Dreaming about becoming a real estate agent? A career in residential real estate is compelling and exciting. It’s one of the few careers you can transition into at any stage of life — whether you’re a recent high school graduate, a stay-at-home-parent looking to join or return to the workforce, or someone looking to move from a traditional 8-to-5 job to something with more flexibility. It’s also one of the few careers with unlimited financial potential.
You might wonder if you can make a success job as a part-time agent. The simple answer is, of course. But take a step back and look at a few things before jumping in. Then, if you determine real estate is a good fit for you, decide between full and part-time.
Is your personality right for real estate?
Before spending money on pre-licensing classes and exams, take a hard and honest look at your strengths and skill sets. Consider what agents must do in their day. Agents must call on prospective buyers and sellers, create marketing and advertising strategies and material, negotiate the fine points of contracts, and stay on top of multiple deadlines.
Extroverted versus Introverted
Are you someone who likes talking to people? Do interactions with people excite you or drain you? If you were standing in a grocery store and overheard someone talking about wanting to sell their house, would you jump into the conversation and hand them a business card? Being introverted doesn’t mean you can’t be a real estate agent. But if you have anxiety about talking to people, it could inhibit your success.
Self-Directed versus Preferring Direction
In real estate, you’re your own boss. That means your success falls squarely on your efforts. If you’re someone who can set and honour your own goals, can block and use your time for real estate activities without someone giving you direction on what to do next, real estate might be a good choice.
Generalist versus Specialist
When you’re a real estate agent, you do everything from marketing to sales to accounting. Do you get excited about knowing a little about many things, or do you lean toward becoming an expert in a few subject areas? Many people think an agent is just an expert on houses, but in fact, understanding houses and the housing market is just a small slice of what it takes to be a competent agent. This is a bit of a trick question because to be an agent, you need the skills of both a generalist and a specialist.
Do you have seed money?
To obtain your licence, you must first take and pass the courses to pass the exam. You can enroll in courses online or in-person but in either case, expect to pay between $150-$600 for the course. Exam requirements and costs vary by location. Many new agents don’t anticipate the expense of the actual start-up costs.
Beginning a career in real estate is much like starting any small business. It’s not for someone who doesn’t have the cash to get started. A typical agent spends around $5,000 in the first-year for signs, MLS and lockbox dues, advertising, marketing, supplies, and more.
It can take a few months or more to close your first deal. So, you might have to live on your savings or income from another job during that time when you have few commissions combined with heavy expenditures. These early months are a test for those entering the profession as part-timers because you can’t dedicate full-time focus on securing those first clients.
If you’re going into real estate with the intention of being part-time only, develop a budget and business plan. The Small Business Association has an excellent financial planning guide to help you estimate and plan the right budget. A mobile app such as QuickBooks Self-Employed makes it easy to manage your business and personal finances, and file quarterly and end-of-year taxes, whether you work as a part-time or full-time agent.
What is your availability?
If you’re considering starting your real estate career as a part-time agent, perhaps because you still have a day job you can’t or aren’t sure you want to leave that job yet, consider whether you have enough time to study and the flexibility in your work schedule to sit for the exam in the middle of the day. Also think about how willing you are to work evenings and weekends, sometimes at the last minute.
As an agent, you find yourself discussing multiple offers, negotiating details of contracts, and marking up documents in the evening. If you’re a parent, having support for childcare during the odd (or even last-minute) times you work is important.
Much like developing a financial budget, as an agent, you must budget your time. You need to make cold calls, follow up on leads, develop marketing and advertising materials, schedule photographers and other contractors, hold open houses, and more. How many hours a day can you devote to real estate? Which hours can you block for each activity?
What’s your risk comfort level?
As with any career, there are certain risks that come with being an agent.
Being a real estate agent doesn’t come with a steady paycheck. Your paydays depend on commissions and when sales close. It also depends on the state of the housing market. As a real estate agent, it’s a good idea to set your own goals, act as your own boss, and reap all the rewards from your hard work. There’s no limit to what you can earn… but there’s no floor either. The tradeoff is maximum flexibility and control versus a guaranteed paycheck.
