For those looking for a career change, a great option is to become a real estate agent. This occupation is an ideal career for people who work well with others. It also helps a lot if you’re excellent at being in business for yourself. Real estate agents help their clients find houses, condos, and apartments to live in. The real estate industry is definitely competitive. But now is a great time to get started in real estate.
Real estate agents primarily work for themselves. A real estate agent is responsible for managing an office, taking care of the paperwork, following leads, and conversing with home buyers and sellers. There are a lot of steps to go through to become a real estate agent. They all depend on what state a potential agent plans to become licensed in. Becoming a full-time real estate agent isn’t easy, but it’s a worthwhile career choice. Keep reading to learn about the inner workings of what it takes to get started as a real estate agent.
1. Real Estate
Real estate is the business of buying and selling properties. Renting land, housing, and other buildings are also included in the real estate business. Those who work in real estate could be tasked with selling undeveloped land, industrial properties, and residential real estate.
The real estate market is broken down into three large categories. Residential real estate covers houses, condos, townhouses, and undeveloped land. Commercial real estate includes nonresidential buildings like retail stores, warehouses, and office buildings. Industrial real estate takes care of business parks, farms, mines, and factories. These types of properties are large and can include locations with access to harbors or rail lines.
2. Residential Real Estate
When it comes to residential real estate, structures may be either for single-family or multiple families. These buildings are for living and other non-business purposes. Real estate agents can classify residences based on how they connect to neighboring homes and land.
Owners can occupy their residential real estate properties or rent them out to tenants. Additionally, an owner could have multiple buildings on a property. They can choose to live in one home and rent out the others for a profit. Real estate is an excellent investment for those looking to expand their income.
The primary type of residential real estate is the apartment. They’re also known as a flat in Britain and a unit in Australia. An apartment is a dwelling that is a single part of a large building. Most often, apartments are located on a single story in their building.
To be considered an apartment, a building must have three or more separate residences inside its structure. An apartment is a self-contained residence that has its own front door, bathroom, toilet, and kitchen. Tenants pay rent to their landlord. In turn, he or she provides services like maintenance as and security. Apartment landlords must abide by strict laws and regulations.
4. Multi-Family House
Multi-family private (otherwise called multi-dwelling unit or MDU) is an arrangement of lodging where numerous different lodging units for private occupants are contained inside one structure. They can also contain a few structures inside one complex. Units can be alongside one another or stacked over one another. These are called top and base units. A typical structure like this is an apartment building.
Once in awhile units in a private multifamily structure are townhouses, where regularly the units are owned separately instead of rented from a solitary loft building proprietor. Numerous purposeful networks consolidate multifamily living arrangements, for example, in co-housing ventures. This is frequently observed in multi-story disconnected structures, where each floor is a different condo or unit.
5. Terraced House
Also known as a townhouse, a terrace house is a row of attached homes that share sidewalls. This style of home became popular in the 16th century in Europe. In certain areas like Philadelphia, Washington, D.C., New York City, and Baltimore, they are referred to as row houses.
Although terrace housing is found all over the world, it’s most common in Latin America and Europe. Terrace houses are now associated with the working class. But throughout history, they’ve been used in the gentrification of inner-city regions and cities. In the United States, many terrace houses are large, with many being more than 2,000 square feet.
A condominium, regularly abbreviated to a condo, is a sort of living space similar to a loft. Yet it’s independently sellable and thus, viewed as real estate. The condo building structure is split into a few units that are each separately owned. The spaces are encompassed by primary areas that are owned together.
Private townhouses are often developed as apartments. However, there has been an expansion in the number of “disconnected condos” recently. Those resemble single-family homes in which the yards, exteriors, and streets are together owned and mutually kept up by a homeowners association. In contrast to apartments, which are rented by tenants, condominiums are owned by their occupants. Furthermore, the owners of each condo own common areas of their property including foyers and walkways.
Most commonly referred to as a co-op, a cooperative is an association of people that unite together to own a property jointly. Co-ops look like most other businesses since a community offers goods and services as traditional organizations do. Yet it’s what goes on in the background that makes it unique. A co-op exists to serve its individuals. However, what makes these centers one of a kind is the fact members are additionally the proprietors.
In this way, co-op members get the items and services they need. They also have a say in the business decisions made by the entire cooperative. As opposed to compensating outside financial advisors with its revenue, a co-op gives its extra income to its members in a way that’s equal to how much they contribute. By using a democratic system, co-op members can better serve themselves and their community.
