I receive questions like this frequently, both from friends, and clients as well:
"Hi Naomi, I am looking into getting my Realtor's license and wanted to ask you some questions. Other than showing people houses they are interested in, I know nothing about it! I would love your thoughts. I'd also like to find out the pros/cons of the job? Can it be done part time? How much does it cost to get started?"
My answer to these questions can vary depending on the specific situation, but generally here is how I respond!
How much does it cost to become a Realtor?
This answer depends greatly on your location and where you are going to be licensed. In Northern Virginia, it costs about $3,000 to get up and running. This total includes classes, testing, licensure requirements and mandatory memberships for your first year. An average total for annual requirements is approximately $1,000 per year to keep those memberships running and active after your initial startup. You will be required to take continuing education and that is an additional fee as well.
This total does NOT include business cards, a website, and any other branding / advertisement type expenses that you'll use to promote your new business. It also does NOT include any costs associated with forming a business in the State of Virginia, if you decide to create an LLC or company.
How long does it take to obtain a Realtor's license?
Currently in Virginia, you are required to complete 60 hours of coursework that can either be done online or in person. Many brokerages (the offices where each realtor calls home) have instructors at each of them that are certified to teach your licensure classes. Once you have completed your 60 hours of coursework, you will be required to pass the PRE-exam test. This can be taken at many locations in Virginia.
Finally, once those steps have been completed, you will need to sit for the PSI Test, which is comprised of two exams, one state and one national test. The testing sites require an appointment made in advance and you will need to bring proof of identity, and can take nothing in with you to the testing site. Upon completion of the test, you will be given either a pass or a fail.
How do you choose which brokerage / company to choose?
There are definitely better brokerages than others when it comes to education for newly licensed Realtors, but in my opinion, it's the hands on work from a broker that helps with the learning curve, not sitting in MORE classes. Having said that, every individual is different, and every transaction is completely different so we are always learning. Never assume that real estate is a situation where you need to only "learn the ropes" once.
There are also "splits" -- what its called when the brokerage takes a % of your commission. If you sell a $500,000 home and your broker split is 70/30, your before taxes take home pay would be (assuming the commission is a standard 3%) $10,500.
NOTE: My tax advisor recommends you withhold 25-30% of each commission check for taxes, as you are self-employed as a Realtor.
There are also different office structures -- some have "desk duty" where you have a responsibility to man the main desk, some have monthly fees, some charge a "desk fee" and others charge for printing, etc.
There are also differences when some brokerages allow teams to exist, or separate out whether their agents are showing agents only, or perhaps listing assistants, etc.
If you'd like to speak with me about different brokerages in the Northern Virginia area, please shoot me a text at 571-482-7356.
How many hours per week will I spend being a Realtor?
I put in about 12-14 hours a day working in and on my business. Many of those hours are community based (PTA, the boards I sit on, etc) but I'm up at 5am to get client work done before the kids school prep time ... then I work solid until 3pm and again after dinner - late into the night.
Real Estate is known to be a heavy weekend/evenings gig because that's when most of your clients are available. you will need to find a balance for providing your clients with great customer service, while balancing your personal needs / schedule, as well as that of your friends and family.
Having said that -- there ARE opportunities to be in real estate and work part time where you are on a team doing either admin work or helping with buyers during the days, etc. Depending on the way an arrangement is situated, that can potentially offer more steady income as it would likely be salaried.
How much money will I make?
Most transactions are 45-60 days long with about 2-3 weeks (minimum) for the showings before the transaction timeline begins (some clients look for 6-9 months) so if you break down your "hourly rate", it can vary widely from transaction to transaction.
Your commission will depend on the market that you will be working in. In most markets, between 2-3% of the sales price is considered a standard commission for the agents involved. Keep in mind that you will need to deduct your brokerage split, and other miscellaneous fees from that commission. We recently wrote this article on how a buyer's agent "gets paid."
A commission is only payable when the transaction goes to closing. Often times, you will work for quite some time with clients and in the end, the transaction does not go to closing (whether because one party changed their mind, financing was not obtained, or for many other reasons). Be aware ahead of time that the risk involved comes into play when you have dedicated many hours, miles on your vehicle. When you work with sellers, often times you have invested money into that property, whether that is the cost of the sign installation, the professional photographs, marketing materials, items for open house events, etc.. You will not be compensated for your work when the closing does not come to fruition, so make your decisions in a smart way when deciding how much cushion to keep for yourself.
Remember to always remember that a Realtor's income is not consistent and not promised!
