You love to figure out the square footage of friends’ houses. You calculate how much houses are worth by looking at the front of the property. You love people and you love finding a perfect place for them.
Ever thought of turning that natural passion into a business as a real estate agent?
From getting your license to getting real estate agent insurance, we’ll walk you through the steps involved in starting your own real estate brokerage, as well as how to find your first clients.
How to Become a Real Estate Agent: Qualifications
1. Be at least 18 or 19 years old.
In most states, you need to be at least 18 to become a licensed real estate agent. There are a few states where you do need to be 19, so it’s worth checking your state’s guidelines around licensure requirements.
2. Be a legal US resident.
You should be a legal US resident or citizen, as this is typically a requirement for your real estate license.
3. Show proof of a completed pre-licensure course.
The pre-licensure course is essentially your prep to take the real estate license exam. During this course, you’ll learn the ins and outs of being a real estate agent, as well as the specific laws and regulations surrounding real estate transactions in your specific state.
4. Have a passing mark on your real estate licensure exam.
We’ll touch more on this later in the article, but you should be able to provide proof that you passed your real estate license exam. From there, you’ll be ready to start a real estate agency in your state.
5. Have a passion for real estate.
An important part of becoming a real estate agent is a sense of passion and purpose. Real estate agents are essentially their own business owners; they have to manage an office, find potential clients and buyers, and continually connect with the community.
If you are not sure whether you want to become a real estate agent, try talking to people in the real estate game. If you still think you’re ready, we’ve got the next steps for you.
3 Steps to Become a Real Estate Agent
1. Take the real estate salesperson exam.
After you complete any necessary coursework, you will need to take the real estate salesperson exam.
Most of the state real estate exams have 75 questions and take about an hour and a half to complete. Several states offer test prep classes or courses free or for a small fee, so you may want to check and see if your state offers that option.
To register for the real estate licensure exam in your particular state, check your state’s real estate regulatory authority for additional information.
2. Find a broker to mentor you.
Once you have passed the exam, you will need to find a real estate broker who can act as your mentor. You are called a real estate salesperson, not a real estate broker, which means that you can’t act as an independent agent yet. Instead, you have to work for someone under their sponsorship.
When you apply for your real estate license, they will also fill out some paperwork for you to turn in to the state.
Here are a few additional tips on how to find the right real estate broker to mentor you:
- Get a feel for who has the best reputation in your area. Ask other real estate agents or folks who have recently worked with different agencies for their opinions. Ideally, you’ll want to go with a broker who has a solid reputation in the field.
- Find a brokerage that specializes in the type of real estate you’d like to sell. For example, if you have your heart set on selling waterfront properties, find a brokerage that has an extensive portfolio of real estate with a waterfront view.
- Choose a real estate broker who has the time and admin support for newly minted real estate agents. Ask established real estate agents who’d they recommend, as they likely have feedback from their own experiences.
- Work with a brokerage that has a reasonable commission package and can support you with marketing, admin, and more. After all, a generous commission package is great, but if you have to earn it by doing your own marketing and admin work, it may not necessarily be the best arrangement.
- Find a brokerage who will work with you the way you prefer, i.e., as an independent contractor or an employee. You may also want to ask what obligations come along with working with the brokerage (for example, will you owe your brokerage for marketing fees if you decide to leave early?).
Once you find the right brokerage for you, your state may require you to put in anywhere from three to five years of work before you can start your own real estate business.
3. Think about going solo.
If your goal is to learn how to become a real estate agent, you’re pretty much there. If, however, you have your eye on starting your own real estate business, then you’ll want to check out what we’ve got in our next section.
How to Start Your Own Real Estate Business in 8 Steps
If you find out that you like real estate, and you want to move up the real estate ladder, there are ways you can do that.
1. Know the challenges you’re going up against – and embrace them.
Some people are perfectly content being a real estate agent working with another brokerage. But if you’ve got that entrepreneurial itch, it’s worth looking into starting your own real estate business. While there’s undoubtedly more work involved in the process (we’ll talk about that in a bit), there are other payoffs too, like:
- Earning more money
- Controlling your own schedule
- Executing on your vision
- Working with the clients you want to work with.