Homes come in numerous shapes and sizes. One type that is well-known with larger families or new landowners is a duplex. It’s more than just one home; it’s two. The units or lofts might be stacked on top of the other on independent floors. Or they might be next to each other with a single dividing wall. A duplex may likewise be known as a “multifamily dwelling” because more than just one family can live there.
A duplex is at times mistaken for a “twin home.” However, they’re not a similar kind of building. A twin home may resemble a duplex – two separate homes sharing a divider. Yet with a twin home, the building’s lot line goes through the normal divider. So on each side, there’s an individual home on its own portion of land even though they’re connected.
9. Detached House
In the real estate business, single-family homes that sit by themselves on a piece of land without sharing any dividers with another household or buildings are known as detached homes. Connected housing shares dividers on each side of another house. Americans have favored single-family homeownership over other types of lodging. But these types of structures are more typical in suburban neighborhoods. Detached homes give separation between neighbors, a better sense of security, and more floor space than attached homes.
A home can be semi-attached if it happens to share a wall with another residence. The two houses in a duplex are both semi-attached because they have a shared wall on one side. Semi-detached homes commonly give owners less living space than completely detached homes. They may also require additional discretion when dealing with neighbors.
10. Mobile Home
A mobile home is a pre-assembled structure that is typically built in a factory on top of a chassis that’s permanently attached. It’s then moved to a site. This is done by the house being towed or on top of a trailer. Utilized as permanent residences or for temporary living, mobile homes are left most often in one spot permanently. But they can be moved. A mobile home might be required to move now and then for legal purposes.
Mobile homes share similar beginnings in history as travel trailers. However, today, the two types of dwellings are different in size and decoration. Travel trailers are most often used for vacation homes or temporary residences. Behind cosmetic adjustments made to hide the bottom of a mobile home, there are also solid trailer frames, wheels, axles, and tow-hitches.
A houseboat is a boat that has been altered to be used as a home. It is not the same as a boathouse, which is a shed for boat storage. Occasionally, houseboats are not mechanized because they’re typically secured, kept stationary at a fixed point, and frequently fastened to land to access utilities like power. In any case, many houseboats are equipped for power. In Western nations, houseboats will usually be either owned privately or often leased to vacationers. On specific bodies of water in Europe, residents stay in houseboats throughout the entire year.
Houseboats began to show up in the United States in Seattle, Washington, not long after the first European settlement. In the first half of the 20th century, there were more than 2,500 such homes in Seattle. That doesn’t count live-aboard boats in the sea. Houseboating is a well-known recreational activity for gatherings of all types.
12. Sales & Marketing
It’s common in the sales of properties for there to be an intermediary that provides support during a transaction. In North America, these people are known as real estate agents or brokers. They are referred to as an estate agent in the United Kingdom and a real estate representative in Australia.
Most people’s wealth comes from real estate investments, especially in the United States. A survey conducted by the Federal Reserve found that over 65 percent of families in the United States own their primary residence. The grand scale of the real estate industry makes it appealing to investors.
13. Real Estate Influencers
The main thing that drives real estate trends is demographics. Demographics compose an entire population, including age, gender, race, pay, population growth, and movement patterns. These measurements are a regularly disregarded yet critical factor. They influence how land is valued and what sorts of properties are sought after. Significant changes in the demographics of a country can primarily affect real estate patterns for multiple years.
Interest rates additionally affect the real estate industry. In case a buyer is thinking about purchasing a home with a mortgage loan, it’s imperative to research interest rates utilizing a home loan calculator. Changes in these rates can significantly impact an individual’s capacity to buy a home. That’s because the lower interest rates are, the lower the expense to get a mortgage will be. That makes a higher interest rate for real estate, which again drives up costs.
14. Real Estate Agent
A real estate agent, realtor or real estate broker is an individual who speaks to sellers or purchasers of land or property. While a real estate agent may work alone, a realtor, for the most part, operates under an authorized real estate broker to work with clients. Real estate agents are authorized by the state to arrange deals. They take care of the documentation required for closing property sales.
In North America, many real estate agents are members of the National Association of Realtors (NAR). That is the most prominent association for the real estate agency. NAR real estate agents are committed by a code of ethics that goes well beyond state legal measures to work with their clients’ best interests in mind. Homebuyers and sellers are often encouraged to hire a licensed real estate agent to ensure that their real estate transactions are above board.