There are risks in terms of liability (for fraud, negligence, and violation of an agent’s fiduciary duties, to name a few). For this, some agents invest in insurance plans or choose to work full time with a brokerage that provides some type of liability coverage. Risks to personal safety include hosting open houses or showing houses alone and walking into homes with big dogs or other dangers. You can easily mitigate some of these risks by asking a friend to work with you and talking to homeowner about pets beforehand.
Steps for Becoming a Real Estate Agent
Real estate is a rewarding career path, and with a constantly evolving housing market, it’s exciting too. Here’s a step-by-step guide to becoming a real estate agent. Becoming a real estate agent is something you can pursue without a college degree. Eligibility starts with being 18 or older and a high school graduate.
Step 1: Enroll in Your Province’s Real Estate Licensing Course
Licensing requirements vary by state and by jurisdiction. Research your province and follow the necessary process for licensing where you live. If you live near a provincial border or travel often to another province, you may want to consider becoming licenced in multiple provinces.
Once you know your state’s requirements, enroll in a course. Many provinces offer both in-person and online options for completing the course. Expect to spend between $150-400 for the required coursework.
Step 2: Complete the Required Pre-licence Education
Every province requires a pre-licence course prior to applying for a licence. The number of course hours you need to complete varies by province.
Step 3: Pass the Licensing Exam
It’s a good idea to spend some time studying the material before sitting for the exam as the questions are a little tricky. Test questions vary — just as province’s exams vary — but there are general preparation books available that provide you with practice tests.
Once you pass the exam, you need to take continuing education courses to maintain your licence. Many agents also choose to get specialty designations that allow them to market and target their services to different segments of people. Some agents choose to join the Canadian Real Estate Association (CREA).
Step 4: Find an Agency and Broker
After receiving your licence, find a real estate agency that’s a good fit for you. Interview a number of managing brokers to find out about their working style, agency structure and agent fees. Expect business start-up costs of up to $5,000. Agents must purchase their own signs, enroll in a local multiple listing service (MLS), apply for key access for lock boxes, and purchase any marketing collateral, such as the postcards and flyers you use to get your name out there.
Most agents need to pay a fee to the brokerage they work under. Sometimes this is a flat fee, other times, a percentage of every sale. Make sure any managing broker you speak with clearly outlines the fees you pay. You want to know this before signing on to an agency.
It’s a good idea to ask brokers about mentoring or additional classwork the agency offers. Some agencies team up new agents with experienced ones on the first few deals to help make sure you learn all the forms, how to successfully work with clients, and to prevent breaking laws or licensing rules.
Step 5: Plan for and Track Expenses
As an agent, you work as independent contractors, which means you have a lot of flexibility to work as much or as little as you want. But being an independent contractor also means there are many expenses to plan for and track. Here are some of them:
- Signage — You need custom signs with your name on them to hang at your first listing. These usually cost $40-$60 for each. You also need open house A-frame boards. These run about $100 each.
- Association fees — Whatever local association you need to join, expect annual dues of anywhere from $300-$700.
- Lockbox services — Keys for listings are in access-controlled boxes. Typically, you buy both the boxes and the service for accessing them. Expect fees to run $300-$500 per year and each box to cost around $100.
- Advertising — Trying to get your name out into the world is pricey. Third-party vendors such as Zillow and Trulia offer advertising options for agents, but ads on their listings can run from $50 to $1,000 per month. Don’t overspend on advertising early on when your income is low. You might consider a business website. Hosting can run from $50-$200 per year.
- Miscellaneous — Don’t forget professional headshots for your business cards, the business cards themselves, and other office supplies like a computer, transaction folders, and a printer.
Since you work as an independent contractor, any commissions you make don’t have taxes taken out. You need an easy solution for tracking what you earn, what you owe, and whether your real estate business makes money.