2. Research the demand (and competition) in your area.
Before getting into business for yourself, get a better understanding of what the market looks like in your area. Ask yourself the following questions:
- Are there plenty of homes for sale in my area?
- Are there more commercial properties for sale, or residential properties?
- Are there one or two main real estate brokerages in the area, or does the local market support a variety?
- Are there any niche real estate brokerages in your area (for example, high-end residential real estate, waterfront properties, etc.)
3. Get a good idea for your startup funding.
Every real estate brokerage is different, so the costs to start up your real estate business may be different. Among the costs you may encounter are:
- Utilities
- Rent for office space
- Marketing
- Business insurance
As you grow your real estate business, you can choose to invest money back into the brokerage. If you need capital now, check out our guide on how to apply for a small business loan.
4. Get your brokers license (and business license, too!).
Before you can become a full-fledged broker, you have to become an associate broker first, and continue to work under a licensed real estate broker.
To become an associate broker, you need to take an additional 60 hours of coursework. This coursework includes:
- Lessons on advanced property law, property management and management of large, multi-family housing developments;
- How to minimize risk with property investments, rental law and tenant-owner relationships, equal opportunity law, ethics and enforcement, mechanical liens and construction liens; and
- How to spot property issues that might impact the sale of the property.
As with the real estate sales license, you also have to take an examination for the associate broker’s license as well.
Some states give you the option of applying for a broker’s license three years after your sales license, while in other states, it is five years. You will need to check with your state to figure out the requirements. There will also be continuing education courses, just as there are with real estate sales.
Specialization in property management also requires additional certification, so if you want to add that to your resume, you need to check with your state to see what you will need to do in order to get certification in property management, or in commercial sales.
Once you get your broker license, you may need to get additional licensing for your real estate business. For example, your state, city, or county may require you to get a business license.
Not sure how to get one? No worries; we’ve got you covered. Just check out our state-by-state guide on how to get a business license.
5. Protect your brokerage with business liability insurance.
From the moment you set up your new real estate business, you should get it covered with business liability insurance.
From general liability insurance (which covers claims involving property damage and accidents) to professional liability insurance (which covers acts of negligence), business liability insurance can play an essential role in keeping your finances protected from costly claims.
Safe to say, it’s a good idea for real estate professionals to have some kind of business liability insurance coverage in place. You can learn more about real estate business insurance here, or if you want to explore your options, try out our free online quote tool!
All you have to do is answer a few easy questions to get a business insurance quote for real estate from a top insurer.
Get Insured in Under 10 Minutes
Get an affordable and customized policy in just minutes. So you can get back to what matters: Your business.
6. Put a solid business plan in place.
Starting a small business is no picnic in the park – there’s a lot of moving parts that you’ll need to keep track of and you’ll need to start building your clientele as soon as you get started.
To help with those questions, it’s important to come up with a business plan. Think of your business plan as a blueprint for how you’ll approach growing your real estate business, as well as tracking the milestones that indicate that you’re on the right track.
A business plan can also be a useful document for showing investors, financial professionals, and other interested parties how you’re planning on growing your real estate business.
Building a business plan can be challenging. Luckily, we’ve made it easy for you. Check out our FREE downloadable business plan.
7. Set your commission rate.
The average commission for a real estate agent is 3% per agent, or 6% overall. There are times that real estate agents can earn more on commission, and there are also times real estate agents earn less, because commissions are to some extent negotiable.
Additionally, commercial property real estate agents can earn higher commissions.
The Bureau of Labor Statistics also noted that the growth rate for real estate agents is around 6% through 2026, which means that the job field is expected to grow as fast as the average job within the labor market.
8. Start building your clientele base.
Starting out your own real estate business may mean starting your clientele base over from scratch, especially if the brokerage you used to work with kept your book of business.
Looking for more information about becoming a real estate agent? Check out these helpful guides:
5 Real Estate Marketing Ideas That Will Get Your Business Out There