Real estate brokers are business people who sell, rent, or manage the property of others. Real estate agents are salespeople who are either self-employed or hired by brokers. Sometimes, the term agent is applied to both real estate brokers and agents. There are approximately 460,000 real estate agents and real estate brokers employed in the United States.
Real Estate Agent and Real Estate Broker Careers History
Three factors contributed to the rise of the modern real estate business: first, the general increase in the total population and in the number of pieces of real estate for sale, second, the growing percentage of people owning property, and third, the complexity of laws regarding the transfer of real estate. These factors led to the need for experienced agents, on whom both sellers and buyers increasingly rely.
Professionalization of the real estate field developed rapidly in the 20th century. In 1908, the National Association of Realtors was founded. This huge trade group has encouraged the highest ethical standards for the field and has lobbied hard in Congress for many of the tax advantages that homeowners and property owners now enjoy.
The Job of Real Estate Agents and Real Estate Brokers
The primary responsibility of real estate brokers and agents is to help clients buy, sell, rent, or lease a piece of real estate. Real estate is defined as a piece of land or property and all improvements attached to it. The property may be residential, commercial, or agricultural. When people wish to put property up for sale or rent, they contract with real estate brokers to arrange the sale and to represent them in the transaction. This contract with a broker is called a listing.
One of the main duties of brokers is to actively solicit listings for the agency. They develop leads for potential listings by distributing promotional items, by advertising in local publications, and by showing other available properties in open houses. They also spend a great deal of time on the phone exploring leads gathered from various sources, including personal contacts.
Once a listing is obtained, real estate agents analyze the property to present it in the best possible light to prospective buyers. They have to recognize and promote the property’s strong selling points. A residential real estate agent might emphasize such attributes as a home’s layout or proximity to schools, for example. Agents develop descriptions to be used with photographs of the property in ads and promotions. To make a piece of real estate more attractive to prospective buyers, agents may also advise homeowners on ways to improve the look of their property to be sold.
Agents are also responsible for determining the fair market value for each property up for sale. They compare their client’s real estate with similar properties in the area that have recently been sold to decide upon a fair asking price. The broker and any agents of the brokerage work to obtain the highest bid for a property because their earnings are dependent on the sale price. Owners usually sign a contract agreeing that if their property is sold, they will pay the agent a percentage of the selling price.
When the property is ready to be shown for sale, agents contact buyers and arrange a convenient time for them to see the property. If the property is vacant, the broker usually retains the key. To adjust to the schedules of potential buyers, agents frequently show properties in the late afternoon or evening and on weekends. Because a representative of the broker’s firm is usually on the premises in each house, weekend showings are a good way to put part-time or beginning agents to work.
An agent may have to meet several times with a prospective buyer to discuss and view available properties. When the buyer decides on a property, the agent must bring the buyer and seller together at terms agreeable to both. In many cases, different brokers will represent the seller and buyer. Agents may have to present several counteroffers to reach a compromise suitable to both parties.
Once the contract is signed by both the buyer and the seller, the agent must see to it that all terms of the contract are carried out before the closing date. For example, if the seller has agreed to repairs or a home inspection, the agent must make sure it is carried out or the sale cannot be completed.
Brokers often provide buyers with information on loans to finance their purchase. They also arrange for title searches and title insurance. A broker’s knowledge, resourcefulness, and creativity in arranging financing that is favorable to the buyer can mean the difference between success and failure in closing a sale. In some cases, agents assume the responsibilities of closing the sale, but the closing process is increasingly handled by lawyers or loan officers.
Commercial or agricultural real estate agents operate in much the same fashion. Their clients usually have specific and prioritized needs. For example, a trucking firm might require their property to be located near major highways. These real estate specialists often conduct extensive searches to meet clients’ specifications. They usually make fewer but larger sales, resulting in higher commissions.
In addition to selling real estate, some brokers rent and manage properties for a fee. Some brokers combine other types of work, such as selling insurance or practicing law, with their real estate businesses.
Real Estate Agent and Real Estate Broker Career Requirements
There are no standard educational requirements for the real estate field. However, high school courses in English, business, and math would help to prepare you for communicating with clients and handling sales.
An increasing percentage of real estate agents and brokers have some college education. As property transactions have become more complex, many employers favor applicants with more education. Courses in psychology, economics, sociology, marketing, finance, business administration, and law are helpful. Many colleges also offer specific courses or even degrees in real estate.
Certification or Licensing
Every state (and the District of Columbia) requires that real estate agents and brokers be licensed. For the general license, most states require agents to be at least 18 years old, have between 30 and 90 hours of classroom training, and pass a written examination on real estate fundamentals and relevant state laws. Prospective brokers must pass a more extensive examination and complete between 60 and 90 hours of classroom training. Additionally, many states require brokers to have prior experience selling property or a formal degree in real estate.
State licenses are usually renewed annually without examination, but many states require agents to fulfill continuing education requirements in real estate. Agents who move to another state must qualify under the licensing laws of that state. To supplement minimum state requirements, many agents take courses in real estate principles, laws, financing, appraisal, and property development and management.
Successful brokers and agents must be willing to study the changing trends of the industry to keep their skills updated. Residential real estate agents must keep up with the latest trends in mortgage financing, construction, and community development. They must have a thorough knowledge of the housing market in their assigned communities so they can identify which neighborhoods will best fit their clients’ needs and budgets, and they must be familiar with local zoning and tax laws. Agents and brokers must also be good negotiators to act as go-betweens between buyers and sellers.
