One of the most complex and significant financial events in peoples' lives is the purchase or sale of a home or investment property. Because of the complexity and importance of this transaction, people typically seek the help of real estate brokers and sales agents when buying or selling real estate.
Real estate brokers and sales agents have a thorough knowledge of the real estate market in their communities. They know which neighborhoods will best fit clients' needs and budgets. They are familiar with local zoning and tax laws and know where to obtain financing for the purchase of property.
Brokers and agents do the same type of work, but brokers are licensed to manage their own real estate businesses. Agents must work with a broker. They usually provide their services to a licensed real estate broker on a contract basis. In return, the broker pays the agent a portion of the commission earned from the agent's sale of the property. Brokers, as independent businesspeople, often sell real estate owned by others; they also may rent or manage properties for a fee.
When selling property, brokers and agents arrange for title searches to verify ownership and for meetings between buyers and sellers during which they agree to the details of the transactions. In a final meeting, the new owners take possession of the property. Agents and brokers also act as intermediaries in price negotiations between buyers and sellers. They may help to arrange financing from a lender for the prospective buyer, which may make the difference between success and failure in closing a sale. In some cases, brokers and agents assume primary responsibility for finalizing, or closing, sales, but typically this function is done by lenders or lawyers.
Agents and brokers spend a significant amount of time looking for properties to buy or sell. They obtain listings—agreements by owners to place properties for sale with the firm. When listing a property for sale, agents and brokers compare the listed property with similar properties that recently sold, to determine a competitive market price for the property. Following the sale of the property, both the agent who sold it and the agent who obtained the listing receive a portion of the commission. Thus, agents who sell a property that they themselves have listed can increase their commission.
Before showing residential properties to potential buyers, agents meet with them to get an idea of the type of home the buyers would like, and how much the buyers can afford to spend. They may also ask buyers to sign a loyalty contract, which states that the agent will be the only one to show houses to the buyer. An agent or broker then generates lists of properties for sale, their location and description, and available sources of financing. In some cases, agents and brokers use computers to give buyers a virtual tour of properties that interest them.
Agents may meet numerous times with prospective buyers to discuss and visit available properties. Agents identify and emphasize the most pertinent selling details. To a young family looking for a house, for example, they may emphasize the convenient floor plan, the area's low crime rate, and the proximity to schools and shopping. To a potential investor, they may point out the tax advantages of owning a rental property and finding a renter. If negotiation over price becomes necessary, agents must follow their client's instructions thoroughly and may present counteroffers to reach the final sales price.
Once the buyer and seller have signed a contract, the real estate broker or agent must ensure that all terms of the contract are met before the closing date. If the seller agrees to any repairs, the broker or agent ensures they are made. Increasingly, brokers and agents must deal with environmental issues as well, such as advising buyers about lead paint on the walls. In addition, the agent must make sure that any legally mandated or agreed-upon inspections, such as termite and radon inspections, take place. Loan officers, attorneys, and other people handle many details, but the agent must ensure that they are carried out.
Most real estate brokers and sales agents sell residential property. A small number—usually employed in large or specialized firms—sell commercial, industrial, agricultural, or other types of real estate. Every specialty requires knowledge of that particular type of property and clientele. Selling, buying, or leasing business property requires an understanding of leasing practices, business trends, and the location of the property. Agents who sell, buy, or lease industrial properties must know about the region's transportation, utilities, and labor supply. Whatever the type of property, the agent or broker must know how to meet the client's particular requirements.
Work Environment
Real estate brokers held about 109,900 jobs in 2020. The largest employers of real estate brokers were as follows:
- Self-employed workers - 58%
- Real estate and rental and leasing - 37%
Real estate sales agents held about 408,900 jobs in 2020. The largest employers of real estate sales agents were as follows:
- Self-employed workers - 58%
- Real estate and rental and leasing - 33%
- Construction - 3%
Workplace size for real estate brokers and sales agents can range from a one-person business to a large firm with numerous branch offices. Many brokers have franchise agreements with national or regional real estate companies. Under this arrangement, the broker pays a fee to be affiliated with a widely known real estate organization.
Some real estate brokers and sales agents work in a typical office environment, while others work out of their homes. In both cases, real estate workers spend much of their time away from their desks, showing properties to customers, traveling to see properties for sale, and meeting with prospective clients.
Work Schedules
Many real estate brokers and sales agents work more than 40 hours per week. They often work evenings and weekends to accommodate clients’ schedules. Many brokers and sales agents spend a significant amount of time networking and attending community events to meet potential clients. Although they frequently work irregular hours, many can set their own schedules.
Some brokers and sales agents work part time and may combine their real estate activities with other careers.
Education & Training Required
Agents and brokers must be high school graduates. In fact, as real estate transactions have become more legally complex, many firms have turned to college graduates to fill positions. A large number of agents and brokers have some college training.
