A house or an apartment, whether purchased as a residence or an investment property to be rented out, is the single most expensive item in most people's budgets. Thus, people generally seek the help of a real estate agent or broker when buying or selling a home. These workers have a thorough knowledge of the housing market in their community. They know which neighborhoods will best fit their clients' budgets, local zoning and tax laws, and where to obtain financing for the purchase. Agents and brokers also act as a medium for price negotiations between buyer and seller.
Brokers are independent career people who not only sell real estate owned by others, but also rent and manage properties, make appraisals, and develop new building projects. In closing sales, brokers often arrange for loans to finance the purchases, for title searches, and for meetings between buyers and sellers when details of the transactions are agreed upon and the new owners take possession. A broker's knowledge, resourcefulness, and creativity in arranging financing that is most favorable to the prospective buyer often mean the difference between success and failure in closing a sale. In some cases, agents assume the responsibilities in closing sales. Brokers also manage their own offices, advertise properties, and handle other career matters. Some combine other types of work, such as the sale of insurance or the practice of law, with their real estate career. Real estate agents generally are independent sales workers who provide their services to a licensed broker on a contract basis. Today, relatively few agents work as employees of a broker or realty firm.
In selling or renting real estate, brokers and agents generally first meet with potential buyers to get a feeling for the type of home they would like and can afford. Then, they may take the client to see a number of homes that appear to meet the needs and income of the client. Because real estate is so expensive, agents may have to meet several times with a prospective buyer to discuss properties. In answering questions, agents emphasize those selling points that are likely to be most important to the buyer. To a young family looking at a house, for example, they may point out the convenient floor plan and the fact that schools and shopping centers are close by. To a potential investor seeking the tax advantages of owning a rental property, they may point out the proximity to the city and the ease of finding a renter. Whenever bargaining over price becomes necessary, agents carefully follow the seller's instructions and may present counter offers in order to get the best possible price.
There is more to agents' and brokers' jobs, however, than just selling. Since they must have properties to sell, they spend a significant amount of time obtaining "listings" (owner agreements to place properties for sale with the firm). Much time is spent on the telephone exploring leads gathered from advertisements and personal contacts. When listing property for sale, agents and brokers make comparisons with similar property being sold to determine its fair market value.
Most real estate agents and brokers sell residential property. A few, usually in large firms, specialize in commercial, industrial, agriculture, or other types of real estate. Each specialty requires knowledge of that particular type of property and clientele. Selling or leasing career property, for example, requires an understanding of leasing practices, career trends, and location needs. Agents who sell or lease industrial properties must know about transportation, utilities, and labor supply. To sell residential properties, the agent must know the location of schools, religious institutions, shopping facilities, and public transportation, and be familiar with tax rates and insurance coverage.
Although real estate agents and brokers generally base their operations in offices, most of their time is spent outside the office--showing properties to clients, evaluating properties for sale, meeting with prospective clients, and performing a wide range of other duties. Brokers provide office space, but agents generally furnish their own automobiles.
Agents and brokers often work more than a standard 40-hour week. In addition, they often work evenings and weekends to suit the convenience of their clients.
Real estate agents and brokers held about 422,000 jobs in 1990. Many worked part time, and a significant number were self-employed. Many additional agents and brokers worked on a commission basis, many of them combining their real estate activities with other careers.
Most real estate firms are relatively small; indeed, some brokers operate a one- person career. Some large firms have several hundred real estate agents operating out of many branch offices. About one-sixth of all brokers have franchise agreements with national or regional real estate organizations. Under this type of arrangement, similar to many fast-food restaurant operations, the broker pays a fee in exchange for the privilege of using the more widely known name of the parent organization. Although franchised brokers often receive help in training sales people and in running their offices, they bear the ultimate responsibility for the success or failure of the firm.
Real estate is sold in all areas, but employment is concentrated in large urban areas and in smaller but rapidly growing communities.
Training, Other Qualifications, and Advancement
Real estate agents and brokers must be licensed in every State and in the District of Columbia. All States require prospective agents to be a high school graduate, be at least 18 years old, and pass a written test. The examination--more comprehensive for brokers than for agents--includes questions on basic real estate transactions and on laws affecting the sale of property. Most States require candidates for the general sales license to complete at least 30 hours of classroom instruction and those seeking the broker's license to complete 90 hours of formal training in addition to a specified amount of experience in selling real estate (generally 1 to 3 years). Some States waive the experience requirements for the broker's license for applicants who have a bachelor's degree in real estate. A small, but increasing number of States require that agents have 60 hours of college credit--roughly the equivalent of an associate degree. State licenses generally must be renewed every year or two, usually without reexamination. Some States, however, require continuing education for license renewal.
