How To Become A Real Estate Agent

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How To Become A Real Estate Agent

This question comes up a lot.  If you google this you’ll get a variety of answers from state-specific licensing requirements to job opportunities.  Our hope is to clear it all up for you with this guide.

First things first in order to become a real estate agent, officially, you’ll need a real estate license.  Hence all the google results that indicate that! Your state regulates real estate licenses and has a set way for you to obtain one.

Most of the states require at these basics.

  • You to be 18 years old or older.
  • You must complete some sort of pre-license course, usually around 75 hours.  These courses can be done online in some states, in-person in others. Some states allow you to use university credits for this.  Most of these courses are less than $500.
  • Some states require a background check

Check out License Requirements For Your State.


How To Get Your Real Estate License (Step By Step)

Real Estate Licensing Requirements1.  Find Out Your State’s Requirements

You can find a list of states here with their requirements.  Some states can make the process confusing by using code numbers for courses.  We tried to simplify this for you.  However, each state links directly to the state licensing authority so you can get the most accurate information.

2.  Enroll in the Real Estate Pre-license Course of your State

That step says it all.    We recommend that you sign up for a course that offers some sort of in-person cram course.  You can pass online pre-license course all day long but if it doesn’t prepare you for the state exam then you’re in trouble.  In fact, it could be said this way…

The Purpose Of the Pre-License Course Is To Be Able To Pass The State Exam.

The course will cost some money, the cram course might be extra and the test might also cost money depending on what state you are in.

If you prefer you can just jump straight to an online course option like this one.  The one in our link is legit, but you want to double check that the course will satisfy the state requirements.

3.  Take the Real Estate Salesperson Exam

Chances are good if you had a good pre-license course then you’ll know the other requirements that might come along with passing the exam (such as a background test).  Each experience in each state will be different.  Some will allow you to take it online, while others will require you to empty your pockets, before taking the test.

For as simple as most state exams are practically, they still tend to be a test that is easy to fail at.  Most of these tests are “government standardized” tests.  This means that they often have multiple right answers on multiple choice.  So it’s not enough to be right but the most right is actually right.

4.  Find a Real Estate Broker

Once you’ve passed your state exam and meet all the other requirements it’ll be time to find a broker.  Check out our blog for more about selecting the right broker.  The biggest thing to remember is that THEY WANT YOU, not the other way around.   Take your time to interview each on thoroughly.  Will they train you on sales, will they provide leads themselves, do they provide other services (such as contract to close?).  In addition, to training and support, most brokerages offer some sort of “tech” package.  Do not be enamored with this!  Most of these services are stripped down versions of products.   A Broker provided website isn’t going to do much for you other than give you a website right out of the gate.

Become A RealtorOptional:  Decide If Being A Realtor Is For You

Some Brokers will require you to be a Realtor.  A Realtor is a real estate agent (or broker) who agrees to work within a set of guidelines that the Board sets.  These guidelines are mainly just good ethical behavior that are more clear and spelled out than state licensing authorities.

Get the info on your local state’s real estate license requirements.

Questions To Ask Yourself Before Deciding to Become A Real Estate Agent

Probably more important than just answering how do you become a real estate agent is if you should actually pursue it.  Real estate is a very social and relationship-driven business. However, that only covers the phase of “customer acquisition.”

In order to be an excellent agent, you’ll need negotiation skills (which can be learned) and the will to use those skills. You’ll have to have a very high work ethic.   Finally, you’ll need administrative skills to manage the contracts and paperwork involved.

Most people like real estate because of the flexible schedules and the ability to get a very large paycheck from simply having friends.

This is TRUE!

Many successful real estate agents work by helping those that they know. The problem occurs when someone takes advantage of this and doesn’t really have the expertise to help someone.

A part-time agent or “hobby” agent is absolutely legitimate, but without the intentionality behind being excellent they could end up harming their friends or at least not helping them to the full extent.

If you want to pursue real estate you’ll need one more ingredient.  You’ll also need some money in the bank.

How Much Does It Cost To Become A Real Estate Agent?

It can run you close to $1,000 just getting ready for the exam, taking the exam, taking the additional state test and doing background checks.  This varies from state to state and can be under $500 total, depending on where you live.

The real cost of starting a real estate career is the cost associated with waiting to be paid.  Most home buyers and seller’s will need roughly 30 days or so to find a home, you’ll need another 30-60 days to close on the home (which is also state dependent).  So even if you have a client day 1, it’s unlikely you’ll get paid for 90 days!

