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California Real Estate Exam: Everything You Need to Know
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Escrow is commonly associated with real estate but it’s not exclusive to it. Escrow is a neutral third party used to hold and distribute money or property once contractual obligations are met. Escrow is used across many fields of business such as banking, the buying and selling of intellectual property, and in mergers and acquisitions of large companies. But let’s talk more about how it’s used in real estate.
Now maybe you have heard the term but you’re not exactly sure what escrow does in a real estate transaction. In simple terms, escrow in real estate is a neutral third party that protects the integrity of the transaction. So what does this mean? Let’s explore how escrow in real estate plays a part in that.
It starts with you as a real estate agent getting a buyer and a seller together. That can be to either acquire or sell a property depending on who you are representing. When everyone is happy and in agreement, both parties will enter into a legal and binding contract called the RPA or Residential Purchase Agreement.
The RPA is integral to the transaction because it covers all the terms, conditions, and stipulations that have to be met according to what the buyer and seller have agreed upon. It acts as the blueprint for escrow to carry out.
When you have a fully executed contract that’s when escrow steps in. A “fully executed” contract means that the buyer, seller, and their respective agents have all signed off the Residential Purchase agreement as well as any other addendums or amendments that include the conditions of the sale.
The main purpose of an escrow company is to now take the RPA and make sure that all the conditions are met in the transaction. As a matter of fact, escrow will not close until that happens. Not only will they make sure that all the stipulations are met, but they are also responsible for keeping everything on schedule and accounting for every penny.
So what happens if you’re going through escrow and a condition has not been met? What happens then? Does escrow still close? As we just discussed it’s escrow’s responsibility to make sure that all conditions are met. Let’s talk about how escrow handles the situation when they aren’t.
So, let’s say we have opened escrow and so far everything has been on schedule. All items have been accounted for, we’re nearing the close and everyone is happy. Escrow is reviewing their final paperwork to make sure all stipulations have been met and they happen to notice that the seller agreed to give the buyer a termite report. It was never ordered. Now we have a problem.
Or do we?
A missing termite report could be considered a minor issue. This is not an expensive report and can be obtained fairly easily. Should escrow worry about it or just close the deal?
Knowing what you do up to this point, what do you think needs to happen? If you said, “Get the termite report done,” then you are right! Why? Because it’s in the contract. So even though you may have been near the end, everything has to stop. It’s a stipulation and all stipulations need to be met before escrow can close.
Remember, escrow will uphold the integrity of the transaction regardless of whether the stipulation or condition is small or large. This is escrow’s primary purpose. So what else is escrow responsible for?
Let’s talk about the other aspects that escrow is responsible for in a transaction. Aside from the stipulations that have to be met, they are involved with other areas of the transaction such as:
What is the property title? The property title is the transfer of ownership from the seller to the buyer. Escrow is in communication with title to get the property information and to make sure that all the information is accurate.
The Grant Deed is a document that ensures the new buyer is clear to hold the title of the property. Escrow prepares the grant deed and sends it to the seller. The seller signs it in front of a notary and returns it to escrow. At close, the escrow holder will record it.
During escrow, they will receive and hold funds for the seller’s existing loan. Escrow is also in contact with the buyer’s lender. This is to ensure that everything with the loan is on track. This also allows escrow to be aware of any issues that may arise to prevent the closing of escrow.
They prepare the Final Closing Statement for the buyer and seller. This is an accounting of funds made to the seller (seller’s statement has proceeds amount) and to the buyer (buyer’s costs and credits). This is prepared before escrow formally closes escrow or funds the loan.
Escrow is an excellent resource for both you and your client. All you have to do is reach out to your escrow officer and they can let you know everything they can do for you.
As you can see, escrow is a vital part of the real estate process. Because they are a neutral third party, you can be assured that everything is on the up and up in the transaction. Escrow makes sure that everything in the contract is honored and frees up the real estate to do what they do best. Getting more deals!
Have you had an encounter with an escrow company that went above and beyond? Share your experience with us.
Addendum vs amendment–what’s the difference? The addendum and amendment are two important terms related to the Residential Purchase Agreement (RPA) or contract in real estate. These are typically used when you need to add or modify terms or conditions that have already been agreed upon.
We will discuss what these terms mean and when to use them. They are similar but knowing the difference between an addendum vs amendment will help you to use them correctly.
Let’s start with the contract also known as the Residential Purchase Agreement. The Residential Purchase Agreement is used to create a legally binding agreement between the buyer and the seller. Within the RPA are all the terms, conditions, and stipulations agreed upon by all parties in the transaction.
Occasionally, these terms may have to be changed or modified. Sometimes the negotiation of terms will continue even after you have a fully executed contract and have opened escrow. This is when the addendum and amendment come into play. Let’s get a little more detailed about what these terms mean and when you would use them.
In some cases, you are adding conditions to the contract. When the contract exists and we add something new to the terms, we want to use the addendum. This addition could be the inclusion of real property or the addition of an inspection or report. Just remember, when we ADD to the contact, we use the ADDendum.
For example, let’s say during the escrow process there’s some damage to the carpets done by the pet or child of the seller. The seller agrees to then add a $5,000 credit for new carpet at the close of escrow. Because we are adding a credit to the agreement, we would use the addendum to account for this.
Other times, you may be amending terms within the contract. Amend means to change or modify. Let’s talk about the RPA again. So we’re starting with the agreement of terms and conditions. Now you want to take something out or change something within the terms. In this case, we’re going to use the amendment.
So, a good example of when to use an amendment would be if you wanted to take something out of the agreed terms. Maybe the seller originally agreed to include the living room furniture in the purchase. The original agreement included the sofa, coffee table, love seat, and recliner. But, now, the seller has second thoughts about the recliner for sentimental reasons. You would then use an amendment to change the terms omitting the chair.
There may be situations where you may not be sure whether to use the addendum vs amendment. There could be times where you’re both adding as well as changing conditions that already exist. How do you categorize this? It seems to get tricky at this point. What form do you use? When in doubt, always use the addendum.
The addendum is a flexible document. Although you would primarily use this for adding a new condition, you can also use the addendum to exclude terms and document a detailed change or addition. The addendum has extra space so that you can get specific with line items. Remember that it’s important to be specific so that there are no misunderstandings on either side of what items were agreed upon.
Let’s circle back to the example of the living room furniture. This is a great example of using the addendum for inclusion, exclusion and detailing items. Let’s say it gets more complicated than one chair that needs to be excluded. You could then use the addendum to document exactly what the buyer is asking for.
Simply writing in, “Buyer wants all the real property in the home” is too vague. This could cause potential issues between parties so get specific and clearly outline all the buyer wants.
For instance:
As you can see, this is clear and more detailed leaving no doubt what the buyer is requesting from the seller.
Now that we know more about the differences between the addendum vs amendment and how to use them, what do we do with these changes?
Did you know that anything you put on an addendum and send to escrow will formally get put on an amendment? Yes, whenever a change is implemented and sent to escrow, they will create an amendment and add it to the escrow instructions. Actually, the addendum is the preferred way that escrow would like to receive changes in a transaction.
So using the addendum will ultimately make it easier on you as a real estate agent. You create the addendum, you send it to escrow and escrow creates the amendment to the deal and includes it in the escrow instructions.
The addendum and amendment are great sidekicks to the Residential Purchase Agreement. In real estate, you never know what’s going to happen during a transaction and the most well-written contract may need to be changed or modified. Even the Constitution has amendments!
So, remember that when you add to the contract, use the addendum. When you’re removing from or changing the contract, use the amendment. When you’re not sure, play it safe and default to the addendum.
As an agent, what’s the most creative item you’ve had to put on an addendum in a transaction? Share it with us!
A termite inspection in real estate is done to make sure that a home is free of termites and other damaging elements. What you may not be aware of is how that termite report is broken down and what those sections mean. We’re going to talk more about Section 1 and 2 of a termite inspection, what they mean, and the differences between the two.
So when would you need a termite report?
Let’s start with your client that’s interested in buying a home. You show your buyer houses and they finally find the one they want. You make an offer and it’s accepted. Escrow is open and everyone is happy so far.
