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Job Report Real Estate Agents and Brokers
Nature of the Work
A house or an apartment, whether purchased as a residence or an investment
property to be rented out, is the single most expensive item in most people's budgets.
Thus, people generally seek the help of a real estate agent or broker when buying or selling
a home. These workers have a thorough knowledge of the housing market in their
community. They know which neighborhoods will best fit their clients' budgets, local zoning
and tax laws, and where to obtain financing for the purchase. Agents and brokers also act
as a medium for price negotiations between buyer and seller.
Brokers are independent business people who not only sell real estate owned by
others, but also rent and manage properties, make appraisals, and develop new building
projects. In closing sales, brokers often arrange for loans to finance the purchases, for title
searches, and for meetings between buyers and sellers when details of the transactions are
agreed upon and the new owners take possession. A broker's knowledge, resourcefulness,
and creativity in arranging financing that is most favorable to the prospective buyer often
mean the difference between success and failure in closing a sale. In some cases, agents
assume the responsibilities in closing sales. Brokers also manage their own offices,
advertise properties, and handle other business matters. Some combine other types of
work, such as the sale of insurance or the practice of law, with their real estate business.
Real estate agents generally are independent sales workers who provide their
services to a licensed broker on a contract basis. Today, relatively few agents work as
employees of a broker or realty firm.
In selling or renting real estate, brokers and agents generally first meet with potential
buyers to get a feeling for the type of home they would like and can afford. Then, they may
take the client to see a number of homes that appear to meet the needs and income of the
client. Because real estate is so expensive, agents may have to meet several times with
a prospective buyer to discuss properties. In answering questions, agents emphasize those
selling points that are likely to be most important to the buyer. To a young family looking
at a house, for example, they may point out the convenient floor plan and the fact that
schools and shopping centers are close by. To a potential investor seeking the tax
advantages of owning a rental property, they may point out the proximity to the city and the
ease of finding a renter. Whenever bargaining over price becomes necessary, agents
carefully follow the seller's instructions and may present counter offers in order to get the
best possible price.
There is more to agents' and brokers' jobs, however, than just selling. Since they
must have properties to sell, they spend a significant amount of time obtaining "listings"
(owner agreements to place properties for sale with the firm). Much time is spent on the
telephone exploring leads gathered from advertisements and personal contacts. When
listing property for sale, agents and brokers make comparisons with similar property being
sold to determine its fair market value.
Most real estate agents and brokers sell residential property. A few, usually in large
firms, specialize in commercial, industrial, agriculture, or other types of real estate. Each
specialty requires knowledge of that particular type of property and clientele. Selling or
leasing business property, for example, requires an understanding of leasing practices,
business trends, and location needs. Agents who sell or lease industrial properties must
know about transportation, utilities, and labor supply. To sell residential properties, the
agent must know the location of schools, religious institutions, shopping facilities, and public
transportation, and be familiar with tax rates and insurance coverage.
Working Conditions
Although real estate agents and brokers generally base their operations in offices,
most of their time is spent outside the office--showing properties to clients, evaluating
properties for sale, meeting with prospective clients, and performing a wide range of other
duties. Brokers provide office space, but agents generally furnish their own automobiles.
Agents and brokers often work more than a standard 40-hour week. In addition, they
often work evenings and weekends to suit the convenience of their clients.
Employment
Real estate agents and brokers held about 422,000 jobs in 1990. Many worked part
time, and a significant number were self-employed. Many additional agents and brokers
worked on a commission basis, many of them combining their real estate activities with
other careers.
Most real estate firms are relatively small; indeed, some brokers operate a one-
person business. Some large firms have several hundred real estate agents operating out
of many branch offices. About one-sixth of all brokers have franchise agreements with
national or regional real estate organizations. Under this type of arrangement, similar to
many fast-food restaurant operations, 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 in training sales people and in running their offices, they bear the
ultimate responsibility for the success or failure of the firm.
Real estate is sold in all areas, but employment is concentrated in large urban areas
and in smaller but rapidly growing communities.
Training, Other Qualifications, and Advancement
Real estate agents and brokers must be licensed in every State and in the District
of Columbia. All States require prospective agents to be a high school graduate, be at least
18 years old, and pass a written test. The examination--more comprehensive for brokers
than for agents--includes questions on basic real estate transactions and on laws affecting
the sale of property. Most States require candidates for the general sales license to
complete at least 30 hours of classroom instruction and those seeking the broker's license
to complete 90 hours of formal training in addition to a specified amount of experience in
selling real estate (generally 1 to 3 years). Some States waive the experience requirements
for the broker's license for applicants who have a bachelor's degree in real estate. A small,
but increasing number of States require that agents have 60 hours of college credit--roughly
the equivalent of an associate degree. State licenses generally must be renewed every
year or two, usually without reexamination. Some States, however, require continuing
education for license renewal.