15. Seller’s Agent
Also known as a listing agent, a seller’s agent does precisely what their name implies. They sell properties. A seller’s agent works directly for a seller. They are tasked with marketing a property to get it sold. Any homeowner looking to sell their property will have a better chance of making a sale when they employ a seller’s agent.
A seller’s agent is compensated through an exclusive listing agreement between them and the home seller. Occasionally, the agent may take a small fee for helping with a house listing but not fully representing a seller. Most commonly, a selling agent will sign an exclusive right-to-sell document with a home seller.
16. Buyer’s Agent
A buyer’s agent is responsible for all aspects of the home buying process. They can help a potential homeowner save time and money on their journey to buying their dream home. Buyer’s agents guide their clients through a home-buying transaction. They are also available for any questions and concerns a homebuyer may have.
As a buyer’s agent, they help their clients find the perfect property for their needs. They work with a seller to negotiate an appropriate offer for a property. Additionally, a buyer’s agent can refer their clients to other professionals like home inspectors, movers, and mortgage brokers.
17. Dual Agent
Another option for a real estate broker is to be a dual agent. When a broker has a dual agency, that means they can represent a home buyer and seller at the same time. Dual agents are under no circumstances allowed to disclose confidential information to either of their clients in the same transaction.
Dual agency can be complicated. This is because there are so many legal requirements in a real estate transaction, leading to potential legal issues. Real estate agents are bound by law to disclose their dual agency status to each of their clients. A dual agent may seem like a complicated matter for selling or buying a home. But they can still assist clients in a significant way.
18. Transaction Broker
When someone is looking to buy or sell a home, they have the option of hiring a transaction broker. This type of real estate agent doesn’t represent a home buyer or seller. They are required to work as a neutral party to help both a buyer and seller complete a transaction.
Transaction brokers are bound by law to remain neutral. They can work with a buyer or seller during a transaction. They’re considered to be professional assistants. A transaction broker can assist with preparing a buyer’s offer for purchase, help a seller decide what price to ask for their home, or help a buyer and seller communicate. Instead of earning a percentage of a home sale, transaction brokers typically charge a flat fee.
Real estate agents in the United States are licensed by the state they work in instead of by the federal government. There is a real estate commission in each state that observes real estate agents and provides licensing. Individual states only permit lawyers to create property transfer documentation. Some states will let a licensed real estate agent do this task.
Many states have laws defining what type of relationship a real estate agent can have with their clients. Also, there are written requirements a lawful real estate agent must achieve to represent their clients as well as members of the public. Real estate agents must carefully study the laws in their state since they differ from state to state.
20. State Licensing Requirements
The licensing requirements in each state differ. Due to that dynamic, it’s essential to research the guidelines thoroughly before becoming a real estate agent. Potential agents can find the official prerequisites for real estate pre-licensing on their state’s real estate commission website.
The first requirement that all states have is that a real estate broker must be at least 18 years of age to become licensed. Residency in a particular state is most often not required. But out-of-state agents may need to abide by other requirements. Many states will want their applicants to be completely honest. They may deny potential real estate agents who have previously been convicted of a crime.
21. Real Estate Exam
After researching the requirements to become a real estate agent, it’s time to enroll in a pre-licensing course. All real estate agents are required to take a certain number of hours of education before being allowed to take their real estate exam. Agents can attend classes at real estate schools, certain universities, technical schools, and real estate firms.
Real estate education is complicated and extensive since real estate agents have several legal responsibilities. Because of this, the exam to get a real estate license is difficult. An agent must first apply to take their exam after they complete all of the required education. Real estate agents may be required to pass a background check and give fingerprints before being allowed to take an exam.
22. Real Estate Broker
After working hard to pass the real estate licensing exam, it’s time to find a real estate broker to work with. As a real estate agent, a newly licensed broker is permitted to work on behalf of an established broker. It’s essential to find a broker to work with as early as possible.
After a real estate agent passes their licensing requirements and passes the real estate exam, they’ll be required to complete final paperwork with the broker they choose to work with. Then, the paperwork must be filed with the state they’re going to work in. After these forms are accepted, a real estate agent will be issued a license and allowed to practice real estate.
23. Written Agreement
For a real estate broker and their clients to be protected, both must have legal documentation. Written documents clearly stating the mission of both an agent and a client keeps all dealings in line with their state’s laws. An oral agreement may seem like an adequate choice. But having nothing written down can lead to a legal battle in the future.
