generation X and baby boomers research home remodel project costs on the internet, but millennials do so by the largest margin (77%).Homeownership is focused on building wealth.
Homeownership is focused on building wealth.
While purchasing a home involves plenty of hurdles for younger buyers, many of them are choosing to become homeowners because it helps them build wealth in the long term. “There is still interest in buying a house because I’ve got a job, I need a place to live, rent is expensive and I should put my money somewhere,” Bull says of the millennial homebuyer mindset. As they build equity in their home, they’re in a better place to purchase a larger house in the future or use the profit of a sale for other investments.Kid-friendly housing makes a comeback.
Kid-friendly housing makes a comeback.
Homeownership isn’t the only thing that millennials are doing later in life for financial reasons. Millennials are also marrying and having children later than previous generations. But as millennials get older, more are getting to the point where they’re starting families. While a condo in the heart of downtown worked for many first-time millennial homeowners when they were single, home preferences change as soon as kids come into the picture, Bull says: “People are starting to step up into that next level of a single-family home and maybe out in the suburbs.”Walkability is a must.
Walkability is a must.
Even with many millennials leaving urban centers, one feature they won’t compromise on is walkability. “They want more activities in the area, they want walkability, they want the convenience of shopping without having to use their cars a lot,” Levin says. Even in more suburban settings, many millennials are showing a preference for areas that offer residential and commercial spaces within walking distance. Bull says the areas catering to these homebuyer preferences have been dubbed “hipsturbia,” where suburban towns offer an active downtown or main street area with the live-work-play atmosphere many people don’t want to lose when they move out of a major city center.Eyes are on garages and kitchens.
Eyes are on garages and kitchens.
Luxurious features and finishes in a house are ideal, but millennial homebuyers are making their must-have lists a bit more realistic. In a survey of 1,000 Americans who plan to purchase a home in 2020 by real estate information company Clever, millennials' preferred home features focused on details that make life more convenient, especially as they start families. When asked which features are a requirement for their new home, millennial respondents placed a garage, large kitchen and space to grow into as their top three priorities. Details like hardwood flooring, a fireplace, pool and dedicated office space were among the lesser-desired details.High home prices don't deter eager buyers.
High home prices don't deter eager buyers.
Affordability is still an issue for many millennials, especially among the younger members of the generation. But that doesn’t mean millennials are uninterested or afraid of purchasing a home – it’s just a matter of the right timing, the right location and the right home. Between consistently rising home prices and a lack of inventory as homeowners choose to remain in their homes longer, the housing market remains extremely competitive, Bull says, especially in the Boston area where she works. But the millennials who are financially ready to purchase are willing to rise to the challenge. “They’re used to being aggressive to get into the college they want, and then get the job they want,” Bull says, which primes them to make a strong offer if they see a home they like.Low down payments solve savings issues.
Low down payments solve savings issues.
The Clever survey found 70% of millennial homebuyers plan to make a down payment of less than 20%. Low down payment programs have grown significantly in the past 10 years and are now a major part of home purchases – NAR’s 2019 Profile of Home Buyers and Sellers reports that the median down payment for a home in the U.S. is 12% of the purchase price. While low down payment programs help resolve the lack of savings, homebuyers putting less than 20% down should be sure to factor into their budget the added monthly cost of private mortgage insurance.Parents play an important role.
Parents play an important role.
For younger millennials and even Generation Z, which is made up of people born in 1999 and later, coming up with the cash for a down payment is one of the biggest obstacles to becoming a homeowner, even at less than 20% of the purchase price. For millennial first-time homebuyers and the rare Gen Zer getting into the market, financial help from a loved one is often what makes a home purchase possible. “Parents are getting involved a lot – I still see a lot of situations where parents are gifting money or helping in some other way,” Bull says. “I don’t see that changing at all.”Here are 10 ways millennials are changing homebuying:
Here are 10 ways millennials are changing homebuying:
- Text communication is key.
- Research is a natural part of the process.
- The hub for advice is online.
- Homeownership is focused on building wealth.
- Kid-friendly housing makes a comeback.
- Walkability is a must.
- Eyes are on garages and kitchens.
- High home prices don't deter eager buyers.
- Low down payments solve savings issues.
- Parents play an important role.
Updated on July 14, 2020: This story was published at an earlier date and has been updated with new information.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at firstname.lastname@example.org.