Typically, a good rule of thumb is to have 6 months of living expenses saved up before going full time into real estate.

How Much Money Can I Make As A Real Estate Agent?

This is an “it depends” type question.   We’ll give you some generalities and a way to figure it out for yourself.

First, let’s say you can make A LOT of money.  There are real estate agents (not Brokers) that are making over $1 Million a year.  The ones that achieve success in real estate at this high level often do it through “doing” real estate as a business.   They have “teams” with paid administrative staff and other real estate agents who do parts of the business (more on this later).

The average real estate agent, according to the NAR (national association of realtors), makes less than $50,000 a year and sells less than 10 homes a year.   These figures are low, and they are low due to the part-time nature of so many real estate agents. If you are only helping friends and family you might only sell a few homes.  Depending on the price range of those homes depends on your income.

So Really, how much money can you make as a real estate agent?

Let’s look at your area. What’s the price range? If you were to look at Georgia for example, a real estate agents in Atlanta are selling homes with a median price point just under $300,000.   Now you can take that number and multiply it by the commission you’d earn selling that home. Let’s assume you’re helping a home buyer buy. For this assumption, the posted commission will be from 2.5% to 4%. (Usually, it’s rarely over 3% but some new construction will offer incentives.)   So if it’s 3% and $300,000 then the gross commission is $9,000. Now let’s say you sell 6 homes in your first year. That’s $54,000. That’s how NAR got their number.


That number is the gross number.  In real estate you are an independent contractor, so that means paying your own taxes.  Unless you decide to incorporate you will be taxed at a slightly higher rate, 15.4% to be exact.  In addition, we haven’t really talked about the different splits. Most Brokers will want 10% of this whether it’s by a flat out commission split or some fees that total up to this amount.

Your $54,000 just went to $41,147.   Keep in mind if you have this amount left over then you’re likely paying for your own signs, your own cards, etc.  A good rule of thumb is 40%. That’s a healthy number for profit. So in this scenario, you’d be able to keep $21,600 free and clear.   (This 40% number comes from the research done in the Millionaire Real Estate Agent by Gary Keller).

Many would be real estate agents would read this and then ask, “so how to get enough closings to really live off of?”   Short answer: Hardwork. Longer answer, it’s all about lead generation. That’s outside the scope of this guide, but there are many ways to generate business.  In some cases, Brokers will give you new business opportunities (for an increased split or referral fee).

How To Get A Job In Real Estate

Once you pass the exam, you’ll need to place your license with a Broker.  This is usually where the confusion comes in. Technically (and legally) the Broker represents the client and a real estate agent represents the Broker.  Since this is how the state views this relationship you’ll have to start by finding a great Broker.

With your license in hand, you’ll likely want to look for a job in real estate.  Some people might look at job boards or even the paper (gasp!). Some firms will set up interviews and give the impression that you’re going in for a job interview.   While others will pursue you immediately.

It’s all a farce!

If you have a real estate license you can control your own destiny.   These brokerages all NEED you to survive. Whether they take a cut of your commission or monthly fees (more on this later) the brokerage business model needs agents to succeed.  All of the big brand brokerages will recruit you and make you feel really special. Most of the people you talk to about a job usually have some sort of quota to hit (like Keller Williams) or an incentive (like part of your commission) to earn by you joining.

That doesn’t mean that companies that are heavy recruiters are bad, it’s just important for you to know that is what they do up front.  You shouldn’t feel “special” because they do something for you ( you should feel special because you are anyway). They do this to get people in the door.

You Must Interview The Brokerages!

When you get your license you don’t want to go on interviews for you, you want to interview them!  They need you. That being said a good brokerage can make or break your young career and only you know what you need.

Most brokerages work on a sliding scale of services vs fees.   Some brokerages will provide you with real estate signs, business cards, lockboxes and all the tools to do the job but take 40% or more of your commission.   Others give you 100% of your commission while charging you a few hundred dollars to be a part of their team.

On top of all this, there are classes, training, access to tools (apps and software) that play a part.   However, there are some things to ask and look for.

Questions To Ask Yourself Before Joining A Brokerage

Questions To Ask Your Broker Before Becoming One Of Their Agents

What Are The Fees?

Transaction fees, copy fees, class fees, technology fees,  the list can go on and on. I’d ask for a list of every fee that the brokerage could charge you, period.  Not just what’s on the brochure, but what are the fees really?. A lot of companies hide some of their nickel and dime fees.  It can be really disheartening to join a broker only to have them hit you with a technology fee that you weren’t aware of for supposed technology that is outdated.

