How to Become a Real Estate Agent
You can start your real estate business as a real estate agent.
Do you desire to work as a real estate agent and don’t know how or where to start? Real estate agent is one of the rewarding small business ideas with high profits.
However, to be successful as a real estate agent, you need to be dogged and be ready to acquire necessary knowledge. How to become a real estate agent is not a difficult thing to know. One good thing about working as a real estate agent is that you don’t need to be a licensed real estate broker. But you must work under a licensed real estate broker. The main thing you need is the acquisition of skills. Some of the knowledge you need can be acquired while working with a broker. Some real estate agents are willing to impact the agents working under them with knowledge and skills. They know that if their real estate agents succeed, it will also impart on their own business. Even though I mentioned that working as a real agent is among lucrative small business ideas with high profits, all is not a bed of roses. It is important you know what your roles would be if you actually want to go into real estate agency.
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Below are the duties of a typical real estate agent:
- Act as an intermediary between buyers and sellers. You are either negotiating on behalf of buyers or sellers.
- Present purchase offers to sellers for consideration.
- Determine the competitiveness of the price of a property by comparing it with the prices of properties recently sold.
- You will advise your clients on general real estate market conditions, prices and other related issues including legal requirements
- Engage in promotion of sales of properties through different types of advertisements as may be suitable per time.
- Take buyers to the locations of properties and advise them on the value and suitability of the properties.
- Prepare important agreement documents like deeds and lease agreements, purchase agreements and representation contracts.
- Ensure that both buyers and sellers meet the terms and conditions of purchase agreements before the closing dates.
- Seek to understand the kinds of properties your clients are seeking for.
- Provide answers to clients’ questions.
- Assess properties by visiting them before showing them to clients.
- You coordinate different appointments for properties inspections.
- Advise sellers on how to improve the worth of their properties.
- Provide interface between clients and utility companies.
- Ensure clients have proper titles by carrying out title searches.
- Oversee document signing and payments during property closing
- Match properties that are compatible with buyers needs and financial resources
- Explain the features of properties whether commercial, industrial or residential to clients.
- Arrange for proper maintenance of clients’ properties
- Have a network of attorneys, mortgage lenders, contractors and other professionals you can easily refer your clients to.
The list is not exhaustive anyway. It is just to give you a clue of what you are likely to do as a real estate agent. So, let’s get down to the basics! What do you need to do to become a successful real estate business?
Acquire knowledge and skill.
While it is not compulsory that you must know how to do all the functions mentioned above before you start real estate agency business, you must commit yourself to training and development. The length and type of training you need would vary from country to country. Seek to know the specific training requirements in your region. It is worth the effort if you can find and connect to highly qualified and professional real estate agents who can help you fulfil the above roles and much more.
Source for funds
People usually have the notion that working as a real estate agent is a small business idea you can start with no capital. This can be true to certain degree. If you look at the roles mentioned above, you will discover that you will need funds to kick start the real estate agency business. For examples, you need money either to pay for transportation or fuel your car to get to the location of properties for inspection. You need funds to attend training courses. Most importantly, you need money that will take care of your overheads and personal expenses for the initial three to six months. While few people can be lucky to hit it big within the first two months, it may take an average of six months before you start having positive cash flow.
Prepare a business plan
I supposed to mention this one first but you might not see any reason for the preparation of business plan as a real estate agent. With the tips about the financial requirements given above, you will discover the need for business plan. This will show you a roadmap to running a successful real estate agency business. Your business plan should cover sales, marketing and other important aspects of the real estate agency business.
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Marketing
A good real estate agent must be good at marketing. In fact, marketing is your first job as a real estate agent. You are not just selling a property; you should know how to sell yourself. If you can’t market, you can’t work as a real estate agent. Your income is commission based. The mathematics for calculating your income is simple. No marketing, no sales! No sales, no commission. Engage all marketing strategies you know such as word of mouth, listings and others. You need to be aware of real estate market trends. You need to keep tracks of the property value in your environment.
Build your clients
Every client is important. Keep a database of all your clients and their contact details. Ensure you connect with them regularly. Don’t be afraid to ask them for referrals. Most of your clients will come through referrals. People are more comfortable with real estate agents they can trust. You can cheaply earn the trust of new clients by having somebody referring them to you. Good testimonials from existing clients will help you in closing sales without stress.
Further Analysis of Real Estate Agency Business
Let’s analyse the real estate agency by using SWOT analysis as a tool. We shall be looking at possible strengths, weaknesses, opportunities and threats as they affect the business.
Strengths
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Weaknesses
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Opportunities
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Threats
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Strengths
Relevant practical experience: If you ask me whether you can work as a real estate agent, the question I will ask you is “do you have experience in the field?” A person with years of experience will perform better as a real estate agent than someone who is green horn. Your experience will count when it comes to marketing.
Good reputation: I have heard cases of situation whereby a real estate agent collected money from two or three people for the same property. Such type of individuals cannot be in business for long. If you have a good reputation and you can be trusted with money, people will be willing to do business with you. You will even enjoy referrals as people are sceptical when it comes to giving a real estate agent money. People always like to have background information about any real estate agent they will do business with.
Access to High Network Individuals: My mentor usually says that you can’t work with giants and remain a dwarf. You can only get highly priced properties from High Network Individuals. Since your commission depends on the value of the property, one single sale of highly valued property can make a lot of difference for you. Imagine you sell a property worth $500,000 and you get ten percent commission. That is cool $50,000 income. If you can have two of such transaction in a year as a real estate agent, your income will be in the realm of $100,000 per annum on average.