Requirements for Becoming a Real Estate Agent
The first step to becoming a real estate agent is successfully completing the courses required by your province. Provincial real estate councils or associations typically provide their residents with the information needed to get started, and those organizations are listed at Royal LePage.
The second step requires you to retain sponsorship from a licenced real estate broker, then contact your provincial licencing body to get and submit an application. Sponsorship typically means you have a job offer from the broker in question. To maintain your licence once approved, you may need to take additional courses, depending on the province in which you sell real estate.
Advantages of Being a Real Estate Agent
One of the main advantages of being a real estate agent is working for yourself, even when you work under the umbrella of a larger agency. You can work the hours of your choosing, and you can even perform many duties from home on your personal computer or on the go via your tablet or smartphone.
Another benefit is always knowing the scoop on neighbourhood amenities, including school ratings and park locations. Because of this, customers look to you as an expert. Even if they don’t plan to purchase a home at the moment, you can cultivate these relationships to get business down the road. This can also help you earn repeat business from satisfied previous customers.
Being a real estate agent also helps you learn new skills that you can apply to other endeavours. Since many real estate sales and purchases arise due to major life changes, you often serve as a sounding board for your clients, which helps you learn to listen as much to what people say as what they don’t say. Using these empathy skills, you can help clients going through rough times navigate the often-complex process of moving into a new home and ensure they find exactly what they need.
Going to Work With Your New Licence
If you are thinking about a new career in real estate, you ponder whether you should launch your career under the umbrella of a real estate franchise (such as Century 21, Re/Max or Keller Williams), join an independent firm, or strike out on your own.
Before you jump in, it’s important to understand the difference between a real estate agent and a real estate broker. To be a broker requires more experience and more education (though this differs from state to state). A broker can work as both an agent and a broker, and many work as both. A real estate agent can only work as an agent. And an agent cannot work independently from a broker.
Join a Franchise?
Knowing the pros and cons of joining a franchise lays the groundwork for understanding the other two models of real estate — independent firm and solo.
Franchises usually have a well-established regional or national brand. This is helpful when you’re new to the industry and your name isn’t out there yet. If you align yourself with a reputable firm, clients may view you as skilled and trustworthy based on the brand’s reputation.
An existing franchise usually offers proprietary software and tools, marketing materials such as flyer templates and logos, opportunities for office hours to gain access to walk-in clients, and mentoring for complex transactions.
With a franchise, you get administrative and transaction coordination assistance including maintaining files, sending paperwork between you and other agents, working with title and escrow companies, and processing commission checks.
Many agents prefer to join a firm when they’re just starting out because of the increased opportunity for leads, mentoring, and colleague support. Because franchises tie the brokerage and the agency together, you also have the support of a broker in-house. Once you build a successful and deep clientele, as well as learn the ropes of all types of transactions, you might feel more confident about starting your own brokerage.
Franchises don’t offer their brand and tools for free. A percentage of each commission you earn goes to the brokerage and the franchise. Franchise fees can range but are typically around 5%. Most brokerages also take a cut of your fee. Some do this by simply charging you a monthly desk fee — from $100 to 40 percent of a commission. Others work by taking their “split” on a commission, usually 50 percent until you earn a specified amount in a calendar year (typically $19,000 to $27,000).
Need for volume
Split commissions and fees can make earnings for you, as new agent low until you establish a client base and process enough transactions in a year to start earning profits.
For example, if an agent grosses $5,000 on his first sale of the year, $2,500 of that sale goes to the brokerage toward the split and another $250 to the franchise. The actual check the agent receives is for $2,250.
You need to factor in the expenses for taxes, marketing, advertising, photography, and the like. Many agents find that the only way to recover their expenses sufficiently is by taking on a high volume of clients throughout the year.
Franchises usually have strict rules about how you represent their business. That means adhering to guidelines around logo use, signage design, website user interface, and templates for business cards and flyers.