What are the commission splits?

Most brokers are more upfront about their splits.  However, it’s useful for you to know what the splits are when comparing places to go.

Is there a cap on what I would pay the company?

Made popular by Keller Williams, a cap is a limit on what you actually pay the real estate brokerage.  For example, imagine that you gross $150,000 in commission and the broker takes $30,000 of that on a 20% split.  If a broker had a $15,000 cap, then they’d only take that portion leaving you with $135,000 vs $120,000 after the split.

While the idea of a cap sounds enticing you need to look at what does the company offer.  Cap driven companies typically are heavy recruiters and sometimes fail to offer anything to agents that can exceed the cap every year.   We’ll cover the cap in the future.

What kind of real estate training do they provide?

Are they bringing in the closing attorney to train you or do they have practitioners who are doing it out in the field train you?   Companies like Coldwell Banker, Keller Williams and eXp understand the value of training and invest a lot of time and money into their agents.   As mentioned above, some boutique (smaller) real estate brokerages will mentor you one on one (or one on few).

Do they teach you how to run a business or just “do” the business?

These aren’t meant to be right or wrong questions here, but certainly, new agents could do well to learn that real estate is a business AND can be run like one.  However, it’s helpful to know what the focus is for the brokerage.

A brokerage could focus on real estate tactics to help you make more money.  That’s amazing. If the brokerage supports you in ways that free you up just to focus on that then even better.  Again, it’s just helpful to know what the plan is ahead of time.

How does the brokerage feel about teams?

Teams are a reimagining of brokerages.  Essentially, they offer support for you, provide you with new business opportunities (leads) in exchange for usually half of your commission.   Since a “team” is usually inside a brokerage, their split is ON TOP of your Brokerage split. The idea is that instead of you working your tail off to close 15 deals on your own, you could close 50 with them.

For a new real estate agent, teams can be a wonderful place to learn the business get hands-on training (on top of the training you get from the broker) and do enough transactions to become competent.  The downside is that it’ll take longer to achieve your financial stability.

With the right team, you could make as much as you want with no limits.  With the wrong one, you’ll wash out of real estate much, much faster.

Whether you like the idea of a team or not you might want to know how the broker feels about them.   If the company is pro-team. Then they may be pushing all their efforts to support the teams. Whereas if they are anti-team, you might get more training specific to your needs but you might see top producers leave the company for better opportunities.

Before you interview with a Broker you’ll want to think about why you are becoming a real estate agent and what you want to accomplish.   Here are some questions you should ask.

  • Would you value training?
    • If so, how do you like to be trained?  Online (eXp)? in class (Keller Williams or Coldwell Banker)? Or perhaps mentored (boutique).
  • Do you want to go into the office every day and treat real estate as a job (say yes) or do you want to work from home?
  • Do you want to (and have the ability to) pay for your own stuff so you can own it or do you want to use the Broker’s resources and not have to worry about it?
  • Finding new clients – do you think you can do this if someone teaches you or do you want the Broker to provide?
  • Is there growth opportunities inside the company itself?  Is that something you’d want?

How to Evaluate Brokerages Commission Models

Imagine What Your First Year (and 3 Years) will look like as a real estate agent with this Brokerage.

When selecting a new brokerage I had to create a spreadsheet.  The fees were so varied and commission plans so different that I had to create a separate sheet with different scenarios.   Some of the lower commission splits but higher transaction fees were actually “bad deals” for someone who does high volume (selling a lot of homes).  Whereas a luxury real estate agent might prefer that because their unit volume is typically low but their commission is high.

Take inventory of yourself and think about how many families you are going to help move in the next 12 months.   If you had 12 closings in the first 12 months of your career, that’d be a great start… better than most. Now take those 12 deals multiply it by the value of your own home (or the home of one or your friends or the median price point of your area) – the reason is that most of your friends and family will be in similar price brackets as you.  Take that times 2.8% which is a commission rate that has been averaged. With that GROSS amount (and the 12 closed deals) evaluate the broker fees, etc.

While you are doing this you should be transparent and let the broker know this is what you’re doing.   You know you’re in a good place if they engage with you to see how they can help you double that number.

Finally, take those numbers and that methodology and do it for year 2 and year 3.   Do the broker’s fees seem warranted or not.

Real Estate License Information By State