What do you love most about being a Realtor?
Oh, there are SO many things! I love the opportunity to step alongside an individual or family to assist in making the transaction enjoyable, stress free and exciting for a family. I love the opportunity to inject more kindness and ethics into the industry with the agents and other industry professionals I work with. I love the opportunity to be a part of creating a community during each transaction! I also love the challenge of getting from Point A to Point B in a satisfactory manner, with all of the moving parts coming together like a well-oiled machine.
What do you not like about being a Realtor?
The things I don't love so much include the work it takes to consistently stay 100% on top of my customer service game with existing clients at the SAME time I am providing that same level of service to brand new clients. I also don't like that working with clients is seasonal (generally, you are only working with a client for 3-4 months). Just when you've gotten to know them so well and really enjoy spending time with them and assisting with their real estate dreams, the transaction ends!
What are some of the things you have to do as a Realtor?
The job of a Realtor is much different than most people think. Because of the popularity of many shows on HGTV, there is misunderstanding that Realtors simply open doors, show people homes and then deliver the good news that the client's offer has been accepted.
Marketing / Leads: Your business (clients) have to come from somewhere, so you will need to spend a bulk of your time marketing yourself, meeting new people and establishing relationships with future clients. Not everyone you meet will need the services of a real estate agent, so it's important to not treat your networking and relationship building opportunities as salesy.
Branding: If you truly want to excel at your job of being a Realtor, you will need to brand yourself! Brand doesn't simply mean creating a logo, however. It's deeper than that and will take time and effort to find your brand. For more on that topic, check out Seth Price's Personal Branding content (don't miss this article and this one too!) ... as well as Kara Macdonald's content (Who Is Your Customer? Increase Visibility for Your Brand are a few of my favorites), for what they have to say on the matter.
Continuing Education: Your state association will mandate your continuing education requirements, and it is important that you stay on top of your game for new codes and legislation affecting the real estate market, as well as stay informed and up to date on the neighborhoods and locations you sell.
Beginning Stages of Work with a Client: Whether you represent buyers or sellers, there is work to be done before an offer is accepted by the other party. When working with buyers, plan on spending some time with them to determine what is important to them when finding their new home. Each time you go out to show properties, you should plan on at least 45 minutes for each home, including drive time to the next showing. It takes a few hours to set up appointments and logically plan out your showings so they make geographical sense, and you will also need to coordinate showings with the sellers' schedule and availability.
When working with sellers, quite a bit of work goes into the preparation of a home before it can be placed on the market. You can read more about the timeline for getting a home ready for the market by reading our Timeline for Selling a Home article. Once your clients are ready to either make an offer or accept an offer, you can plan on 2-3 hours of paperwork while writing the contract and preparing all disclosures and addenda
Transaction Duties: Once a client has "ratified" (both parties accept the terms of the contract), the work of managing the transaction begins. Often times, a transaction can have up to 20 individuals to keep on the same page, working towards the same outcome (two Realtors, 2-4 clients (buyers and purchasers), a lender/underwriter and their team, a home inspector, appraiser, the title company, and in rural settings, well inspector, septic company, water test representatives, etc.
It will be imperative that you monitor the very important deadlines and paperwork that your clients are contractually obligated to complete in a timely manner. The manner in which you process the transaction can mean a big difference in the outcome of the transaction. We use a combination of platforms to assist with our organization: Pipedrive, and this "old school" client file management system as well!
Post-Transaction Care: Once the transaction has closed, you might think your work is done, but it is important that you continue to keep your relationship with your client vibrant and consistent. It is likely they will (assuming you've done a fantastic job!) either refer you to a friend or family member, or will request to use your services again in the future. It's going to now be your job to stay in touch and continue to be a Realtor that brings value to their lives!
Can I work in the industry of Real Estate but NOT have a license?
In most locations, you would need to be licensed to show homes -- as you would have to have access to various tools/apps (such as Sentrilock in Virginia) and belong to a local association (i.e. DAAR, NVAR, etc). Depending on the brokerage you align yourself with, it is possible they could have tasks and positions available for non-licensed individuals.
The real estate industry is a satisfying one to be a part of, but it shouldn't be entered into lightly. It may seem - on the surface - that it's an easy gig, with access to fast cash, easy closings and little to no work, but the reality is much different. I am happy to answer additional questions you might have, text me at 571-482-7356 or shoot me an email at firstname.lastname@example.org and we can talk more about your specific questions, as I'm happy to provide support!