As with any property, we want to make sure there are no underlying issues. Your buyer has the right to a home inspection in a real estate transaction. Along with that, your client has the right to a termite inspection. In some cases, if the buyer is dealing with a lender the termite inspection will be required as a condition of the loan.
The next step would be to hire a termite inspector that will go into the home and inspect for any infestations. If necessary, the inspector will also go under the home to check for subterranean termites. This to make sure the house is free and clear of termites.
If there is no evidence of termites, this is called having clearance and the lender will need to be provided with this information to satisfy the condition of the loan. The reason some lenders require this report is to ensure that they are issuing a loan on a property that’s a good investment.
Along with termites, the inspector is checking for things like dry rot, fungus, and any other issues that come with damage to wood. The inspector will look at the interior and exterior areas of your home and check for any visible signs of a termite infestation.
Having a termite inspection is vital, especially in places like California where most homes are made from wood and stucco. Unless the home is new construction, don’t forgo having a termite inspection. This will ensure that the investment in the home is sound and alert you to any problems from pests.
As you can imagine, this is extremely important because no one is going to want to invest in a home that has been structurally damaged. You want the report to disclose that the home is solid and has good structural integrity.
So the termite inspector has viewed the property, made his notes, and created the termite report. The findings will be important to you as the real estate agent, to your buyer, and to the lender for the loan. The inspector lists that there are Section 1 items in the kitchen, the bathroom, and under the house. Further along in the report, he lists that there are several Section 2 items.
Whoa, ok. At this point you may be asking, “What are Section 1 and Section 2 items?” Is one worse than the other? Will these findings affect the sale of the home or conditions of the loan? Now let’s talk more in detail about what these terms mean, the differences between the two, and the impact they may have on the home.
If the termite report comes back with Section 1 items, that means there is an actual infestation of termites. That is the most important thing to know about what Section 1 means on the termite report. It’s fairly straightforward. Termites are there and are existing.
We know this because the inspector enters the home and visually sees termites or evidence of termite damage. That is Section 1 of a termite report. So let’s move on to what Section 2 means on the report.
This is when the inspector notes potential damage to an area. If it is not treated or repaired in the near future, it can become a Section 1 item. These areas are considered hotspots and generally refer to where termites can flourish or elements that can cause wood damage. So what does this mean exactly? Let’s talk about a Section 2 example to make things more clear.
The inspector is viewing both the interior and exterior of the property and notices that the home has wood siding. Alongside the home is the sprinkler system. When it comes on, one of the sprinklers hits the side of the house slightly warping the wood.
The inspector notes that it hasn’t damaged the side of the house yet; it still has structural integrity. But he also notes that if the sprinkler head is left unchecked it has the potential to turn that wood siding into dry rot. So again, it has the potential of turning into a Section 1 item.
As you can see Section 2 items are not as serious as Section 1, but just as important when you are looking at the Termite Inspection Report overall. Your buyer will want to be made aware of these potential issues to protect their investment.
Buying a home will be one of the most important investments you’ll ever make. You will want to safeguard that investment. Getting the termite inspection is just one safeguard that you should definitely invest in.
Remember, findings of Termite Section 1 may mean taking a more serious look at the property. Addressing the infestation should prevent more extensive damage. If the report finds Termite Section 2 items, take that into consideration to avoid these issues becoming problems.
Would you purchase a home with no Section 1, but a considerable amount of Section 2 Items that would have to be addressed? Share why or why not with us!
Real estate is not just the business of buying and selling homes—it's a business of dealing with people.
As a real estate agent, you will work with many different personalities throughout your career, and eventually, you will come across an indecisive client. So how do you help someone who struggles to make decisions?
In this article, we'll discuss several tactics and strategies to help you effectively work with indecisive buyers.
Indecisive buyers struggle with making decisions throughout the home buying process. Buying a home is one of the biggest investments a person can make, and while it is often an exciting time, it can also be overwhelming, confusing, and emotional. This combination of emotions can lead to indecisiveness, making it essential for agents to use effective strategies to help their clients navigate the process.
Indecisiveness can be caused by doubts, fear of commitment, or discomfort with the unknowns. Understanding the underlying causes of your client's indecision is crucial to guiding them through the process. Your role as a real estate agent is to help alleviate these concerns by offering support, clear information, and patience.
Patience is key when working with indecisive clients.
You might feel that part of your role as a real estate agent is to help your client make decisions more quickly, but pressuring them can have the opposite effect. It can deter them from making any decision at all. Instead, take a step back and allow your clients to move at their own pace. Buying a home should be an enjoyable experience—like savoring a fine dining experience rather than being rushed by a waiter. Let your clients take the time they need to feel confident.
Active listening is one of the most important skills for a real estate agent.
Being an active listener will help you better understand what your client is truly looking for in a home. Pay attention not only to what they say they want, but also to the underlying needs that may not be explicitly stated. For example, if your client changes their preference from a two-bedroom to a three-bedroom home, it may indicate they need flexible space—such as a loft or bonus room. Learning to read between the lines can help you offer options that meet their needs.
Indecision may also stem from fear or doubt. By actively listening, you can pick up on these emotions and address them directly. Invite your clients to ask questions, and offer thorough explanations to empower them with information. This will help alleviate anxiety and build confidence.
Clear explanations can help indecisive clients feel more comfortable with the home buying process.
One of the most effective ways to help an indecisive client is to explain the entire process in detail. Fear often comes from the unknown, and the more your clients understand, the less intimidating it will be. Address any questions they have and provide information on the steps involved in purchasing a home.
If financial concerns are contributing to your client's indecision, involve their lender in the conversation. Having the lender explain details about the loan process, payments, interest, taxes, and insurance can help alleviate some of the uncertainty. The more informed your clients are, the more comfortable they will feel moving forward.
When working with indecisive clients, too many choices can lead to overwhelm.
After listening carefully to your client, narrow down the properties that best meet their needs. When it comes time to show homes, limit the number of options. Presenting a smaller, curated selection of properties makes it easier for your client to make a decision. For someone who already struggles with decision-making, focusing on quality rather than quantity will help simplify the process.
Indecisive buyers are simply clients who need a bit more guidance. As a real estate professional, your knowledge and patience can help empower them to make decisions confidently. By being patient, listening actively, explaining the process, and limiting options, you can help your clients overcome indecision and enjoy the journey of buying a home.
In review, the following tactics can help with indecisive clients as well as all of your clients: be patient, be an active listener, explain the process clearly, and limit options.
If we think of a smooth, uneventful real estate transaction as a sunny day, then anything that hinders the effortless transfer of title, would be deemed a cloud. “Clouds” are any claims, unreleased liens, or documents that appear on a property’s title record.
Property buyers prefer clear titles and clouds make property title transfer more difficult. Additionally, clouds could invalidate the legal ownership of the property. A clear title is a record that does not have legal claims or ownership disputes from other parties.
The presence of clouds diminishes the value of the home. Additionally, the new property owner would be responsible for the debts if they decide to purchase. In many cases, clouds may deter potential buyers.
Some common clouds on title records are as follows:
Clouds are often created when creditors file a claim on the property or when paperwork regarding the property is misfiled, misplaced, or omitted. For example, mechanic’s liens are common liens that are filed against a property’s title.
If a contractor is hired to complete work on a property, and they are not paid in full upon completion of the project, contractors can file a mechanic’s lien on a property through the county recorder’s office. This lien allows the contractor to recover the unpaid balance.
Clouds get discovered during a property title search. This generally occurs after accepting a real estate offer. Title companies will search many sources for documents related to a property. Examples include deeds, county land records, divorce cases, and bankruptcy records. This search will show all unresolved claims and encumbrances on the property title.
Title companies check that the seller has the legal right to transfer a property’s title. It is also a necessary step to determine the title company’s ability to ensure a transaction. The title insurance provides protection for the property owner and lender in the event that liens or encumbrances get discovered.
Properties with cloudy title records may deny title insurance. Additionally, mortgage lenders will halt the lending process until the title issues are resolved.
There are a few things property owners can do to avoid future clouds on title.
First, buyers should consider purchasing separate owner’s title insurance. During the closing process, lenders need buyers to purchase title insurance for the property. But, these policies usually protect the lender’s financial investment. If a title claim is successful in court, the owner, without an owner’s title insurance policy, could lose their down payment and accrued equity.