If a written agreement isn’t in place, real estate clients can dispute with their agents about the arrangement on their representation as well as how property is sold. With legal documentation, it’s easy to define whether or not a real estate agent can enforce a compensation agreement with their clients. This also includes disputes concerning the duration of their professional relationship as well as the exclusivity of their arrangement.
24. Real Estate Education
As we mentioned earlier, real estate agents must become licensed in the state they plan to work in. They’re required to attend a minimum number of hours of real estate classes. Then, potential real estate agents must take and pass a challenging real estate exam.
After earning their real estate license, agents are designated as being salespeople. They’re required to work under an established broker within a firm. All states require that those with a real estate license must alert the clients of their partnership with a managing real estate broker depending on the nature of their transaction.
Many may not realize, but there’s a difference between a real estate salesperson and a broker. When a person passes their real estate exam and becomes licensed, they are known as a real estate salesperson. They have to be associated with an established real estate broker to work in the industry.
In most states, real estate students may be required to take between 99 and 120 hours of classes before being eligible to take the real estate exam. In several states, licensed real estate agents from another state can take a real estate exam without having to attend the required number of course hours. But in other cases, they may only be asked to take a state law exam.
Once a salesperson has worked for a few years and gained some real estate sales experience, they can choose to become a real estate broker. By doing this, they can manage, own, and operate their own brokerage firm. Several states allow college graduates to earn a broker’s license without the necessary years of real estate experience.
In most cases, a state will require a potential broker to take additional coursework as well as pass a broker’s state exam dealing with real estate law. Once a real estate agent has earned their broker’s license, they can choose to continue working with an established broker. On the other hand, they can also branch off and start their own brokerage.
27. Agency Relationship with Client
Typically, a real estate broker offers its clients a comprehensive, commissioned-based relationship. This deal occurs under a signed agreement with a property seller or a buyer representation agreement with a potential buyer. By doing this, a real estate agent creates an agency relationship with financial obligations under common law.
When this occurs, a home buyer or seller is then established as a client of a broker. In certain states, there will be statutes to specify the nature of an agency’s representation of its clients. With these partnerships, a real estate broker has a legal description of a buyer and seller’s principal. This makes them the agents of that principal.
28. Non-Agency Relationship with Customer
In some cases, a buyer or seller will have no written agreement with a real estate broker. This action will result in a non-agency relationship. These types of partnerships involve no fiduciary relationships. Here, a real estate broker, along with their staff, work with a principal referred to as a broker’s customer.
When a buyer purchases a property but does not have a buyer agency agreement with their broker, said broker works as a sub-agent of the seller’s leading broker. If a seller works with a transaction broker, there will never be an agency relationship to establish. This deal is a unique way of working with real estate clients and is not very common.
29. Designated Agency
A new development in the real estate industry is the designated agency. With this practice, it allows individual real estate licensees in a firm to work as agents for individual buyers and sellers in one single transaction. A principal broker must designate this practice.
With this method, two agents working in the same real estate office can work in strict fiduciary roles for their clients. In some states, this practice has been adopted into the state laws In other states, it’s considered partially problematic as a dual agency. The main goal of a designated agency is to make a large firm able to handle an entire real estate transaction in-house without having a conflict of interest.
30. Types of Services
Also known as a trading service, there are many real estate services provided by brokers and salespersons. Laws differ by state, but it’s highly recommended that potential buyers and sellers hire a licensed real estate broker for their transactions. An example of a service offered by a real estate agent includes comparative market analysis. That is an estimate of a property’s value compared to other homes in the area.
Another service is the total market overview. This determines a home’s value objectively versus a comparative market analysis, which is subjective. Real estate agents also handle marketing a property to prospective buyers. They guide buyers through the purchasing process and sellers through the selling process.
31. Broker’s Price Opinion
Performed by a licensed real estate agent, a broker’s price opinion is a comprehensive report. It’s similar to comparative market analysis. A real estate broker is paid to create a broker’s price opinion. That is either a full interior report of a home or an exterior report. In this type of release, a real estate agent will research a potential property, take pictures of it, and investigate the surrounding neighborhood.
Once they have done their research, a real estate agent will put together their findings. They will combine that with their knowledge of the local real estate market into a broker’s price opinion report. A finalized broker’s opinion report is created to support a real estate professional’s opinions on a property. This report can help identify a home’s ideal selling price or estimated value.
32. Real Estate Appraisal
Occasionally referred to as a land or property valuation, a real estate appraisal involves the development of value for real property. This figure typically encompasses a market value. Appraisals are required in real estate transactions. This is because each property is unique and sales do not happen very often.