For some, these rules can feel restrictive, and the rules don’t allow much creative licence for how you builds your business.
Join an Independent Firm?
As a new agent, you have the option to join an independent firm, which is smaller than a large franchise, but not venturing out solo. According to the National Association of Realtors, 59 percent of realtors work with an independent, non-franchised company. Independent firms offer more flexibility, fewer fees, and allow agents to give more input into processes and procedures. These firms are as small as a couple agents or very large.
Independent firms typically have local authority and an established reputation in a geographic area. When you’re looking for independent firms in a specific area, does one or more agent seem the most prevalent? If everyone in town knows Jane Smith is the one to work for, check out her company, whether independent or franchise, and see what’s making her successful.
Should you decide that starting your own firm is the way you want to go, be sure and check your state’s licensing requirements for brokers. Most require additional education and an exam on top of your real estate salesperson licence to qualify you to run your own business. You can’t practice real estate completely solo. You need to hang your licence with a brokerage or take the necessary education and gain the experience to become a broker yourself.
Running your own business is usually the most profitable model since there aren’t any fees taken from your commissions that go to a firm. It also means you have the final say (and creative licence) in marketing decisions and can work as little or as much as you choose.
For this freedom and flexibility, solo agents must forgo the support system of a larger franchise, as well as the clientele and infrastructure a larger name brand provides.
To develop a robust client base, you want to assess your managerial and business skills, as well as develop a solid business plan to determine if you can design and maintain a financially profitable company.
Deciding the Right Model for You
Before you decide to join a franchise, an independent firm or to start your own business, consider:
- What agencies in town get the most listings — independent firms or franchises?
- Is there a particular independent firm with strong local reputation?
- Do you need or want the support from a larger franchise?
- Do you favor flexibility and freedom over support and resources?
None of the three real estate agency models is the right or wrong path. The decision is simply based on what makes the most sense, and is the best fit, for you as an individual agent.
Finding Leads and Meeting New Clients
You have printed business cards. Your newly established website has all the bells and whistles modern technology can offer. You have four-color fliers printed on high-quality stock. You’re ready to start selling real estate. But still, there’s something missing: clients.
As someone new to the business, finding customers — buyers and sellers — is the thing you need to find success and riches. Here’s how to generate leads — both free and paid — to build your reputation and clientele in your new profession:
Generate Your Own Leads
Use the fact that you’re new to the industry to your advantage. Let friends and family know you’re happy to spend as much time with them as they need to find the right home or develop a strategy to get their home sold quickly. Offer tips for ways your acquaintances can maximize the value of their property. (But remember to tone it down a bit. Not everyone wants to talk about real estate all the time.)
Find customers where you’re a customer
When you shop, store owners consider you as their customer. Among them are your hair stylist, barber, dry cleaner, fitness trainer, and chiropractor. Now, consider them your potential customers.
If you are friendly, enthusiastic and helpful — without being pushy — those you build relationships with in the past can help you spread the word.
Keep your eye on your own neighborhood
Certain behaviours are tell-tale signs that a house is in the process of prepping to go on the market. Chat up neighbors — whether you know them or not — when you see them gussying up the exterior of their homes, especially after a history of neglect. Maybe they’re readying it for sale.
Likewise, knock on the door or leave your card and other promotional materials at a house that’s fallen into disrepair. Maybe it’s in foreclosure, or about to be. Estate and garage sales are also good indicators of an imminent move.
See a carpet cleaning truck? Many people don’t clean their carpets unless they’re about to sell. Introduce yourself to the homeowner.
Watch for carpet cleaners, roofers, carpenters and painters
Speaking of vendors, plan to do business with all sorts of vendors and home improvement professionals as you help your clients ready a home for sale. Ask your go-to vendors to return the good referrals. They give you leads on where they’re doing business, and make their customers your customers.
