The Basic Steps to Start a Successful Real Estate Business
- Contributor:by The HOMEiA Team
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Are you attracted to the idea of buying and selling homes for a living? Perhaps you love exploring houses or helping people find just the right fit for them. Or maybe you’ve dreamt of negotiating great deals and taking home an impressive commission. Do you like the idea of working flexible hours rather than a set schedule?
If you are considering becoming a real estate agent, you are in good company. In the United States alone there are about two million people with active real estate licenses. It is a career choice that appeals to many people, especially given the popularity of television shows about renovating, buying and selling.
Here are some things to think about if you want to start a successful real estate business:
Table of Contents:
1. Do your research
You can start by gathering basic information from sources such as the Occupational Outlook Handbook published by the U.S. Bureau of Labor Statistics. Here you can find projections for the occupation.
For example, the BLS predicts that the number of real estate brokers and sales agents will grow by seven percent—faster than average for all occupations—between 2018 and 2028.
The Occupational Outlook Handbook also reports the median pay for the job; in 2019, that was $50,730 per year or $24.39 per hour.
Keep exploring the site for steps required to start out in this field, employment data by state and area, and links to additional resources.
Each state has its own requirements for becoming a real estate agent, so be sure to research what’s required in your state. One place to start is the regulatory agency directory on the website for the Association of Real Estate License Law Officials.
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You will have to pass one or more exams, and your state may require you to take specific courses before you do so. There may also be age and background check requirements.
Another major resource is the National Association of Realtors. NAR is the largest professional organization for real estate agents, and it offers a substantial amount of information that will help you understand what is going on in the industry.
Before you commit to your new real estate career, ask yourself a few questions.
- a. Do you have some start-up money to invest in this career?
- b. Do you have the discipline to work on your own without supervision?
- c. Are you willing to work outside regular hours, on your clients’ schedules?
- d. And can you thrive in a role where you must constantly seek out new clients?
The best way to learn about the career is to talk to as many real estate agents as possible about what the work is really like, what qualities and skills are most important and how to get a good start.
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2. Get educated
Once you’ve decided that real estate is right for you, it’s time to get educated.
You don’t need a college degree to become a real estate agent, but you do need to understand the processes and laws involved in the industry and the expectations for your role.
For most newcomers, the best place to start is a pre-licensing course. In fact, your state probably requires such a course before you take the licensing exam.
You may have several options for this training, from community colleges to online courses or even dedicated real estate schools.
Be prepared to spend several hundred dollars on your training, and a significant amount of time. Depending on your state, you may be required to participate in anywhere from 24 to 210 hours of training.
In addition to your formal real estate training, you may want to strengthen your knowledge in business, negotiation, marketing, home construction and your local market.
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3. Get licensed
This step is not optional. Without a license, you can’t represent clients. It is also not free; depending on where you take the exam, it may cost you as much as $300.
Your pre-licensing training program should guide you toward the test and explain what you need to do.
In general, you can expect to take a computerized test with multiple choice questions. There will be one general section covering real estate practices and principles that apply nationally, and a separate section specific to your state’s laws.
Once you’ve passed the exam, you can apply for your license by submitting your results, appropriate documentation and any additional fees charged by your state.
Because real estate licenses are issued by the state, not the federal government, in most cases you will only be able to practice in the state where you’re licensed. If you work near a border, though, or have a reason to expect to do business in another state, look into the reciprocal agreements that are in effect. These agreements among states allow agents licensed in one to work in the other.
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4. Find a brokerage
Unless you become a broker yourself (which may require multiple years of experience), you will be working within a brokerage. A brokerage has the legal ability to oversee transactions in real estate and ensure that agents are working in legal and ethical ways.
The brokerage will collect the commissions from your transactions; it will keep a small percentage and pass the rest on to you. Your pay will come directly from your commissions, not from a regular salary. While you will get many resources from your brokerage—these may include office support, training opportunities, marketing support and more—you may also have to pay for your desk space, membership to multiple listing services, technology, materials and more.
In your first year or two, the cost outlay may be significant and the income limited.
There are many brokerage options to consider. The most traditional are branches of the big national franchises, many of which are household names: RE/MAX, Century21, Keller Williams and so on.
Other brokerages may be small locally-owned or boutique firms, or newer business models that operate partly or mostly online.
Take the time to research and even interview with multiple brokerages, and decide which one best aligns with your needs and values and will offer you the most benefit.
In addition to joining a brokerage, you may wish to become a licensed Realtor. This term—though often used interchangeably with “real estate agent”—applies only to members of the National Association of Realtors (NAR), which is the United States’ largest real estate trade association.
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5. Build your business
When you work as a real estate agent, even under a brokerage, you are an entrepreneur. While you’ll receive guidance, you will be responsible for bringing in clients and for structuring your own approach to the business.
Here are a number of ways to maximize your potential:
A. Find a mentor
You can only learn so much from classwork. If you really want to build your understanding, look for more experienced agents who will take you under their wing.
B. Immerse yourself in the market
Read every listing. Go to open houses. Drive around local neighborhoods, or walk the sidewalks and talk to people you encounter. Get to know school districts, public transportation routes, utility companies, recreational opportunities and home styles. When you know your area like the back of your hand, you can earn your clients’ trust.
C. Make connections
Having a strong network is one of the most important ways you can meet new clients. Participate in local groups and associations, attend networking events, and get to know professionals who provide various services for homeowners—lenders, lawyers, contractors, painters and anyone else whose work you can honestly recommend. They may recommend you in turn.
D. Offer assistance
Help other agents in your office. Provide free services to potential clients or their neighbors, such as pricing assessments or comps. Write blog articles for real estate sites, or answer questions on message boards. All of these approaches will help get your name out there, show your expertise and work ethic, and encourage others to come to you in the future.
E. Go above and beyond
How can you make sure your clients have not only a fair business transaction, but a positive experience overall? Respond quickly, provide extras, follow up with gifts of congratulations? Use your imagination and read your clients to figure out what will make them want to provide a stellar review.
F. Be persistent
Building a business takes time, and the more clients you have, the more you will get. Many agents give up within the first few years, but if you stick with it your business will eventually grow at a faster rate.
G. Keep learning
The real estate market is always changing, so stay on top of new trends, technologies and regulations. You will be required to participate in some continuing education in order to renew your license, but don’t stop there. Stay on the cutting edge so you can be a leading guide your clients.
H. Promote yourself
Consumers are drawn to what is familiar, so the more the people in your community who see your name, your face and your logo, the more likely they are to think of you when they have a real estate need. Marketing costs money, but it also leads to more clients.
Real estate is a fairly easy industry to enter, and it can offer a lot of flexibility and earning potential to the right person. The initial challenges, however, can be daunting. It will require a financial investment, hard work and lots of help to get your business off the ground.
Once you’ve established yourself in the market, you’ll have many options for growth, specialization and creative control, which can make real estate a highly rewarding career.
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