Persons who take real estate sales positions are older, on average, than entrants to most other occupations. Many homemakers and retired persons are attracted by the flexible and part-time work schedules characteristic of this field and may enter, leave and later re-enter the occupation, depending on the strength of the housing market, family responsibilities, and other personal factors. In addition to labor force entrants and reentrants, others transfer into real estate sales jobs from a wide range of occupations, including clerical and other sales jobs.
As real estate transactions have become more complex, many of the large firms have turned to college graduates to fill sales positions. A large number of agents have some college training, and the number of college graduates selling real estate has risen substantially in recent years. However, personality traits are fully as important as academic background. Brokers look for applicants who possess such characteristics as a pleasant personality, honesty, and a neat appearance. Maturity, tact, and enthusiasm for the job are required in order to motivate prospective customers in this keenly competitive filed. Agents also should have a good memory for names and faces and career details, such as taxes, zoning regulations, and local land-use laws.
Persons interested in beginning jobs as real estate agents often apply in their own communities, where their knowledge of local neighborhoods is an advantage. The beginner usually learns the practical aspects of the job, including the use of computers to locate or list available properties or identify available sources of financing, under the direction of an experienced agent.
Many firms offer formal training programs for both beginners and experienced agents. Larger firms generally offer more extensive programs than smaller firms. Over 1,000 universities, colleges, and junior colleges offer courses in real estate. At some, a student can earn an associate or bachelor's degree with a major in real estate; several offer advanced degrees. Many local real estate boards that are members of the National Association of Realtors sponsor courses covering the fundamentals and legal aspects of the field. Advanced courses in appraisal, mortgage financing, property development and management, and other subjects also are available through various National Association affiliates.
Trained and experienced agents can advance in many large firms to sales or general manager. Persons who have received their broker's license may open their own offices. Training and experience in estimating property value can lead to work as a real estate appraiser, and people familiar with operating and maintaining rental properties may specialize in property management. Those who gain general experience in real estate and a thorough knowledge of career conditions and property values in their localities may enter mortgage financing or real estate investment counseling.
Employment of real estate agents and brokers is expected to grow about as fast as the average for all occupations through the year 2000 as a result of growing demand for sales and rental housing and other properties. However, most job openings will occur each year as workers transfer to other occupations, retire, or stop working for other reasons. Many beginners become discouraged by their inability to close a sufficient number of sales and subsequently leave the occupation. Employment growth in this field will stem primarily from increased demand for home purchases and rental units. Shifts in the age distribution of the population over the next decade will result in a larger number of prime working age persons (25-54 years old) with careers and family responsibilities. This is the most geographically mobile group in our society and the one that traditionally makes most of the home purchases. As their incomes rise, these people also may be expected to invest in additional real estate. However, employment of agents and brokers is not expected to keep pace with real estate sales because the use of computers to locate and list property or identify available sources of financing allows each agent and broker to handle more career. During periods of declining economic activity and tight credit, the volume of sales and the resulting demand for sales workers may decline. During these periods, the number of persons seeking sales positions may outnumber openings.
Real estate sales positions should continue to be relatively easy to obtain. Not everyone is successful in this highly competitive filed, however; well-trained, ambitious people who enjoy selling should have the best chance for success.
Commissions on sales are the main source of earnings--very few real estate agents work for a salary. The rate of commission varies according to the type of property and its value; the percentage paid on the sale of farm and commercial properties or unimproved land usually is higher than that paid for selling a home.
Commissions may be divided among several agents and brokers. The broker and agent in the firm that obtained the listing generally share their part of the commission when the property is sold; the broker and agent in the firm that made the sale also generally share their part of the commission. Although an agent's share varies greatly it is about half of the total amount received by the firm.
According to a National Association of Realtors survey, the median income of full- time real estate agents was about $18,700 a year in 1990. Real estate brokers earned an estimated median gross personal income (after expenses) of $42,600 a year. The most successful agents and brokers earn considerably more. Some firms, especially the large ones, furnish group life, health, and accident insurance.
Income usually increases as an agent gains experience, but individual ability, economic conditions, and the type and location of the property also affect earnings. Sales workers who are active in community organizations and local real estate boards can broaden their contacts and increase their earnings. A beginner's earnings often are irregular because a few weeks or even months may go by without a sale. Although some brokers allow an agent a drawing account against future earnings, this practice is not usual with new employees. The beginner, therefore, should have enough money to live on until commissions increase.
Selling expensive items such as homes requires maturity, tact, and a sense of responsibility. Other sales workers who find these character traits important in their work include automobile sales workers, securities sales workers, insurance agents and brokers, yacht brokers, travel agents, and manufacturers' representatives.
Sources of Additional Information
Details on licensing requirements for real estate agents and brokers are available from most local real estate organizations or from the State real estate commission or board.
For more information about opportunities in real estate work, as well as a list of colleges and universities offering courses in this field, contact:
National Association of Realtors, 430 North Michigan Ave., Chicago, Ill. 60611.