Tailor to the young and the previously young
Adults at both ends of the age spectrum are often contemplating moving. Keep your marketing materials in view at apartment buildings with a high concentration of young professionals. In “more mature” neighborhoods, target your materials toward people who are ready to downsize.
Visit (or host) open houses
Even if you don’t have your own listings, you can help your colleagues sell theirs. Open houses are all about making contacts. Chat with the people who come by. Find out what they are looking for. Are they particularly interested in a home in the area? Offer to find comps.
- But don’t just email the list to them. Follow up with a phone call or two.
- Don’t drop the lead if you don’t hear back. Follow up with them in a few weeks. Remember — deciding to buy and sell a house is a process. Just because someone isn’t ready to choose you as their agent the moment you meet doesn’t mean they won’t be ready to sign on later.
- Automate the follow-up process with an app such as Open Home Pro or Open House Toolkit to automatically follow up with people who sign in.
Pay for Leads
Buying leads has a loose definition. It ranges from paying a third party to do the digging for you to pay-per-click advertising.
You may consider investing in some of those prospect lists that flood your inbox since the day you received your licence. Surely these companies know what they’re doing — after all, they found you, right? But buying leads is largely a trial-and-error process.
The quality of leads differs greatly from source to source, and until you try a few sources, you don’t know if buying lists is a good direction for you. These lists can be a great new source of clients for newbies, but they can also drain resources, if you don’t successfully turn those leads into sales. See what sources your peers use and ask a few questions of vendors before you sign on the dotted line.
- How long is your contract? And if you cancel, who owns the lists?
- Does your list also go to other real estate agents? If so, how many? If you’re getting the same list as everyone else in your area, it may not be worth your time or money.
- What is the average conversion rate?
Diversify your websites
If you’re just starting out, you don’t need 10 domain names or landing pages that point to your site, but a few can’t hurt.
The motivation for this strategy originally stemmed from trying to take up all the page-one spots on Google’s search results. But Google caught onto this and now having multiple websites is mostly beneficial for targeting purposes, not SEO.
Clients have different needs and therefore want different information.
For example, if you owned montrealhomes.com, montrealcondos.com, and montrealtownhouses.com, you could better direct your website content to your audience based on their search, and as a result of this relevant approach, also rank better.
Make sure your site is mobile optimized regardless of how many you have. Google ranks mobile-friendly sites higher than sites that aren’t mobile-optimized.
Pay-per-click ad campaigns — such as those on Google and Yahoo — can help you get exposure when potential customers use certain search terms. This concurrently helps your search engine ranking. It’s best if you do this in a targeted manner, as it can become very expensive if you bid on popular search terms.
Facebook ads can be particularly effective in generating leads because you can set narrow parameters — demographic, age, sex, location, and even interest — to really hone in on your ideal customers.
More Marketing Advice
You need a concrete plan for marketing yourself and making the most of your listings. Here are some strategies to get you started.
Expand your sphere of influence.
Without a sales track record, you need to attract business from strangers when you first start out in the real estate business. Even with glossy fliers and a state-of-the-art website, you want to make an impression on someone who hasn’t met you. So focus your marketing energy (and dollars) wooing potential customers who already know how fabulous you are — from places where you’re a customer to networking events.
Be sure to emphasize how you can help others, not how they can help you. Need help making new contacts? Cultivate leads in your existing circles — in your own neighborhood, at your kids’ schools, your golf club or any other special interest groups in which you participate.
Be friendly and confident
Body language has a bigger impact on your success than you may think. Carry yourself with confidence. Whether you overhear the lady in front of you at the dry cleaners talking about selling her home, or the topic comes up with another parent at your child’s soccer game, always be ready to make a good first impression. Here are a few basics to keep in mind:
- Stand up tall.
- Say your name and get theirs. Then use their name in conversation.
- Make eye contact and smile.
- Always offer to shake hands and deliver a firm handshake.
- Don’t be afraid to give them your business card.