Additionally, an owner’s policy will cover the fees associated with resolving past title issues that weren’t discovered through the title search. Real estate agents should encourage their buyers to buy a separate policy to protect their assets.
Property owners can enjoy creating detailed project contracts with contractors. Outlining project timelines, payment schedules, and payment records give both parties a clear paper trail of the agreement. This can reduce the occurrence of missed payments and mechanic’s liens.
Finally, property owners can avoid surprises on their titles. Checking the title record at the county recorder’s office keeps owners up-to-date on their status. This allows them to catch and resolve title defects as issues arise.
The process of removing a cloud on the title varies. Some are easier to remove than others. For example, to resolve a mechanic’s lien, the homeowner must contact the contractor to pay their balance. Then, the contractor will remove the lien. Similar liens, such as mortgage and tax liens, can be resolved this way.
Real estate agents need to be proactive when working with homes that have clouds on the title. For buyer’s agents, be sure to address the clouds on the title. Leverage this as a negotiation strategy.
For example, informing the seller, “I have a buyer who is interested in your home but they noticed there are clouds on the title. If they are removed, I have a buyer for you!” may motivate them to clear the home’s title in order to secure the sale.
For seller agents, be proactive and take a look at your client’s title report early on in the process. It is possible that the owner is not aware that their property has clouds. Therefore, checking with the title company is very helpful. If there are clouds on the title, agents can work with sellers to make a list of the fixable clouds. Together, they can come up with a strategy to resolve them.
Clouds on title are any unresolved issues that appear on a property’s title record. There are many types of clouds and their presence can make it more difficult to sell the property. That's because it can invalidate the owner’s right to the property. Title companies play an important role at this stage of the real estate process. They conduct title searches to ensure that the property in question has a clear title.
There are ways that property owners can avoid clouds on title. They can create clear worker contracts, check title records, and buy owner’s title insurance. Resolving clouds on title can be as simple as paying taxes or costly and time-consuming. Agents review the title record of a property with clients to help them make informed choices.
The fees to become a real estate agent stack up. If you don’t pay attention, the costs and fees will get away from you and burn a whole through your debit card.
At first glance, they might look small. But, you see where your money really goes when you track the fees. This article is not made to discourage you. In fact, the article is meant to prepare you for your future real estate career.
At the end of this article, you will find 3 plans to help you afford the fees to be a real estate agent.
So, let’s get started. There is no better place to start than at the beginning. What is the cost of a real estate license?
Total Estimation: $622 - $885
The cost of a real estate license varies from state-to-state. This is an estimate for how much it costs for a real estate license in California. So, let’s break down the total cost of a real estate license to see the smaller price tags. There are 4 main fees to look at:
Estimation: $150 - $400
Real estate school is a pre-licensing program that gives students the required educational material to take the real estate license exam. California has many pre-licensing programs. So, the cost of these programs vary. Online programs may cost less than in-person programs. But, they both come with different perks. To know which program to choose, ask yourself what you need to excel.
Cost: $100
When you graduate from an accredited real estate school, you must apply to take the state exam. A real estate exam application fee is the cost to schedule your exam. In the state of California, this cost is $60. This fee will vary from state-to-state. So, check the Department of Real Estate’s website to know your state’s application fee.
Estimation: $22 - $35
One requirement for the State Exam is a fingerprint live scan, also known as a background check. People with a criminal history will have trouble passing the background check. Always be honest and clear when asked about your criminal history. As the saying goes, honesty is the best policy.
Cost: $350
The real estate license fee is the final payment to get your license. This final fee may seem hefty, but the cost of a real estate license pales in comparison to the money you will make as an agent. After this payment, you will have your license in your pocket for whenever you want to use it.
Total Estimation: $600 - $900/year
Real estate agents have annual costs they pay to keep their active status. The fees to work as a real estate agent come from 2 main sources: brokerages and membership dues. These costs give you tools, resources, and, with some brokerages, training. Here is a breakdown of the annual fees to be a real estate agent:
Estimation: $100/year
Brokerage fees, also known as desk fees, are the costs to hang your license at a brokerage. The reason why brokerages charge fees are because they give resources, tools, and training to agents. This includes insurance, legal resources, office supplies, internet, training, leads, and even coffee. Desk fees can vary based on your location. They can become more costly in populated areas.
Estimation: $450 - $800/year
A big part of your annual fees will go to your local real estate board. So, you might be wondering, “what is the purpose of the local real estate board?” This is where you get access to tools, resources, and other perks to doing your job well.
This includes membership into the National Association of REALTORS® and your state’s association of REALTORS®. You will also have access to the Multiple Listing Service (MLS). Finally, you get invitations to holiday parties and social events to expand your network. Your local real estate board connects you with the world of agents.
Estimation: $185 ($150/year + $35 Entry Fee)
The National Association of REALTORS® (NAR) is the countrywide network of agents that connects them on real estate matters. When you join the NAR you will adopt the designation of REALTOR®. This shows clients that you are committed to a code of ethics and a higher standard of professionalism.
Estimation: $400/year
The Multiple Listing Service (MLS) is a data-driven database to learn about properties. This service has shared information from agents and brokerages about real estate property. So, it's a vital resource when learning about new homes.
Total Estimation: $6,830 - $12,880/year
Calculating the costs and fees of your business expenses will vary from agent to agent. Nobody will know how much you should spend on your business better than you. So, to calculate your total expenses, you should create a business plan. This will help you identify how much of your budget you should spend on where. The costs and fees calculated in this section are derived from the average agent’s expenditures.
Estimation: $1,750 - $3,500/year
Advertisements come in different shapes and forms. They can be ads on social media, newspapers, and search results. Advertisements are effective. They can boost your leads with speed and ease. Because of that, they can be expensive. Weigh your options and understand your market, because they can be a worthwhile investment when used right.
Estimation: $180 - $3,480/year
From starting your website to the occasional maintenance cost, your website can come with a hefty price tag. Not all websites need complexities. You will realize the more intricate your site is, the more expensive it is. Some agents can do a lot with little. Before you make a website, know what you want and build around this.
Estimation: $500
Business cards are how people remember your services after a meeting. The classic card stock is cheaper in comparison to a ritzy gloss stock. So, when it comes to deciding on business cards, know the message you want to send. Business cards help people remember you, so the style, design, and integrity of the card should compliment you.
Estimation: $2,000+/year
One unspoken fee to becoming a real estate agent is the travel. Agents drive a lot. So, they will have to afford car insurance, gas, and car maintenance. If they don’t own a car, then they have public transit expenses. Additionally, there are plane tickets or other modes of transportation for national events, if applicable.
Estimation: $1,000 - $2,000/year
Open house expenses include signs, drinks, snacks, and other nice amenities. This budget category can be wide or small depending on what scene you want to set for open house visitors. Consider the cost of signs, though. Signage can burn a hole in your budget because of their unexpected price.
Estimation: $2,400/year
If you turn your house into your private office, then expect to pay office expenses. These vary from the internet bill to folder dividers depending on your office (and organization skills.) Some agents can avoid the recurring office expenses by working from their brokerage. Offices and work areas are sometimes provided to agents through their desk fee payments.
Total Estimation: $317
The final slew of fees to become a real estate agent is your license renewal. If you want to renew your real estate license, you'll have to enroll in a continuing education course and pay the license renewal fee.
How much does it cost to renew your real estate license? In the state of California, it can cost around $317, depending on the continuing education course.
How often do you have to renew your real estate license? Every 4 years you have to renew your license. This is because practices change in real estate. So, to keep agents current with the industry, they have to take a continuing education course.
Estimation: $72
A real estate agent continuing education course is required to renew your license. The curriculum requirements are 45-hours of studying and you must pass the online quizzes and final exams. CA Realty Training offers an online continuing education course that you can complete in as little as 6 days. Other programs vary in their accessibility, cost, and program.
Cost: $245
To renew your license, you must provide proof of completing the continuing education course and pay the $245 fee in California. Afterward, you don’t have to think about renewal for another 4-years. If you are late for the renewal, you could have your license suspended and the fee will increase.