Most universities, colleges, and community colleges offer various courses in real estate. Some offer associate and bachelor’s degrees in real estate, but mostly they offer certificate programs. Additionally, college courses in finance, business administration, statistics, economics, law, and English are also helpful. For those who intend to start their own company, business courses such as marketing and accounting are as important as courses in real estate or finance.
Many local real estate associations that are members of the National Association of Realtors sponsor courses covering the fundamentals and legal aspects of the field. Advanced courses in mortgage financing, property development and management, and other subjects also are available. Also, some brokerage firms offer formal training programs for both beginners and experienced agents. In addition, much of the training needed to learn the practical aspects of the trade happens on the job, under the direction of an experienced agent, who may demonstrate how to use a computer to locate or list available properties and identify sources of financing.
Certifications Needed
In every State and the District of Columbia, real estate brokers and sales agents must be licensed. Prospective brokers and agents must pass a written examination. The examination—more comprehensive for brokers than for agents—includes questions on basic real estate transactions and the laws affecting the sale of property. Most States require candidates for the general sales license to complete between 30 and 90 hours of classroom instruction. To get a broker's license an individual needs between 60 and 90 hours of formal training and a specific amount of experience selling real estate, usually 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.
State licenses typically must be renewed every 1 or 2 years; usually, no examination is needed. However, many States require continuing education for license renewals. Prospective agents and brokers should contact the real estate licensing commission of the State in which they wish to work to verify the exact licensing requirements.
Other Skills Required
Personality traits are as important as academic background. Brokers look for agents who have a pleasant personality and a neat appearance. They must be at least 18 years old. Maturity, good judgment, trustworthiness, honesty, and enthusiasm for the job are required to attract prospective customers in this highly competitive field. Agents should be well organized, be detail oriented, and have a good memory for names, faces, and business particulars. A good knowledge of the local area and its neighborhoods is a clear advantage.
How to Advance
As agents gain knowledge and expertise, they become more efficient in closing a greater number of transactions and increase their income. In many large firms, experienced agents can advance to sales manager or general manager. People who earn their broker's license may open their own offices. Others with experience and training in estimating property values may become real estate appraisers, and people familiar with operating and maintaining rental properties may become property managers. Experienced agents and brokers with a thorough knowledge of business conditions and property values in their localities may enter mortgage financing or real estate investment counseling.
Job Outlook
Overall employment of real estate brokers and sales agents is projected to grow 4 percent from 2020 to 2030, slower than the average for all occupations.
Despite limited employment growth, about 47,500 openings for real estate brokers and sales agents are projected each year, on average, over the decade. Most of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.
Employment
There will be a continued demand for real estate brokers and sales agents, because people turn to these workers when looking for a new home, relocating, or purchasing property for a business, among other reasons. Employment is projected to grow along with the real estate market.
Tighter credit regulations and increasing real estate prices may force some people to continue renting as opposed to entering the housing market.
Moreover, the younger portion of the millennial generation will enter the prime working-age and household-forming age group over the next decade. This generation has delayed home ownership because of financial and personal considerations. Therefore, their slower entry into the housing market should limit demand for real estate agents and brokers.
The real estate market is highly sensitive to fluctuations in the economy, and employment of real estate brokers and agents will vary accordingly. In periods of economic growth or stability, employment should grow to accommodate people looking to buy homes and businesses looking to expand office or retail space. Alternatively, during periods of declining economic activity or rising interest rates, the amount of work for brokers and agents will slow and employment may decline.
Earnings
The median annual wage for real estate brokers was $62,010 in May 2021. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $30,470, and the highest 10 percent earned more than $176,080.
The median annual wage for real estate sales agents was $48,340 in May 2021. The lowest 10 percent earned less than $28,270, and the highest 10 percent earned more than $102,170.
In May 2021, the median annual wages for real estate brokers in the top industries in which they worked were as follows:
- Real estate and rental and leasing - $61,890
In May 2021, the median annual wages for real estate sales agents in the top industries in which they worked were as follows:
- Construction - $48,270
- Real estate and rental and leasing - $47,530
Brokers and sales agents earn most of their income from commissions on sales. The commission varies by the type of property and its value. Commissions often are divided among the buying agent, selling agent, brokers, and firms.
An agent’s income often depends on economic conditions, the agent’s individual motivation, and the types of property available. Income usually increases as agents become better and more experienced at sales. Earnings can be irregular, especially for beginners, and agents sometimes go weeks or months without a sale. Some agents become active in community organizations and local real estate organizations to broaden their contacts and increase their sales.
Many real estate brokers and sales agents work more than 40 hours per week. They often work evenings and weekends to accommodate clients’ schedules. Many brokers and sales agents spend a significant amount of time networking and attending community events to meet potential clients. Although they frequently work irregular hours, many can set their own schedules.
Some brokers and sales agents work part time and may combine their real estate activities with other careers.