Enjoy moving about: Working as a real estate agent requires that you are always on the move. Sometimes you may need to do some trekking. You will be taking clients to project sites for inspection. If you enjoy this type of lifestyle, you will possibly be able to work as a real estate agent.
Good location: The location of a property will in most cases determine the value they place on it. Properties in the heart of a city or in reserved areas are more expensive than properties in suburb areas. If your office location is situated in a good location like a choice area in a city, there is possibility that you will earn much more than your contemporary real estate agent in the rural area.
Adequate funding: Like any other business, real estate agency requires funding. You need money to advertise so that you can enjoy visibility. You also need money to take care of your overheads at the initial stage before your business picks up. You may need to employ marketing officers. You need to motivate them with good remuneration for them to deliver maximally. However, you don’t need to throw money around. Every spending should be seen as an investment.
Weaknesses
Lack of funds: I mentioned earlier that as a real estate agent, you can start your work from home. You don’t necessarily need to open an office at a start. Notwithstanding, working from home may limit your visibility. Therefore, you will need money to do some marketing. You need money to go out there to seek for clients. If you don’t have money to reach your targeted clients, the businesses that should have come to you will definitely go to your competitors. You may need to borrow from friends and relations to kick start the business. I will not suggest borrowing from the bank because of the interest payments.
Poor location: Operating your real estate agency business in a poor location will not bring income that is commensurate with your efforts. Your days will be filled with activities and you may not have tangible results to show for your efforts. If the cost of securing a good location is quite high for you, you can decide to partner with somebody or use someone’s office who is not in the same business with you as your office address.
No family supports: If you are the only one bringing in income to the family, you may have hard times working as a real estate agent. You need the supports of your family especially when you are just starting your business. It can be frustrating when all you do is to spend and have nothing coming in as income. This period may not last but no matter how brief it may be, you need the supports of your family.
Poor sales and marketing skills: This is a reflection of lack of experience. If you want to succeed as a real estate agent, you need sales and marketing skills. If you are lacking in this area, you need to go for training. Working under a real estate broker before you start your own real estate agency may help.
Lack of motivated staff: It is better to work alone than having staff you cannot motivate to work. Un-motivated staff will add to your overheads and they will not contribute to your bottom line.
Irregular cash flow: Real estate agents don’t have regular cash flow except you have already built a large number of clients that you collect rent on their behalf. To some extent, payments of rent are predictable.
Opportunities
These are the external factors which can make your real estate business to thrive. That is, the positive side of the external environment.
New industries: Localization of industries usually drives a great number of people. There will be some staff that are living far away from their place of work that will like to move closer. This usually drives up the value of the properties around the place. Of course, staff will be willing to pay because it may still be cheaper for them paying higher rent compared to how much they would have been paying on transportation daily.
Technological development: There are websites that allows real estate agents to advertise their property at a fractional cost. This allows small real estate agents to enjoy visibility they wouldn’t have enjoyed even if they have their own website. Also, they can use the platform to drive traffic to their own website.
Rising population: Rural – urban drift is causing the population in the cities to continue to grow. This is creating much pressure on the available properties thereby causing their prices to soar. It is a function of the law of demand and supply. When demand is higher than supply, prices tend to increase. The higher the value of a property; the higher the commission you will enjoy as a real estate agent.
The rise of mega cities: A lot of cities in the country are striving to become a mega city. In mega cities, real estate markets usually get boosted. A lot of construction works will be going on. The costs of properties tend to become high to reflect the status of a mega city. This is business opportunity for real estate agents.
Creation of new states: When new states get created, there would be a lot of developmental projects going on at the same time. Ministries will be created. Companies will like to establish their presence in the state capital. More people will have to move in. All these are business opportunities for real estate agencies.
Low interest rate: Any period there is low interest rate, people are attracted to borrowing. Mortgage becomes cheap. People will be able to funds their building projects. Also, real estate agencies can take advantage of this to expand their businesses.
Threats
Threats are those external factors that have negative effects on your real estate business. You can use your strengths to fight them.
Competition: Real estate markets in general are becoming more competitive. If you don’t have resources to compete, you may soon be pushed out of the market. The same way there are threats from existing competitors; new entrants can pose a threat too.
Economic downturn: Any time there is economic downturn, values of properties go down. There will be mass unemployment. People will be unable to pay their rent. This incidentally affects real estate business.
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Flooding: Have you ever experienced flooding in your area? What happened to the properties around the place? They become worthless as people are forced to evacuate the place. Therefore, if you are planning to start your business as a real estate agent, you need to consider the impact of flood in your target market.
High interest rate: If the interest rate is high, people tend to run away from taking loans. Construction of buildings may need to be suspended. This has negative effects on real estate business.
Political risk: In any country where there is political instability, nobody will like to invest in such area. The will be a lot of market instability and uncertainty. This will not affect only real estate markets. It will affect the whole economy of that country.
No regulation: I can say that there is no yet a solid regulation governing real estate market in our country. You see an individual calling himself a real estate agent. There is no specific criteria for becoming a real estate agent. Or possibly the laws governing the sector are not enforced. You will also see an individual selling his own properties without going through real estate agent or broker.
Conclusion:
The essence of the analysis is for you to assess you strengths so that you can leverage on them to compete effectively. You need to work on your weakness and find a way of overcoming them. Use your strengths to explore the opportunities in the market while you do all you can do to mitigate the impacts the threats can have on your real estate business.
Inspired a lot thank you, working as a real estate agent since 3 yrs I am happy with this business
You are welcome!