Real estate agents are licensed professionals who help people through the process of buying or selling a house. Purchasing a house or investment property is a very complex process that most people find quite confusing and it is often the largest financial transaction that a person will make in their life. To ensure that all of the requirements are fulfilled and procedures completed properly, people will typically enlist the services of a real estate agent or broker. Doing this gives them peace of mind that the largest investment of their life will be made in a safe and orderly manner. Real estate brokers and agents must be experts on every step of the sales process and have a detailed understanding of the real estate markets in the surrounding areas. They must know what properties are on the market and be able to match their clients up with the one that best fits their budget and preferences. It is equally important for them to be familiar with the local zoning and property tax laws and where their clients can get the purchase financed.
Agents spend a lot of their time looking for potential buyers and sellers. When they find someone who wants to sell their house or property, they first get them to sign an agreement to put it up for sale. The agent then compares it to similar properties already on the market to determine a competitive sale price. Once they have the price, details from the seller and they have signed the listing agreement, the property is put up for sale. When a property is sold, both the agent who is helping sell the house and the agent helping their client buy it are given a cut of the commission made from the sale. Real estate agents who are able to sell the houses that they put up for sale receive the entire commission.For more details Visit our website propertycashbuyers.com
The first thing an agent will do when meeting a new client is find out what they are looking for in a house and what they are willing to spend. An agent will sometimes require buyers to sign a loyalty contract which states that the client cannot enlist the help of another real estate agent. They will then provide their client with a list of properties that fit their specifications and desires and a list of possible sources of financing. Before scheduling a tour of a house, an agent will often provide the buyer with pictures, videos or a virtual tour of it so that they can get an idea of what it looks like .
Agents will usually meet with potential buyers many times to talk about and tour the available properties they are interested in. An agent’s primary job during this process is to point out and emphasize a property’s most attractive features and relevant selling points. For example, when trying to sell a house to a young couple with kids, an agent might promote its large backyard, how close it is to schools and shopping, the fact that other kids live nearby or how low the neighbourhood’s crime rate is. When dealing with an investor, they may emphasize the tax or financial advantages of operating a rental property or reselling it for a profit. If a buyer is interested in negotiating the price, an agent must follow the seller’s instructions to the letter. However, they are allowed to offer buyers additional perks out of their own pockets. Doing this reduces the amount of commission the agent makes from the sale, but if it is the difference between the house being sold and sitting on the market until another buyer comes along, then it is definitely worth it. Once the seller and buyer have come to an agreement and signed a binding contract, a real estate agent is responsible for making sure that all of the terms of the contract are met and any additional agreements are followed through before the closing date. Necessary house repairs, government required house inspections as well as physical and financial transactions are a few examples. These activities are normally handled by lawyers and loan offices, but an agent’s job is to verify their completion.
During the process of selling a house, agents and brokers will perform title searches in order to verify ownership and arrange meetings between their clients and potential buyers. They act as the mediator during these meetings while giving advice and lending their expertise to help the two parties negotiate and agree on the terms of the sale. They do everything they can to help close the sale for the seller which can include doing things like helping the buyer secure financing from a lender or sweetening the deal by promising them free appliances, renovations or other perks. Agents are sometimes responsible for finalizing a sale and completing the required paperwork, but this job is usually performed by a lawyer or lender.
Real Estate Broker Vs. Agent
The primary difference between a broker and agent is that brokers have a license to run a real estate business. They are both able to buy and sell real estate, but agents are required to work with a broker. A licensed broker hires the best agents they can find to work for their business on a contract basis and pays them the majority of the commission earned when they complete the sale of a house. In addition to selling houses, brokers are sometimes hired to manage and operate rental properties for clients.
Real estate agents and brokers are typically involved with helping clients buy and sell residential properties. Only a relatively small number of agents deal with agricultural, industrial and commercial real estate. These properties are usually handled by specialized real estate firms and agents who know a lot about the type of property and the people who buy them. For example, agents who deal with industrial properties must be familiar with the area’s utilities, labour supply and transportation routes. Regardless of what the type of property is, an agent must know how to effectively cater to their clients’ desires and requirements.
They will often work more than 40 hours a week to accommodate their client’s schedules. This means frequently working evenings and weekends to meet with them and give them tours of the properties they are interested in. Even though the hours are far from ideal, agents are usually able to choose their own work schedule and decide how many clients they would like to work with.
An increasing number of agents are working from home instead of at real estate offices because most of their work can be done on any computer with an internet connection. While this might sound great, it is important to note that they must spend most of their time away from their office to meet with clients, conduct tours for them and research and inspect the newest properties on the market.
Employment Outlook and Careers
Getting a job in the real estate industry is usually relatively easy, but new agents face heavy competition from the more experienced and established agents and brokers working in their area. The number of employment opportunities available and overall health of the job market is extremely sensitive to the ups and downs of the economy – especially the housing market. During a period of rising interest rates or decreasing economic activity the volume of home sales decreases, which causes a direct and proportional decline in the demand for sales workers. The income of brokers and agents sharply decreases and many have to either work reduced hours or find a job elsewhere.
One driving factor in the increasing demand for real estate services is the growth of the young adult population. When they decide to buy their first home, they will need real estate brokers and agents to help them. On the other hand, job growth will be slightly limited by agents’ increasing use of the internet to help do their jobs. This greatly improves their productivity and capabilities, enabling them to take on more clients. The internet also enables potential clients to perform extensive searches for properties that meet their requirements before going to see an agent or broker.