Host an open house — for a colleague
If you’re new to real estate, you probably thought that open houses were a tool to help sell properties. That’s true, but it’s only part of the story. Offer to host an open house for one of your colleagues. It gives them a much needed weekend off.
But more importantly, it provides you with an avenue for making contacts and cultivating leads. Many of the attendees may be nosy neighbors who aren’t buying or selling. But at least some of the visitors are contemplating a move in the future. An open house is a great place to introduce yourself to future listers. And, of course, many attendees are unrepresented home shoppers. Make them your next customer.
Develop a marketing plan — and stick to it
A realistic marketing plan — with achievable, measurable goals and timetables — helps you stay focused. Include short-term objectives such as making a certain number of cold calls daily or publishing a newsletter.
Determine your budget
Many new real estate agents dive head first into marketing, throwing money at lead sources and branding materials, but because they’re trying to learn the ropes, leads sometime don’t get all the attention they deserve.
So start simple. You can do a lot of marketing for free. Networking events are a great way to meet new people, make connections, and pass out business cards. Start with your city’s chamber of commerce to see when they have events, conferences, and workshops. You also can take advantage of social media platforms and your personal website.
As a general guideline, many real estate agents spend 10 to 20% of their commission income on marketing. This money can go toward your website development and promotion, email blasts and postings, listings on third-party sites, and online and print advertisements. Laura Ure, a luxury real estate agent, breaks down some of the numbers in this example. These are more realistic numbers:
- You sell 10 homes for $3,200,000 and earn $96,000 in commission
- You pay a 40 percent broker fee and now have $57,600
- You subtract your overhead (fees, dues, car, gas, etc.) and have $47,400 left
- If you want a steady 10 percent to go toward marketing, you should invest $4,700
While your earnings—and therefore your marketing investment—may not be this high when you’re starting out, the example shows a picture of how you need to look at your commission numbers. It also shows that you need to be keep a close eye on your cash flow, so you know how much you can spend.
Do a reality check
Part way through the year, evaluate your success in meeting your goals. If you’re accomplishing everything you set out to do, consider making your goals more challenging. Could you be doing even more to get your name out and cultivate leads? If you’re not meeting the goals you set, commit to figuring out why. Were your goals unrealistic? Should you do something differently?
Need advice? Ask
Don’t be timid about asking your colleagues for help in setting goals or figuring out why you aren’t meeting them. If there’s no obvious choice for a mentor, consider hiring a sales coach. By the way, it’s not just novices who hire coaches. The New York Times reports that agents at all levels rely on coaches for help with all sorts of skills.
Hone your marketing tools to clearly define what makes you different from — and better than — your competitors. If you speak more than one language, for instance, use that as a marketing tool.
Find your niche
You may find it helpful to focus some of your marketing on a particular neighborhood or direct some of your marketing materials to a specific demographic, such as young, first-time home buyers or seniors, etc. It may help if you’re a member of the demographic that you wish to approach as a buyer’s or seller’s agent. But don’t assume that potential customers only want to deal with someone who is like them. You can find your niche without being exclusive or discriminatory.
Be conservative and track everything
Your most effective tool when paying for leads is good tracking. It’s a good idea to practise conservative approach to any lead you buy and evaluate your financial position before pouring money into lists. Buying leads can get pricey, and it’s important to have a good grasp on your cash flow and what you expect to get in your return on investment. To keep tabs on everything, use QuickBooks to generate Cash Flow Statements, and integrate apps such as Float for cash flow forecasting.
Paying Quarterly Taxes as a Real Estate Agent
Whether you’re transitioning your career or diving into your first real job, you may be new to managing your own cash flow, paying quarterly taxes. and shifting your mindset from employee to self-employed. Here’s a guide to help plan for and pay your quarterly taxes.
First, understand your responsibilities
To be a real estate agent, you must be a jack-of-all-trades. Develop your strategy to tackle your responsibilities by asking yourself these questions:
- Marketing — How do you market yourself and your properties? What media or technology do you use?