An essential part of a property’s valuation is its location. In most cases, the property never changes locations. Because of this, the top ways to improve a home’s value is through renovations and upgrades. Mortgage loans, divorce, estate settlements, and taxation are all based on a real estate appraisal.
33. For Sale By Owner
Known as FSBO, the For Sale by Owner process involves selling a home or piece of land without hiring a real estate agent. People selling their homes have the option of hiring a marketing company to list their home. They can also market their home themselves. With the FSBO method, homeowners don’t have to pay a commission to a real estate agent.
Homeowners who choose the For Sale by Owner process are encouraged to hire a lawyer to help them through the sale of their home. In addition to doing the deal themselves and paying no commission, homeowners can get a small amount of help and pay a small commission fee. They can also pay a real estate agent an hourly rate to help sell their home.
34. Property Management
Another facet of a real estate agency is property management. In this role, a real estate agent monitors and cares for real estate property to ensure that it stays in excellent condition. This action is common for apartment buildings as well as single-family homes.
In addition to watching over a property, property managers are involved in many aspects of this job. They manage financial accounts. They also deal with litigation involving tenants, insurance agencies, and contractors. Occasionally, a property manager may employ a legal professional to work under them. It’s required for a property manager to be up-to-date on their county, municipal, state and federal housing laws.
35. Services From Agent To Seller
Once a home seller signs a listing contract on a property they’d like to sell, it’s time for their real estate firm to get to work. Their real estate agent will earn their commission by seeking out a home buyer and writing an offer. A real estate agent will also list a property for sale and give the home seller a property condition disclosure. They’ll also provide them with up-to-date findings of trends in the real estate market.
Additionally, real estate agents will create advertising materials for property, print pamphlets, and organize open houses. They are tasked with placing “For Sale” signs on the property with contact information so potential buyers can reach out to them. Real estate agents must also pre-screen buyers to ensure that they are financially qualified to purchase the home.
36. Listing Contract
A contract between a real estate agent and thee client authorizing them as the seller’s agent is known as a listing contract. This type of arrangement gives the real estate agent the authority to take over the sale of a property as the owner’s agent. A real estate agent who is a member of the National Association of Realtors must include several terms in their listing contracts.
These terms include a beginning and termination date, the list price of the property on the market, terms and conditions of the brokerage fee, and the amount a real estate agent will earn on the sale. A listing contract also gives the real estate agent the authority to collaborate with other brokers. It lists what type of compensation the other agents will receive.
37. Brokerage Commissions
A real estate agent will receive commissions for finding a viable buyer for a property as well as for additional services provided by their brokerage. Typically, a real estate agent isn’t paid a commission until they find a buyer, successfully negotiate a sale between buyer and seller, or complete a transaction. The common law states that a real estate agent can receive their commission once they find a buyer who is 100 percent ready and financially secure enough to purchase a property.
According to research, the median rate for a real estate commission that is charged to a seller by a real estate agent is 6 percent of a home’s purchase price. This commission fee is usually split between a buyer’s agent and seller’s agent. This results in them each taking home 3 percent of the sale.
The Real Estate Settlement Procedures Act, or RESPA, is a federal law that was put in place in 1974 to protect real estate agents in the United States. In some cases, real estate agents who have worked with lenders may not receive any commission from their referral of a residential client. Thanks to RESPA, that’s no longer legal.
All lender fees to real estate agents are required by law to be disclosed to all parties involved in a sale. Be advised that commercial property sales are exempt from RESPA.
A method that real estate agents use to show houses for their clients is using a lockbox. Once a real estate agent gets their clients’ permission, they can attach a lockbox to a home’s front door. Inside the lockbox is a key to the property which is only accessible by the real estate agent.
This method ensures the security of the home. It also allows the home to be shown to potential buyers when the owners are not home. The listing agent can provide a tour of the house to various real estate agents to expand their listing.
There are several groups that a real estate agent can join. The largest organization is the National Association of Realtors (NAR). This is also one of the largest trade groups in the world. More than one million people are members of the NAR. Once a real estate agent joins the NAR, they’re automatically included in the state and national chapters.
There are several other crucial real estate organizations. The Realtor Political Action Committee (RPAC) provides direct funding to political candidates. The National Association of Exclusive Buyer Agents represents real estate agents and brokers who only represent property buyers. In 1955, the Real Estate Institute of Canada was founded as a non-profit organization for budding real estate agents in Canada.