In 2010, there were 153,740 real estate sales agents working in the United States according to the Bureau of Labour Statistics. The job market for brokers and agents is expected to grow at a rate of approximately 1.4% per year from 2008 to 2018 which is slightly higher than the average for all occupations in the United States during that period. In addition to job market growth, an increasing number of job opportunities will appear to fill the positions of those who retire or change occupations. This is a significant trend because the average age of real estate agents and brokers is higher than that of most other industries. For this reason, many of them are expected to leave their positions within the next ten years. During the next decade, there is expected to be a decrease in the number of part-time hours available. It is becoming more legally and technologically complex to get an entry-level position in the industry so it is important to have relevant knowledge and skills that set you apart from other job seekers. Motivated, hard-working and well-educated individuals (especially those with strong local business and social connections) have the best chance to succeed in the real estate industry.
Required Education and Licensure
To become an agent, one must be at least 18 years old, a high school graduate and be able to pass the written test administered by the real estate association in their area. In both the United States and Canada, a real estate license is required in every state/province in some form or another. The exam for brokers is significantly more difficult than for agents. Both exams consist of questions about how real estate transactions work and the legal aspects of selling a property. In addition to passing the exam, agent candidates are usually required to complete 30 to 90 hours of in-class instruction. Agents applying for a broker’s license must complete 60 to 90 hours of instruction in addition to having 1-3 years worth of experience selling real estate. A number of States waive this experience requirement if the applicant has a Bachelor’s Degree in Real Estate. Once a licence is acquired, it must be renewed every 1-2 years. Agents and brokers are required to provide proof of continuing education in order to renew their licences. An exam is normally not required. For more information about a particular state or province, please refer to the Real Estate Institute of Canada or google “real estate license [your state]”
A high school diploma is the minimum education required, but increasing importance is being placed on applicants who are college graduates due to the complex legalities of real estate transactions. In fact, many agents and brokers currently working in the field have a college degree. A career can be significantly enhanced by a certificate or degree in real estate or a related field. While a few Bachelor’s degree programs do exist, most of the courses available are part of certificate programs. A few examples of fields that are closely related to real estate and can help an agent secure a job, get a promotion, earn higher pay and gain client trust are: business administration, statistics, economics, law, finance and English.
Local real estate associations that are members of the National Association of Realtors often offer courses that go over the basic and legal aspects of working in the industry. More advanced courses such as: property management, negotiating, real estate brokerage and mortgage financing are sometimes available. Brokerage firms often offer beginner and advanced training programs and courses to their agents to refresh their knowledge and enhance their skill sets. Some firms also use the apprenticeship approach to training by allowing entry-level agents to shadow their more experienced counterparts. This way they gain practical experience and learn aspects of the job that cannot be taught in a classroom.
Salary and Commission Guide
The average salary for a real estate agent working in the United States was around $52,490 based on the 2010 report published by the Bureau of Labor Statistics (BLS). The salaries reported by the study were as follows: the lowest 10% earned $20,460 or less, and the highest 10% earned over $95,220. The most popular and successful agents can make over $500,000 a year. Due to the nature of the career, this wide range in salary is expected. Some agents only work part-time and sell a few properties every year, while others either sell many more houses or ones that are considerably more expensive. This of course results in a significantly higher commission.
How Commission Works
Commission definition: A fee charged by a broker or agent for his/her service in facilitating the buying or selling of real estate.
Real estate brokers and sales agents make a living off the commission they are paid after they help someone complete the sale or purchase of a house. Commission is normally around 3% to 7% of the sale price of a house and is often split equally between the agent helping sell the property and the buyer’s agent. The commission percentage depends on a number of factors including the price and type of property being sold, its location and the state of the real estate market. The percentage assigned to the sale of farms, commercial properties and undeveloped land is typically higher than on the sale of residential properties.
Commission is usually paid from the seller’s funds after a real estate transaction has been completed. It is calculated as a percentage of the total sales price of the property. If an agency is with a multiple listing service (MLS), the percentage is stated on the listing sheet for each property. Commissions are often divided among several brokers and agents. The agent or broker who lists a property will share the commission earned with the individual and firm that sells the property. An agent’s share of the commission is normally half of the amount the firm that employs them receives when a property is sold. Agents who manage to sell the properties that they personally listed can significantly increase the amount of commission they receive. Commisssions are almost always negotiable.
An agent’s income depends on a number of factors including their motivation, level of experience, condition of the economy as well as the location and classification of properties that they sell. The income of those who are just starting out in the field is often inconsistent because several weeks or months can go by without closing a sale. Some brokers allow their agents to take out advances on expected future sales, but this option is often only available to the more experienced agents who close sales on a more regular basis. It is advised that entry-level agents have enough money to support themselves for 6 months to up to a year so that they aren’t relying on commissions to survive and can focus on gaining experience.
The three highest paying real estate industries according to the BLS were:
- Insurance Agencies and Brokerages – $89,590 per year (employs 400)
- Telecommunications Carriers – $84,600 per year (employs 210)
- Natural Gas Distribution – $78,130 per year (employs 140)
And here are the top three industries that employ the most real estate sales agents:
- Offices of Real Estate Agents and Brokers – $53,880 per year (employs 58,170)
- Lessors of Real Estate – $46,480 per year (employs 35,510)
- Activities Related to Real Estate – $50,620 per year (employs 30,700)
There are many other factors including location, years experience, level of expertise and market demand that can determine what salary you make.
Salary by Years Experience (United States)
According to payscale.com, a real estate agent salary ranges from $23,733 to $144,785 (including any additional bonuses and profit sharing agreements). The reported stats were collected from 187 professionals, most of whom had less than 5 years of work experience. The average salary is approximately $51,000.
Working as a real estate agent can be quite challenging due to the frequent price fluctuations in the market and high level of competition between agents. However, if you work hard and make a name for yourself through word of mouth recommendations and a high sale success rate, there is absolutely no ceiling on the amount of money you can make.