10 Things You Need to Know Before You Become a Real Estate Broker
If you’re thinking about becoming a real estate broker, it’s important to take the time to educate yourself about the profession before committing to it long-term. You need to know how much money you can expect to make, what your day-to-day work will entail, and how your clients will perceive you as a professional. Here are 10 things you need to know before becoming a real estate broker.
1) Local laws
There are many rules and regulations that govern real estate brokers, including what types of licenses you need to work with each type of client (i.e., private buyers, sellers, etc.). Make sure you understand all laws for your state. Also make sure you understand how business income is taxed; most real estate firms will withhold some taxes on behalf of their employees. Find out what that withholding rate is so you don’t end up paying more than necessary during tax season.
2) Licensing process
In order to become licensed as a real estate broker, you’ll have to pass two examinations: The first is from your state board of realtors. It’s made up of 200 questions and covers issues such as ethics, property law, appraisal standards and so on. The second test comes from NAR, and it includes 70 questions on topics such as finance and economics. Once you’ve passed both exams, you can apply for an active license in your state.
3) Ease into the field
Typically, you need a bachelor’s degree in business administration or real estate to get your broker’s license. The exception is if you have been in real estate for at least 2 years and have passed your state’s broker licensing exam. In that case, you only need at least 1 year of experience. Most states also require that an applicant pass one or more exams from educational providers such as CRB Education Services and REAC.
4) Education level
The National Association of Realtors recommends that you have at least two years of full-time work experience in real estate. This work experience should include supervised activity, such as an internship or part-time job with your local board of realtors.
5) Certification level
Most states require licensees to be licensed and certified, and obtaining your license and certification can be time-consuming (and expensive). To become certified in real estate sales, you must pass two tests: one for broker’s licensing and one for broker’s salesperson licensing. The National Association of Realtors offers an exam called REP—the Residential Sales Exam—that you must pass in order to get your broker’s license.
6) Tools of the trade
The first thing you’ll need is some education—you can’t do real estate on your own. A bachelor’s degree in business and/or real estate will put you on track, and courses like finance and economics (especially appraisals) can be particularly valuable. Once you have those fundamentals down, you’ll want to work as an assistant at a brokerage or agent for about two years—even longer if you can swing it financially.
7) Insurance needs
Working with brokers who are licensed by their state is important for your career. The National Association of Realtors states that 90 percent of homeowners are represented by one. With that much competition, you need all the help you can get, and working with only licensed brokers is an easy way to up your game. Licensed brokers know how their state’s regulatory agencies work and how to avoid future legal hassles.
8) Work with Licensed Brokers
As you’re becoming a real estate broker, it is important that you only work with licensed brokers. It is their job to help you learn what you need to know about starting your own business and how they can help you set up an effective home-based office. Without them, it will be difficult for your career as a real estate broker to start off on the right foot. Once your education is complete, these professionals will then walk with you through each stage of licensing so that everything goes smoothly.
9) Learn market trends before buying your first home
The easiest way to stay ahead of your competition is by being knowledgeable. Whether you’re looking at buying or selling, it’s wise to understand current market trends. Websites like Zillow and Trulia can help you gauge interest rates, price comparisons, and real estate news in your local area. Make sure you know what factors could impact your home purchase or sale so that you can get a leg up on other buyers and sellers in your area.
10) Gain industry experience through internships
If you’re fresh out of school and have no industry experience, your first stop should be an internship. If you want to be a broker, take an internship at a brokerage firm. If you want to be an agent, take an internship at local company that hires real estate agents or brokers.