Persons who take real estate sales positions are older, on average, than entrants
to most other occupations. Many homemakers and retired persons are attracted by the
flexible and part-time work schedules characteristic of this field and may enter, leave and
later re-enter the occupation, depending on the strength of the housing market, family
responsibilities, and other personal factors. In addition to labor force entrants and
reentrants, others transfer into real estate sales jobs from a wide range of occupations,
including clerical and other sales jobs.
As real estate transactions have become more complex, many of the large firms
have turned to college graduates to fill sales positions. A large number of agents have
some college training, and the number of college graduates selling real estate has risen
substantially in recent years. However, personality traits are fully as important as academic
background. Brokers look for applicants who possess such characteristics as a pleasant
personality, honesty, and a neat appearance. Maturity, tact, and enthusiasm for the job are
required in order to motivate prospective customers in this keenly competitive filed. Agents
also should have a good memory for names and faces and business details, such as taxes,
zoning regulations, and local land-use laws.
Persons interested in beginning jobs as real estate agents often apply in their own
communities, where their knowledge of local neighborhoods is an advantage. The beginner
usually learns the practical aspects of the job, including the use of computers to locate or
list available properties or identify available sources of financing, under the direction of an
experienced agent.
Many firms offer formal training programs for both beginners and experienced
agents. Larger firms generally offer more extensive programs than smaller firms. Over
1,000 universities, colleges, and junior colleges offer courses in real estate. At some, a
student can earn an associate or bachelor's degree with a major in real estate; several offer
advanced degrees. Many local real estate boards that are members of the National
Association of Realtors sponsor courses covering the fundamentals and legal aspects of
the field. Advanced courses in appraisal, mortgage financing, property development and
management, and other subjects also are available through various National Association
affiliates.
Trained and experienced agents can advance in many large firms to sales or general
manager. Persons who have received their broker's license may open their own offices.
Training and experience in estimating property value can lead to work as a real estate
appraiser, and people familiar with operating and maintaining rental properties may
specialize in property management. Those who gain general experience in real estate and
a thorough knowledge of business conditions and property values in their localities may
enter mortgage financing or real estate investment counseling.
Job Outlook
Employment of real estate agents and brokers is expected to grow about as fast as
the average for all occupations through the year 2000 as a result of growing demand for
sales and rental housing and other properties. However, most job openings will occur each
year as workers transfer to other occupations, retire, or stop working for other reasons.
Many beginners become discouraged by their inability to close a sufficient number of sales
and subsequently leave the occupation.
Employment growth in this field will stem primarily from increased demand for home
purchases and rental units. Shifts in the age distribution of the population over the next
decade will result in a larger number of prime working age persons (25-54 years old) with
careers and family responsibilities. This is the most geographically mobile group in our
society and the one that traditionally makes most of the home purchases. As their incomes
rise, these people also may be expected to invest in additional real estate. However,
employment of agents and brokers is not expected to keep pace with real estate sales
because the use of computers to locate and list property or identify available sources of
financing allows each agent and broker to handle more business. During periods of
declining economic activity and tight credit, the volume of sales and the resulting demand
for sales workers may decline. During these periods, the number of persons seeking sales
positions may outnumber openings.
Real estate sales positions should continue to be relatively easy to obtain. Not
everyone is successful in this highly competitive filed, however; well-trained, ambitious
people who enjoy selling should have the best chance for success.
Earnings
Commissions on sales are the main source of earnings--very few real estate agents
work for a salary. The rate of commission varies according to the type of property and its
value; the percentage paid on the sale of farm and commercial properties or unimproved
land usually is higher than that paid for selling a home.
Commissions may be divided among several agents and brokers. The broker and
agent in the firm that obtained the listing generally share their part of the commission when
the property is sold; the broker and agent in the firm that made the sale also generally share
their part of the commission. Although an agent's share varies greatly it is about half of the
total amount received by the firm.
According to a National Association of Realtors survey, the median income of full-
time real estate agents was about $18,700 a year in 1990. Real estate brokers earned an
estimated median gross personal income (after expenses) of $42,600 a year. The most
successful agents and brokers earn considerably more. Some firms, especially the large
ones, furnish group life, health, and accident insurance.
Income usually increases as an agent gains experience, but individual ability,
economic conditions, and the type and location of the property also affect earnings. Sales
workers who are active in community organizations and local real estate boards can
broaden their contacts and increase their earnings. A beginner's earnings often are
irregular because a few weeks or even months may go by without a sale. Although some
brokers allow an agent a drawing account against future earnings, this practice is not usual
with new employees. The beginner, therefore, should have enough money to live on until
commissions increase.
Related Occupations
Selling expensive items such as homes requires maturity, tact, and a sense of
responsibility. Other sales workers who find these character traits important in their work
include automobile sales workers, securities sales workers, insurance agents and brokers,
yacht brokers, travel agents, and manufacturers' representatives.
Sources of Additional Information
Details on licensing requirements for real estate agents and brokers are available
from most local real estate organizations or from the State real estate commission or board.
For more information about opportunities in real estate work, as well as a list of
colleges and universities offering courses in this field, contact:
National Association of Realtors, 430 North Michigan Ave., Chicago, Ill. 60611.
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