Total Estimation: $1,077 - $1,640
Without the business expenses, the immediate fees to be a real estate agent can be as low as $1,077 and as high as $1,640. Depending on your location, this estimate could be lower or higher (by a small margin).
Here is the breakdown of this cost:
The cost of entry in real estate is a challenge for some people. Jobs don’t expect you to pay a couple thousand dollars to work.
But, the reality of this price tag is that it pales to how much money you can earn as an agent. That goes for all the fees to be a real estate agent, including the business expenses. When you become an agent, you invest in your education and you invest in your own business. So, we put together a few strategies on how you can finance these entry fees to be a real estate agent.
There are several ways you can finance the costs and fees to become a real estate agent. The cost of a real estate license is a small price to pay for the money you will earn as a real estate agent.
One reassurance is that these costs and fees are tax deductible. These fees will also pay for themselves within the first transaction you make. Also, you can supplement your income with a part-time job or you can save up the money working another job. Here are the way you can afford the fees to be a real estate agent:
As a real estate agent, you run your own business. You are an independent contractor. In other words, you are the CEO of yourself. So, the expenses you accrue to help you do business become business expenses.
Oftentimes, you can offset the fees and costs to be a real estate agent during tax season. Your business expenses become tax write-offs. They do not exist as expenses you financed once and forgot.
So, what qualifies these tax write-offs? They can be your pre-licensing education, brokerage fees, and business expenses.
The money you earn from your first commission check will make up for the money spent to become an agent. According to Zillow.com, the average home price in California for 2020 was $578,267. An agent, who earns a 3% commission, will make $17,348.
The first transaction will finance the entry costs and then some. You can also put that money towards the business expenses that you start to accrue. The more real estate deals you close, the more your finances compound.
Learn more about how a real estate agent commission works.
Supplementing your income with a part-time job is a common way people become real estate agents. People who work as a part-time real estate agent have a guarantee of income. When you are a full-time agent, your only income stream is your ability to close deals. So, you can lessen the burden and the entry costs with another job.
The downfall of this is the time investment. As a part-time agent, you will have to focus on the quality of your hours over the quantity of your hours. In other words, you have to make the most of your time.
Now that you know the cost to be a real estate agent, you can make a savings goal. Anytime you make money, you can tuck away a bit as a nest egg. This will let you “go all in” on your education and career.
But, if you plan on working full-time, you should save money before pursing a real estate license. The recommended amount to save is at least 3-months worth of living expenses in addition to finance the fees to be a real estate agent. This will give you a healthy cushion that will finance your lifestyle in case you do not find a deal right away.
Money is a big conversation topic. The entry cost to be a real estate agent is high and the cost of a real estate license is only the start. From the outside looking in, it can seem the cards are stacked against you. The best thing to do is take it slow and be smart.
How you manage your money will determine your success. You can make this job work–even as a part-time agent. Be honest with yourself and make a business plan.
Now that you know the fees to be a real estate agent, the only thing left to do is to become one.
We all know that building great relationships is beneficial.
They lead to deep and meaningful connections that create better friendships, stronger family ties, and can even help in business.
At its core, real estate is the business of working with people. It’s important to know how to set up and maintain a good foundation with your clients. Better relationships mean a better overall experience that will lead to more sales and referrals.
First, let’s discuss some ways you can start building relationships that last beyond the first transaction. We will then cover the 6 ways on how to maintain those relationships for lifelong clientele.
Listening is fundamental in creating a good working client relationship. Many agents are not in the habit of really listening to their client. Practicing this skill of active listening will give you insight to your client’s needs. It will let you know what they want and more importantly what they don’t want.Buyers may not always know how to communicate what they want, especially if you are working with a first-time home buyer. Listening will help you narrow down the field and help get them in their perfect home.
This may also be the case when working with sellers.
For example, you may be working with a seller that doesn’t want to hold an open house or place a “For Sale” sign in their yard. Perhaps they are not comfortable with strangers in their home. Maybe they don’t want to advertise to the rest of the world that they are selling for personal reasons.
As a real estate professional, you would still want to advise your client why this wouldn’t be the best approach in selling their home. If your seller still insists, then listen and respect their decision.
It’s then up to you to get resourceful and explore other avenues to get the home sold.
Open communication is key when working with clients.
If you are working with sellers, make sure you are being open and honest when it comes to the condition of their property. This will set the right expectations about how quickly you can sell their home. Especially if there are issues that need to be addressed first.
Be sure to communicate everything that is positive before addressing trouble areas.
A home is a personal place. This will ensure you are being objective and less likely to offend your homeowner.
Follow Up
Remember to follow up with your clients. There are many real estate agents in the field and you want to make sure that your client feels that they made the right choice with you. Be thorough and get all their contact information. This will make following up with them easier.
Here are some great examples on how you can follow-up with clients:
Another great way to create a better client relationship is to get personal. Don’t worry! You won’t be crossing any lines you shouldn’t.
We’re talking about things like finding out when their birthday is. Do they have pets? Do they have children?
Talking with your client about these areas of their lives creates rapport and connection. It is also a great way to tie in this information with your follow up. It gives you a purposeful reason to reach out.
Once you establish a good relationship it’s important to know how to maintain them.
Now, let’s take a look at some powerful ways to maintain the relationships you create. These are fundamentals ideas help foster and flourish a client relationship you have already created with people.
A meaningful way to express appreciation is with gift giving.
A gift given to a client that relates to them personally is a wonderful way to go above and beyond. As discussed before, you can base this gift on the information you already have on your client.
A great time for gift giving can be to celebrate certain milestones, like the closing of their first home. To maintain this, you can continue to send a gift on their home anniversary.
Another appropriate time can be on their birthday. Flowers or gift baskets are an easy and convenient way to show that you care and are thinking of them.
Remember that the gifts do not have to be extravagant. A simple gift card to their favorite coffee shop or restaurant is a thoughtful gift that would be appreciated.
Unfortunately, we can all fall prey to the philosophy of “out of sight, out of mind.” With so many real estate agents to choose from, it’s important to have your clients remember you in the future.
How does your own branded real estate magazine sound?
There are companies that create the content. They will then brand your image and information within the issue. They then send it directly to your client. You stay top of mind while also providing something of value.
Don’t undervalue the simplicity of a handwritten note or card to keep in touch with your clients. This is a thoughtful way to keep in touch with your clients and have them remember you.
All the important dates and information that you have on your clients should go into a CRM database. CRM stands for “customer relationship management” and does more than store the data.
It is designed to help you take action on the important dates and milestones. A good CRM database system can schedule emails and remind you of those important dates, like birthdays. It can help you create action plans for following up with potential leads and then automate them.
In short, a database will store data and a CRM helps you manage the data within it to take action.
If your client invites you to their family event or gathering, make sure you make the time to attend. Declining may jeopardize the connection you have already made with your client.
You may not be able to attend every event, but make the effort. Making an appearance is better than skipping the event entirely.
Remember, all your client’s events are opportunities to make new connections with their friends and family. Don’t miss out on the introduction to your client’s friend or family member that was ready to buy or sell.
Let’s go over how you can maintain a client relationship. That’s easy. Talk to your client about what matters to them in real estate!
Whether you have first time buyers, sellers or investors keep the topics relevant. So save the market data and stats for the investors.
LEAD GENERATION TIP:
This is also a great way to get new leads. It’s natural to talk about what you do for a living. So no matter where you are or who you meet, make sure to talk about that open house you had or the new listing you recently got.
If you have a name badge, wear it! It will create an opening for a conversation about real estate. It may also lead to an opportunity to gain a new client.
The best relationships are those that aren’t forced.
Great relationships are organically formed when you involve good listening and communication. Once that client relationship is built, you can maintain them by continuing to be authentic and genuine.
People will pick up on the sincerity. They will be more likely to give you their continued business and refer you to others as well in the future.
Remember that you are dealing with people first, not businesses. This will go a long way in initially establishing good a client relationship.
Actively listen to your client and have good communication. Once you establish connection, make sure you follow up in a timely manner. Don’t be afraid to get personal and ask what interests your clients. This will make for more meaningful conversations.
When it comes to maintaining a client relationship, just remember to treat your clients as you would want to be treated. You’ll have clients that will last a lifetime.