In most cases, educational experience is less important than the right personality. Brokers want agents who possess a pleasant personality, exude honesty, and maintain a neat appearance. Agents must work with many different types of people and inspire their trust and confidence. They need to express themselves well and show enthusiasm to motivate customers. They should also be well organized and detail oriented, and have a good memory for names, faces, and business details.
Exploring Real Estate Agent and Real Estate Broker Careers
Contact local real estate brokers and agents for useful information on the field and to talk one-onone with an employee about their job. You can also obtain information on licensing requirements from local real estate boards or from the real estate departments of each state. Securing part-time and summer employment in a real estate office will provide you with practical experience.
There are approximately 460,000 real estate agents and brokers currently employed in the United States. Many work part-time, supplementing their income with additional jobs in law, finance, or other fields.
Agents work in small offices, larger organizations, or for themselves. (Six out of ten real estate agents and brokers are self-employed.) Opportunities exist at all levels, from large real estate firms specializing in commercial real estate to smaller, local offices that sell residential properties. Much of agents’ work is independent; over time, they can develop their own client bases and set their own schedules.
The typical entry position in this field is as an agent working for a broker with an established office. Another opportunity may be through inside sales, such as with a construction firm building new housing developments. Prospective agents usually apply directly to local real estate firms or are referred through public and private employment services. Brokers looking to hire agents may run newspaper advertisements. Starting out, prospective agents often contact firms in their own communities, where their knowledge of area neighborhoods can work to their advantage.
The beginning agent must choose between the advantages of joining a small or a large organization. In a small office, the newcomer will train informally under an experienced agent. Their duties will be broad and varied but possibly menial. However, this is a good chance to learn all the basics of the business, including gaining familiarity with the computers used to locate properties or sources of financing. In larger firms, the new agent often proceeds through a more standardized training process and specializes in one aspect of the real estate field, such as commercial real estate, mortgage financing, or property management.
While many successful agents develop professionally by expanding the quality and quantity of their services, others seek advancement by entering management or by specializing in residential or commercial real estate. An agent may enter management by becoming the head of a division of a large real estate firm. Other agents purchase an established real estate business, join one as a partner, or set up their own offices. Self-employed agents must meet state requirements and obtain a broker’s license.
Agents who wish to specialize have a number of available options. They may develop a property management business. In return for approximately 5 percent of the gross receipts, property managers operate apartment houses or multiple-tenant business properties for their owners. Property managers are in charge of renting (including advertising, tenant relations, and collecting rents), building maintenance (heating, lighting, cleaning, and decorating), and accounting (financial recording and filing tax returns).
Agents can also become appraisers, estimating the current market value of land and buildings, or real estate counselors, advising clients on the suitability of available property. Experienced brokers can also join the real estate departments of major corporations or large government agencies.
Compensation in the real estate field is based largely upon commission. Agents usually split commissions with the brokers who employ them, in return for providing the office space, advertising support, sales supervision, and the use of the broker’s good name. When two or more agents are involved in a transaction (for example, one agent listing the property for sale and another selling it), the commission is usually divided between the two on the basis of an established formula. Agents can earn more if they both list and sell the property.
According to the U.S. Department of Labor, median annual earnings of salaried real estate agents, including commission, were $35,670 in 2004. Salaries ranged from less than $17,600 to more than $92,770.
Median annual earnings of salaried real estate brokers, including commission, were $58,720 in 2004, and the middle 50 percent of salaries for brokers ranged from less than $33,480 to more than $99,820 a year.
Agents and brokers may supplement their incomes by appraising property, placing mortgages with private lenders, or selling insurance. Since earnings are irregular and economic conditions unpredictable, agents and brokers should maintain sufficient cash reserves for slack periods.
One glance at the property advertisements in any newspaper will offer a picture of the high degree of competition found within the field of real estate. In addition to full-time workers, the existence of many part-time agents increases competition.
Beginning agents must accept the frustration inherent in the early months in the business. Earnings are often irregular before a new agent has built a client base and developed the skills needed to land sales.
After agents become established, many work over 40 hours a week, including evenings and weekends to best cater to their clients’ needs. Despite this, agents work on their own schedules and are free to take a day off when they choose. Some do much of their work out of their own homes. However, successful agents will spend little time in an office; they are busy showing properties to potential buyers or meeting with sellers to set up a listing.
Real estate positions are found in every part of the country but are concentrated in large urban areas and in smaller, rapidly growing communities. Regardless of the size of the community in which they work, good agents should know its economic life, the personal preferences of its citizens, and the demand for real estate.
Real Estate Agent and Real Estate Broker Careers Outlook
According to the Occupational Outlook Handbook, employment of agents and brokers is expected to grow about as fast as the average for all occupations through 2014. Turnover within the field is high; new job opportunities surface as agents retire or transfer to other types of work.
The country’s expanding population also creates additional demand for real estate services. A trend toward mobility, usually among Americans in their prime working years, indicates a continued need for real estate professionals. In addition, a higher percentage of affluence among this working group indicates that more Americans will be able to own their own homes.
An increase in agents’ use of technology, such as computers, faxes, and databases, has greatly improved productivity. Computer-generated images now allow agents and customers to view multiple property listings without leaving the office. However, the use of this technology may eliminate marginal jobs, such as part-time workers, who may not be able invest in this technology and compete with full-time agents. Job growth is potentially limited by the fact that many potential customers are conducting their own searches for property using the Internet.
The field of real estate is easily affected by changes in the economy. Periods of prosperity bring a lot of business. Conversely, a downturn leads to a lower number of real estate transactions, resulting in fewer sales and commissions for agents and brokers.