One of the most important financial events in peoples' lives is the purchase or sale of a home or investment property. As a result, they usually seek the help of a real estate professional or agent when buying or selling real estate. A real estate agent may be a licensed real estate broker or licensed real estate salesperson.
A salesperson is any person who for compensation or valuable consideration is employed either directly or indirectly by a licensed real estate broker to perform certain acts: to sell, offer to sell, buy, offer to buy, negotiate the purchase, sale exchange of real estate; or to negotiate leases thereof or improvements thereon. A real estate salesperson must work under the direction and sponsorship of a real estate broker at all times.
A broker is one who acts as an intermediary between parties to a transaction. A real estate broker is a properly licensed party (individual, corporation or partnership) who, for a valuable consideration or promise of consideration, serves as a special agent to others to facilitate the sale or lease of real property. A real estate broker has the choice of working on their own or working under the sponsorship of another broker.
The majority of real estate brokers and sales agents specialize in residential real estate and must have a thorough knowledge of the real estate market in their community, know which neighborhoods will best fit clients' needs and budgets, be familiar with local zoning and tax laws and know where to obtain financing.
Agents and brokers also act as an intermediary in price negotiations between buyers and sellers. Real estate agents are usually independent salespersons who 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 are independent business people who sell real estate owned by others; they also may rent and manage properties for a fee. Brokers may supervise agents who may have many of the same job duties. Brokers also manage their own offices, advertise properties, and handle other business matters.
There is more to an agent or broker's job than making sales. They must have properties to sell. Consequently, they spend a significant amount of time obtaining listings, owner agreements 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 have recently sold to determine its competitive market price. Once the property is sold, the agent who sold the property and the agent who obtained the listing both receive a portion of the commission. Most real estate brokers and sales agents sell residential property.
A smaller 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 or leasing business property requires an understanding of leasing practices, business trends, and location needs. Agents who sell 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.
Before showing residential properties to potential buyers, agents meet with buyers to get a feeling for the type of home the buyers would like. In this pre-qualifying phase, the agent determines how much buyers can afford to spend. An agent or broker uses a computer to generate 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 in which they are interested. Buyers can view interior and exterior images or floor plans without leaving the real estate office.
Agents may meet several times with prospective buyers to discuss and visit available properties. Agents identify and emphasize the most pertinent selling points. To a young family looking for a house, they may emphasize the convenient floor plan, the area's low crime rate, and the proximity to schools and shopping centers. To a potential investor, they may point out the tax advantages of owning a rental property and the ease of finding a renter. If bargaining over price becomes necessary, agents must carefully follow their client's instructions and may have to present counter-offers in order to get the best possible price.
Once both parties have signed the contract, the real estate broker or agent must see to it that all special terms of the contract are met before the closing date. For example, the agent must make sure the mandated and agreed-to inspections, including the home, termite, and radon inspections, take place. Also, if the seller agrees to any repairs, the broker or agent must see they are made. Increasingly, brokers and agents handle environmental problems by making sure the properties they sell meet environmental regulations. For example, they may be responsible for dealing with lead paint on the walls. While loan officers, attorneys, or other persons handle many details, the agent must ensure that they are completed.
Most real estate firms are relatively small; indeed, some are a one-person business. Some large real estate firms have several hundred agents operating out of many branch offices. Many brokers have franchise agreements with national or regional real estate organizations. Under this type of arrangement, the broker pays a fee in exchange for the privilege of using the more widely known name of the parent organization. Although franchised brokers often receive help training sales staff and running their offices, they bear the ultimate responsibility for the success or failure of their firm.
Real estate brokers and sales agents are older, on average, than most other workers. Historically, many homemakers and retired persons were attracted to real estate sales by the flexible and part-time work schedules characteristic of this field. They could enter, leave, and later re-enter the occupation, depending on the strength of the real estate market, family responsibilities, or other personal circumstances. Recently, however, the attractiveness of part-time work has declined as increasingly complex legal and technological requirements raise start-up costs associated with becoming an agent.
Those interested in jobs as real estate agents often begin in their own communities. Their knowledge of local neighborhoods is a clear advantage. Under the direction of an experienced agent, beginners learn the practical aspects of the job, including the use of computers to locate or list available properties and identify sources of financing.
Many firms offer formal training programs for both beginners and experienced agents. Larger firms usually offer more extensive programs than smaller firms.
Employment of real estate brokers and sales agents is expected to grow more slowly than the average for all occupations through the year 2010. However, a large number of job openings will arise each year from the need to replace workers who transfer to other occupations or leave the labor force. Not everyone is successful in this highly competitive field; many beginners become discouraged by their inability to get listings and to close a sufficient number of sales. Well-trained, ambitious people who enjoy selling should have the best chance for success.
Employment of real estate brokers and sales agents is very sensitive to swings in the economy. During periods of declining economic activity and tight credit, the volume of sales and the resulting demand for sales workers falls. During these periods, the earnings of agents and brokers decline, and many work fewer hours or leave the occupation altogether.
The real estate business is not for everyone. In order to succeed, you need to be a self-starter, to be motivated and persistent. You must be able to plan and more importantly, work your plan. Above all, you must be able to handle rejection. If those characteristics describe you, selling real estate just might be the career for you.
The real estate field is a career area filled with exciting opportunities. It provides the opportunity to help others, the opportunity for freedom and independence, the opportunity to take advantage of your personal strengths, and an opportunity for security.
Edited by Mike Fair, director of the Illinois Academy of Real Estate.
Source: Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2006-07 Edition, Real Estate Brokers and Sales Agents, on the Internet at http://www.bls.gov/oco/ocos120.htm
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