When you have scheduled your real estate exam, you will need to prepare to pass it. One of the best ways to study for the real estate state exam is with guided, focused teaching. In other words, one of the best ways to study is with a crash course. So, what is a real estate crash course?
It is an extra prep course designed to help you pass the real estate state exam. Before we dive into what to expect, let’s be clear about what it is not. This is NOT the course that qualifies you to take the real estate state exam.
Before you take the real estate crash course, you should know how to qualify for the real estate state exam. In California, you must complete 3 courses:
Prerequisites may vary from state to state.
There are many real estate schools to choose from, like CA Realty Training. You can take these courses live at a location, as a live webinar, or choose to take them online at your own pace. When you pass the courses, you will receive your 3 certificates of completion. You must submit these with your real estate state exam application.
The most crucial thing to remember when researching schools is accreditation. Otherwise, the Department of Real Estate will reject your certificates and your application will get denied.
So, you’ve taken your courses, turned in your application for a license/exam, and now it’s time to prepare for the test. How long should you study for the real estate state exam?
We recommend studying for 60 to 100 hours or for 6-8 weeks. Here’s why:
The Department of Real Estate processing times can be anywhere from 6-8 weeks or more before you receive a test date. This is due to the number of applications and the wait time for your background check results.
The good news? This gives you plenty of time to study so you don’t forget everything you’ve learned!
You should use a real estate exam prep course and a real estate crash course as close to your exam date as possible. This will fortify what you have learned so you feel confident stepping into the testing room. Let’s talk more about the differences between the prep course and crash course and how they will benefit you in your exam preparation.
An exam prep course can help you remember everything you learned before the exam. They are multiple-choice practice tests that simulate the exams administered by the Department of Real Estate.
These practices tests have questions that cover the 7 categories of learning required by the Department of Real Estate:
Click here to see the Department of Real Estate’s examination description and outline.
The bank of questions will change each time you take the exam to test your knowledge. They are as close to the state exam as possible, so you will experience an idea of what to expect come test day.
Another benefit of the exam prep practice test is how you can take them by category. This will help you test what areas you mastered and the categories you need to study.
What else is usually included with an exam prep course? Flashcards! Don’t underestimate the usefulness of flashcards. Real estate has its own language and flashcards are a great tool. Use these to keep up with the terminology to give yourself a better understanding of topics.
You’re at a crucial moment right before you take the state exam. Think of the exam as your final destination. If the exam prep is the map, then the real estate crash course is the navigation of the map.
Although you are not expected to know everything, there are concepts you can be sure the exam will cover. The real estate crash course lays out a blueprint to follow so you can hyper-focus on these concepts. Crash courses are over 2-days for a full 8-hours (16-hours total) so you can immerse yourself in the material.
You can take crash courses at a location or as a live webinar over the weekend. If your schedule is not as flexible, a great alternative option is a video crash course.
These are pre-recordings of the live sessions and cover the same material. Although they are not interactive, you can watch them on your own schedule, pause the video to take notes and watch again if needed.
The crash course will also cover topic recall tips & tricks, key terminology, and give exam-taking strategies. These are purposeful ways to build confidence and help you pass the test.
This course is your state exam playbook.
You can never be too prepared and this is key before taking the state exam. So, don’t leave anything to chance! Remember to take advantage of all the prep tools you have at your disposal. Take the exam prep course, use the flashcards, and INVEST in a crash course!
You’ll be happy you did and you will strengthen your odds of passing on the first attempt.
What are you doing to prepare for the real estate state exam? Comment below!
It can happen to anyone. In an instant, no matter what you do, you find yourself in a real estate slump. It can be difficult to get out of and can mess with your mental state.
This comes with the territory as a real estate agent. It’s hard when you depend on yourself for your next deal.
But, don’t panic!
We discuss the methods you can use to help break the real estate slump in this article.
Start with the notion that you can choose to have the right attitude. You can’t change adversity, but you can change how you decide to react to adversity. That’s powerful when you put it into practice.
Let’s face it. When your actions don’t yield results, becoming depressed and wanting to quit is very easy. This can make you question your capabilities and your choice to become a real estate agent. However, don’t give in to these negative emotions and thoughts. Remind yourself that not having constant deals is normal in real estate.
You may have heard over and over again that the right mindset helps you become successful in real estate. That same positive mindset helps you get through difficult times as well.
Daily affirmations are a great way to keep you in the right state of mind. These should be short, simple, and motivational to help you stay on track. Say them before starting your day or put them up in your workspace as a visual reminder. “I have a natural talent for real estate,” is a great one to start with.
Now that we covered the ways you can handle your mental state through a slump, let talk about the business side. Or more accurately, the lack of business...
When you don’t have an upcoming deal and you don’t have leads in the pipeline, that’s when most agents panic. When the panic starts, the slump begins. The next step is to work on your database. This is the source of your potential business.
Your database is your lifeline. As long as you keep adding to your database you will have deals to pursue. However, if you contact your entire database and you still come up short, that means one thing: It’s time to add more people.
Your slump feeling can be deceiving. Real estate is a numbers game–it’s all about converting leads. Some leads can take months to convert into deals. However, when all your leads take months to convert, well you start identifying it as a slump.
Remember, when you’re in the thick of it, every “no” leads you to a “yes.” These will potentially become future deals if you continue with your lead follow-up. Lead follow-up is as important as getting leads and growing your database. If you are diligent, you can end up having an amazing year. Then–just like that–your slump is over.
Sometimes, changing where you work can make all the difference.
Getting into a rut can put you in a slump. A rut is the habit or pattern of behavior that becomes dull and unproductive but is hard to change. If what you are doing is not giving you results, it’s time to change things up a bit. Starting with where you work.
Let’s say you work from home. There are advantages to working from home. For example, having no commute and focusing on calls. But, you are also isolated and have to rely on yourself for motivation. After a while, this can take a toll on you mentally–especially if you are not seeing results. So, make a change and start taking yourself to the office.
Your office can be a great place to change up your routine. When you work from the office you have the advantage of feeding off your coworker’s energy and networking with others. Start some healthy competition and see who can make the most contacts in an hour.
This is the idea: Generate activities to keep you motivated, on track, and in your head in the game.
Maybe the opposite is true for you. If you work from the office and you feel unproductive, take a moment to reevaluate your surroundings. Is your office dark? Are you surrounded by negative coworkers? If this is a constant, consider changing offices.
The bottom line, look for ways you can change where and how you do work. This change can inspire a creative way out of your career hole.
Well, they say having a plan is the best preparation for anything. Knowing that there are steps you can take, even in the middle of a real estate slump, is reassuring.
We talked about having a positive mindset, digging deep with your database, and changing your environment. These measures help you deal with a real estate slump.
When practiced daily, these measures are preventative.
Remember, that even the best agents fall prey to a real estate slump. It’s not the slump you should worry about, but the way you react to it.
What other habits helped you out of a real estate slump? Share them with us!
Becoming a real estate agent in California isn’t a dream only reserved for United States citizens.
You can be a real estate agent in California if you are not a U.S. Citizen. People ask us all the time about the real estate licensing process.
One common question that international students ask is, “Do you have to be a U.S. citizen to get a real estate license in California?”
The short answer: No.
But that doesn’t mean that anyone without citizenship can get their real estate license. You must follow specific requirements to become a real estate agent in the United States.
Let’s discuss how to get your United States real estate license if you’re not a citizen. But, first, let’s look at how you can get a real license without being a citizen in California.
The state of California discovered people were practicing real estate without a license. Moreover, these people were not citizens.
This was because prior laws made getting a real estate license difficult for non U.S. citizens.
When people practiced real estate without a license, they were doing so under the table. This made transactions untaxed and risky.
Therefore, new laws were created to motivate people to get a license with proper training.
These laws protect people from being denied a license based on their citizenship status. So where did these laws begin?
It all started with the introduction of Senate Bill 1159.
Senate Bill 1159 was introduced and signed in 2014 to amend sections of the Business and Professions Code, Family Code, and the Revenue and Taxation Code relating to professions and vocations.
SB1159 changed the legal presence requirements to obtain a real estate license in California.
Removing the legal presence requirement means that applicants are no longer required to prove U.S. citizenship or legal alien status.
Before, license applicants were required to have a Green Card. A Green Card allows you to live and work permanently in the United States.
Without one, you could not apply for a real estate license.
Senate Bill 1159 was the stepping stone that allowed people to apply for a real estate license.
Although, the bill didn’t stop some agencies from asking for citizenship status when issuing a license.
Then in 2019, Senate Bill 695 was passed.
This bill prohibited the Department of Real Estate (DRE) and other agencies from gathering information on the applicant’s citizenship or immigration status
Additionally, Senate Bill 695 disallowed using status as a basis for licensure. In short, this protected non U.S. citizens from being denied a license.
Although non U.S. citizens no longer have to show proof of presence, they still have to meet certain requirements:
An Individual Tax Identification Number is a tax processing number issued by the IRS to people who do not have a Social Security Number but are required to pay taxes.
People who would receive an Individual Tax ID Number include certain nonresident and resident aliens, their spouses, and dependents.
If you meet the requirements above, you are eligible for a real estate license in California.
But, before you can apply for your license, you have to take the required pre-licensing courses.
CA Realty Training has programs available to help you complete this requirement. We understand that not everyone learns in the same way. Therefore, each program offers its own advantages depending on how you learn:
These courses are online and completed at your own pace.
The only regulation by the Department of Real Estate is that you have to spend at least 18 days per course (not maximum).
Additionally, you must take one course at a time. Therefore, you can complete the program in 54 days.
If you are self-motivated and learn best by reading, this program is a good choice.
PROS: Self-paced, fastest program, best for reading/writing learners
This program has supplemental videos that add to the Online Program.
The videos are recordings of our in-class sessions featuring our head instructor. These videos supplement your online course reading.
The videos don’t cover everything in the chapters. But, they highlight important concepts and key terms as well as offer examples on how to apply them.
PROS: Self-paced, fast program, video resource, best for visual/auditory learners
For those that need support and guidance, we have a Live Webinar + Online program. Real estate agent trainers lead this 3-month program.
The live webinars are supplemental training designed to supplement your online courses.
Therefore, it gives you an educational environment. Here, trainers teach material based on their professional experience and the topic’s relevance.
PROS: Scheduled, interactive, best for visual/auditory learners
These new laws have given non U.S. citizens a path to becoming real estate agents.
Not being a U.S citizen is no longer a roadblock to becoming a real estate agent. So as long as you have the proper identification, you can take that first step and get your license.
What is a niche? If you aren’t familiar with the term, a niche in real estate refers to a specialization. The option for specialization is the beauty of real estate.
Maybe you’re asking yourself, “why not specialization in everything?”
Let’s think about the medical field for a moment.
When you get your medical degree, you don’t become a doctor of everything. You decide what interests you the most and specialize in it. Whether it’s internal medicine, neurology, dermatology, there are many paths to take. The same goes for real estate.
Real estate niches start with the two main markets: commercial and residential.
We’ll go over what’s available within each segment and explore the benefits and advantages of each. Before we dive in, let’s discuss why a niche in real estate can give you more clients.
Having a real estate niche is a great way to stand out. It helps edge out the competition. You focus on a specific demographic when you choose a niche.
For example, when you are known for being an expert in the downtown area or for being an expert in beachside properties, you draw clients seeking real estate in those areas.
This is because you are perceived as the authority for those areas.
If a home buyer wants a beachside property, they will contact the beachside property agent and not the downtown agent.
Sure, the downtown agent can help them, but they won’t know as much about beachside properties as the beachside agent. When given a choice, people will pick the real estate expert instead of the real estate generalist.
This is why finding your real estate niche is a powerful strategy for converting more clients.
Choosing a niche in real estate specifies the demographic you work with. Therefore, you will attract more clients because the competition is smaller.
You’re probably wondering what the best niche is. Well, the best niche is the one that you’re going to be passionate about.
Let’s look at the perks of commercial real estate and then how you can create a niche in commercial real estate. This sector is great for people who get excited about the idea of selling large properties.
The benefit of specializing in commercial real estate is the opportunity to earn a large commission.
To keep the math simple, let’s say you have an apartment complex selling for $10 million. 3% commission on $10 million is $300,000. Even after you give the brokerage their share, that’s still a big paycheck.
The potential to make big money in commercials is always a draw, but the inventory is not as large as it would be on the residential side.
If you are passionate about this sector, then join a company or a team that will train you.
A few commercial real estate niche ideas include:
After picking one of these niches, you can qualify even further. For example, you can be a commercial real estate agent who specializes in apartment complexes near the beach.
This will make your market very specific.
Many people do start on the residential side because of the high inventory. Because of the high inventory, there is an opportunity to create more specific niches in real estate.
Along with that, certain properties are able to yield high commission checks.
Take luxury real estate for example.
This is a market area within the residential sector that has expensive property. Typically, luxury real estate sells for $1,000,000+. With a 3% cut, you close a deal and earn $30,000.
Because the sector has more inventory, you can find more property to list and more clients who want to buy.
Therefore, you have the potential to move more in production than you would in the commercial sector.
A few residential real estate niche ideas include:
The benefit of residential real estate is the client size. Compared to commercial, residential properties have more potential buyers. Therefore, you can create a more specific niche to dwindle the competition and increase your client potential.
There are tons of qualifiers you can add to these specializations to make your niche more specific. The more specific you go, there will be less competition. However, you should balance this.
Making a too specific niche will exclude too many clients.
Remember, the purpose of a niche. You want to create an identity in real estate that tells people your specialty. When you specialize in a sector, you become the “expert.”
That’s because you spend your time learning about your specific area as much as you can. Therefore, you will create a level of expertise that other–generalist–agents can’t.
Let’s say you decide to focus on the downtown condos. You will market yourself as the downtown condo guru.
When people think of condos, they will think of you.
Once you have found the niche that speaks to you, concentrate on being the best in that field. The more you know about your niche, the more expertise you will have.
Here is how you can develop your niche in real estate:
Educate yourself on the contracts and practices while selling real estate in your niche. For example, the sales contract for a condo is different from the sales contract for a single-family residence.
Research the paperwork, workflow, and practices of the legal and technical aspects of your niche.
Next, you should familiarize yourself with the properties, people, and language used. This will give you a vernacular for your real estate niche. In other words, get to know your client. Here is how you do this: get out of the office and into the field.
Physically see the properties you want to sell. Meet the people who are interested in these properties. When you are familiar with your real estate niche, you instill confidence in your client that you are the right person for the job.
As with anything, this will come with time. Experience in your niche is vital to becoming an expert. So, immerse yourself. Concentrate on getting as many deals as you can to gain experience.
Your brand will dictate how people remember you. When you market yourself, don’t forget about your brand. Your niche in real estate will make your band. So, when people see your name they know what area you specialize in.
If you use ads, newsletters, digital content, or even word of mouth, then ensure your professional name is associated with your niche. That is how you create your brand.
Now you know the importance of having a real estate niche, what is available to you in both the commercial and residential sectors, and how to create it. Choosing the right niche can help convert leads and bolster your business.
Just remember, the best niche is the one that fuels your passion.
A real estate license lets you become a real estate agent, but it doesn’t guarantee a successful career. That’s where the hard work and tenacity come in. To make it easier for you to start your career in the best way, we outlined the 10 most important things you need to do after you get your license.
After completing your pre-licensing education and getting your real estate license, the law requires that you work under a real estate brokerage. Because of this arrangement, brokerages play a crucial role in determining an agent's success.
Finding a brokerage to work with for the first time may tempt you to choose one with low fees and commission splits. However, these brokerages offer less support than you need as a new agent. Here are the essential things to look for when finding a real estate brokerage.
Once you have found a real estate brokerage that is right for you, the next step is to interview with the brokerage. Setting up this interview is simple. All you need to do is get in touch with the brokerage, express your interest, and schedule a meeting time.
In real estate, your sphere of influence (SOI) is everyone you know, from acquaintances to family members. The sphere of influence is something that every agent has and can make use of.
What makes your SOI so important is that most of your clients, at the start of your career, will come from the people you know.
To maximize your SOI:
A buyer or seller is more likely to hire an agent they know over one they don’t. So, when you have a big SOI, and they know you’re a realtor, the odds of finding a client from your network increase.
According to the Internal Revenue Service (IRS), a real estate board consists of members interested in improving the business conditions in the real estate field. They are not organized for profit, and no part of the net earnings inures to the benefit of any private shareholder or individual.
Some examples of real estate boards are the National Association of Realtors (NAR) and the California Association of Realtors (CAR).
A real estate board membership is the difference between real estate agents and realtors. Although both professionals guide clients through real estate transactions, realtors have boosted their businesses by going further to increase their credibility. In addition, these boards provide membership benefits and perks, a support community, a network of fellow realtors, and several discounts and savings.
To become a Realtor®, you must pass the NAR Code of Ethics exam and work under a brokerage affiliated with an Association of Realtors. Joining a real estate board positions you as a trusted industry professional and can give you a competitive edge.
The Multiple Listing Service (MLS) is a private database established by cooperating real estate brokers to provide data about properties for sale. Real estate professionals also use it to assist their clients with buying and selling property.
The MLS is a vital resource for real estate agents. With MLS access, you can:
Websites are an excellent way for agents to generate leads, establish their expertise, create brand awareness, and provide up-to-date information to the public. Here are several features that make an excellent real estate website.
When creating a real estate website, you can outsource to a web developer or handle the creation yourself.
This comes from top-producing agent, Richard Schulman. Richard runs a top .1% real estate team and has made more than a billion dollars in sales. He understood that lead generation is the most important thing a real estate agent can do. He created a system that let him deepen relationships, build trust, and book clients. He called this "coffee dates."
Richard set up 30-minute coffee get-togethers with contacts in his database. On a recurring basis, he would set up these dates with people he hadn't spoken to in a certain amount of time. When he got together with them, he would catch up and hear how they've been. Eventually the conversation would come back to real estate in which he would ask them if they need any services.
"Coffee dates" are a simple yet powerful way to find new clients. Either the person you meet needs help, they know someone who does, or you catch up with someone who will eventually need help. This is a great way to stay top of mind and get a good caffeine boost.
By the way, we created a online video program with Richard. It's called From Rookie to Rockstar. It's a 6+ hour online video training program that teaches you how to find your first real state client, how to close more deals, and how to earn bigger commission checks.
You can join a team or go solo when you become a real estate agent. Below are a few pros and cons of joining a team:
If you still need help deciding if a team is right for you, consider what kind of leads you will have when you start your career. If you have an extensive network of people ready to buy and sell real estate or are willing to refer you to a family member or friend, joining a team might slow you down. Whereas if you have a smaller network, a team could help create a foundation for you.
A mentor is an experienced person who educates or gives help and advice to a less experienced person. Having a real estate mentor is always a good idea, especially when you are new to the industry. Your mentor can be anybody as long as the person has gained enough experience to guide you.
Your real estate brokerage may run mentorship programs to match new agents with experienced ones in your office for professional development. However, if they don't, you can just walk up to an older colleague and make your intentions known
Even after getting your real estate license, you need to keep learning and acquiring knowledge. So seek out training classes that can help elevate your career. Typically brokerages offer training seminars for their agents to help them become better negotiators, learn about contracts, and establish good workflows.
Success in real estate requires motivation and resilience. Your "why" is your deeper reason for pursuing a real estate career. Whether it’s financial freedom, helping families find their dream home, or building a long-term investment portfolio, having a clear purpose will keep you focused during challenging times.
When obstacles arise, revisit your "why" to stay motivated and committed to your goals.
You have a client so now you need to talk about home value.
Whether you help a client buy or sell a property, you need to know the real estate value.
This is because you need to have a fair listing price to attract sellers or a fair purchase offer to close the deal.
So, where do you begin?
Real estate comps are the best way to price a property like a pro. No other method gives you an accurate value price outside of hiring a real estate appraiser.
Let’s first start with the definition of real estate comps.
You may or may not have heard of the term “real estate comps.”
So, what are they?
“Comps” is short for “comparables.” Real estate comps are comparable home prices. Therefore, “finding comps” is the process of comparing the price of homes within a short radius of a listing.
Real estate agents use comps to help both buyers and sellers.
Comps help sellers estimate their home’s listing value to set a fair price.
Comps also help buyers know the selling price of similar homes in the area. Therefore, you and your client can make a fair offer.
You need to know how and where to find comps to benefit your client. By doing so, you provide the best service and build trust.
That’s vital to build a network of previous, happy clients.
So, let’s talk about 2 methods you can use to find real estate comps for your client.
Let’s start with the method that is most widely and commonly used, the Multiple Listing Service.
The Multiple Listing Service (MLS) is the most common tool used to find real estate comps.
The MLS is a database that has a record of all agent sold properties. This database includes homes that are “pending” or in escrow.
Active agents are required to be MLS members. Therefore, this is the most common way they find real estate comps.
The MLS is easy to use. It filters properties by location and price, and it also gives the user details on the property.
When you price a home, use the MLS to find what similar homes sold for in the same area. Ideally, you should find homes that have similar characteristics.
A few example of similar characteristics to look for are:
The MLS can filter these sold properties with ease.
Finding sold properties on the MLS to set listing prices is a smart choice.
There is already a record to substantiate that the home will sell within a given price range. This is crucial because it shows your seller that their home will sell quickly with the right price.
The MLS is comprehensive. But, it does not capture EVERY home sold.
Therefore, you might miss out on other comparables to use.
Why is finding every comparable important? It is important because you could potentially list your client’s property for a higher price.
Ok, so you may ask how this is possible.
Well, some sellers DON’T use an agent to sell their home. Those sales are called FSBO or “for sale by owner.”
You may have seen those “for sale by owner” signs on a property’s lawn.
A house is not placed on the MLS if a real estate agent does not sell it. In other words, FSBO homes are not placed on the MLS.
What now?
This is where your trusty title representative comes in.
Your title rep can give you computer access to the title database. This database contains all properties that are sold. This includes FSBO properties.
How is this possible?
Every transaction closed goes through the county record’s office. Therefore, the title rep has access to all recorded transactions.
This includes properties on the MLS, excluded from the MLS, and even FSBO.
Why is checking this title database so important?
In some cases, it can greatly affect the outcome of pricing your listing.
Checking both databases is doing your research. This is vital for real estate professionals.
When you check every database you avoid discounting your listing.
Here’s an example:
After viewing every sold property in your area on the MLS, you arrive at a listing price of $1,000,000.
But, the title database has a few “for sale by owner” homes that sold for $1,300,00 and $1,500,000. This shows you that you can list this property at a higher price.
This is helpful when you price an area that does not have many sold properties.
If the MLS is yielding a low return of sold properties in that particular area, the title database may find more.
Remember that using real estate comps help with your clients.
When you work with buyers, they benefit. This is because you find offers to get the best value. Buyers respect a data driven offer.
When you work with sellers, the ultimate goal is to get their property SOLD. Whether you use the MLS or your title representative, it all starts with the right, data-driven price.
This leads to sold properties, having a happy client, and putting a commission in your pocket!
A new homeowner closed on her brand new house. Her realtor hands her the keys.
She’s excited to settle into her new home.
The house is pretty hot when she first walks in, so she turns on the air conditioning.
After a couple of minutes she realizes that the AC is blowing hot air.
The seller reported a completed requested repair a few days before closing. Yet, it’s clear that the job wasn’t finished. Now the new homeowner is stuck with a damaged AC unit and a repair bill.
Situations like this are avoidable when buyers and their agents perform a final walkthrough before closing.
The final walk through is an important step in the closing process.
California’s stipulation 16 in the Residential Purchase Agreement allows property buyers to do a final walkthrough 5 days before closing.
The walkthrough is an opportunity for buyers to ensure that the property is in the same or better condition than it was during their last viewing.
At this point, the buyer’s requested repairs are complete, or near completion.
The buyer and their agent perform a thorough inspection of the property to ensure that everything is in order.
Many home buyers are not sure what they should look out for during a final walkthrough. So, it’s important for agents to attend to make sure a thorough inspection is performed.
A thorough walkthrough can take 2 – 3 hours to complete.
Agents often take notes and photos during the inspection. This is useful to have for their client’s records and for requesting last minute repairs.
The first items to assess during the final walkthrough are the requested repairs.
Once you have taken note of the repair status, begin inspecting the property room by room.
Creating a checklist is a good tool to keep track of the items to test in each room. Common checklist items include:
An inspection of the property’s exterior is as important, so be sure to walk around the outside.
Look for any signs of damage to the siding or roofing.
Additionally, notice if there are any significant changes to the land on the property.
Sometimes the sellers will remove items that sold with the house. Examples include landscaping or outdoor structures, like sheds.
Other items that were not sold with the house may be left behind. So, check out what is on the property at the final walkthrough.
As a home seller or listing agent, you can help make the final walkthrough process easier. Here’s how:
If possible, it’s ideal for the seller to move out of the house before the final walkthrough.
This makes property examination easier for the buyer. But, if moving out before closing is not an option, sellers should make the home available for the buyer.
It helps to remove or pack up as much of the personal belongings as possible.
Aim to complete the buyer’s request for repairs as soon as possible.
Keep copies of the service contracts and receipts. These will come in handy if there are any disputes with the contractors or buyers.
Once every repair is complete, the seller should perform their own final walkthrough. Testing every repaired item ensures that any remaining issues are caught before closing.
Also, if there are items missed during the home inspection, sellers will benefit from addressing those sooner rather than later. Examples include running toilets or leaks under the sink.
Professionals recommend sellers vacate the property before the final walkthrough.
But, if the seller has moved out several weeks before closing, they may not be able to keep a close eye on the property.
If the seller is still in town, it’s a good idea to check on the property once or twice a week to ensure the home is in good condition.
If the seller has moved out of the area, enlisting the seller’s agent, a family member, or close friend to keep an eye on the property is another option.
Completing the final walkthrough within a few days of closing is convenient. If new issues appear or the negotiated repairs are not complete, there is still time to address them.
First, the buyer’s agent needs to address repairs or other issues by reaching out to the listing agent.
Chances are these issues are fixable within a few days. But, in the event of larger problems buyers have a couple of options.
Some repairs take more time to complete.
In that case, the buyers may request to delay the closing. In other cases, the parties may agree to proceed with closing, but set up an escrow holdback account.
This account allows the lender to set aside part of the home loan to be released to the seller once the repairs are completed.
The lending company withholds more than the repair estimate. This is to motivate sellers to swiftly complete the repairs.
The most common time frame given for the repairs is 60 days.
Finally, if the house’s condition has deteriorated to a state where the repairs are costly and time intensive, the buyer can walk away from the deal.
This is likely to happen if natural disasters, fires, or vandalism damage the property.
The final walkthrough is an important step in the closing process. The buyer has a last chance to review the property.
Sellers can ensure that they have met every obligation.
Conducting a final walkthrough on a house gives every party involved peace of mind. Also, it leads to a smooth transfer of property.
What are some of your tips and tricks for a successful final walkthrough?
When a home seller secures a buyer, the home will need two different inspections.
On the surface, appraisals vs inspections of a home appear to serve the same function. They both perform walkthroughs of the property.
But, they examine different parts of the home. They also report that information to different parties.
The lender vets the prospective buyer's ability to pay back a mortgage loan. While doing this, the lender ensures that the property is worth the loan amount.
So, the mortgage company sends a real estate appraiser to assess the value of the home.
The appraiser measures the size of the property and completes a property analysis. This includes comparisons to similar properties in the area.
Also, appraisers judge the home’s integrity. This includes:
On the outside, they want to make sure that everything is operable and well maintained. The appraiser isn’t concerned with the cosmetic view of the property.
They also make note of visible health and safety hazards. Examples include broken windows or loose banisters.
The appraiser compiles this information into an appraisal report. Then, they send the report to the mortgage lender.
Based on the information provided, the lender extends the loan offer.
That is if the property’s sale price is in line with the appraised value.
If the appraisal is lower than the asking price there are some options for the buyers and sellers.
The buyer can ask for a price reduction in the list price. If the buyer has the funds and is willing to pay the list price, they can pay the difference in cash.
The seller can request a second opinion through another appraisal. Also, the seller can show the appraiser their own list of comparable properties. This is to justify their original listing price.
A home inspection differs in scope from the appraisal. The home inspector does a thorough inspection of the space.
They inspect health and safety hazards as well as the integrity of every part of the structure. This includes:
The home inspection usually takes several hours. Once the inspection is complete, the inspector delivers their report to the buyer. The buyer can then use this information to gauge if they want to make the investment in the home.
They can also leverage the information to renegotiate the pricing of the home or other parts of the deal. This includes the closing costs.
Preparing for the home appraisal process is different from the home inspection process.
Here is what your client needs to know to make this process easier for the appraiser and inspector.
For homeowners, the appraisal process can be stressful.
The appraiser dictates the value of the seller's home. There are some ways that homeowners can prepare for the appraisal to get top dollar.
One of the best actions homeowners can take when preparing for a home appraisal is to declutter.
The cleanliness of the home does not impact the appraisal value. But, a cluttered space makes it difficult for the appraiser to get a full, accurate look at the space.
Another suggestion is to perform cosmetic repairs or upgrades on the home.
For example, upgrading light fixtures, repairing a leaky faucet, or painting the walls. It is a good idea to keep a list of repairs and the receipts for the work completed to show to the appraiser.
The homeowner may see some of their money invested reflected in the appraised value.
Homebuyers should consider who they hire to complete their home inspection.
Purchasing a home is one of the most important purchases people make. So knowing what you’re buying is important.
One of the best ways to find a quality home inspector is to ask for recommendations. You can start with friends and family. If they had great experiences with their home inspectors, they might recommend them.
Review ratings on the internet is also helpful. The reviewing ratings help you find home inspectors near you
Also, dedicated home inspectors are often members of local and state organizations. Checking the list of members near you is also a great strategy.
Once you have found some potential home inspectors, the next step is to interview them.
You want to be sure that the home inspector has the experience, five years or more. Ask how long they expect their inspection to last and how detailed a report they offer.
Thorough inspections last several hours. It’s helpful to have an inspector who takes the time to inform you about the major issues that you need to address.
This could be through an extensive home inspection report or an onsite walkthrough.
Both home inspections and appraisals need professionals to assess the home. But, appraisers and home inspectors examine different things for different parties involved.
The appraisal protects the lender’s investment. They report on the property’s estimated value which the visual appearance determines.
Home inspections help protect buyers and sellers. Inspectors assess major and minor structural concerns with the property. This includes roofing, foundation, and plumbing.
Obtaining your license to work as a real estate agent isn't something that is going to happen overnight. But, getting your real estate license won't take nearly as long as obtaining other types of professional licenses. This article will offer a detailed look at how long it takes to get a real estate license.
The time that it will take to enroll into and complete real estate school, apply for, and pass the real estate exam averages 5 or 6 months. Of course, this timeframe can vary by program or state.
Every state has its unique licensing requirements, and it is vital to recognize that you will have to meet the specific licensing requirements of the state where you want to work as a real estate agent.
So the first thing that you should do, if you want to get a real estate license, is investigate your state's requirements.
That said, the framework for becoming a real estate agent is essentially the same across the country and includes the following:
Although the framework for obtaining a real estate license is generally the same in each state, it may take longer in some states to get a license than it takes another.
Since each state has its own pre-licensing requirements for real estate school, the length of the real estate program you take will vary.
In Kansas, you are required to complete 60 hours of pre-license classes before taking the state's licensing exam. In Nevada, it's 90 hours, while Rhode Island requires only 45 hours. The types of courses that you have to take may vary as well.
For example, in California, the Department of Real Estate requires that anyone looking to obtain a real estate license take the following courses:
Regardless of the state you live in, the time it takes to complete real estate school will also depend on whether you choose to take the classes in a traditional classroom setting or online.
Most states allow prospective real estate agents to take their pre-licensing courses online. Typically, taking an online real estate course can significantly reduce the amount of time it takes to complete your pre-licensing real estate education.
Some students prefer online real estate school for the same reason they are drawn to a real estate career: because it offers flexibility and the ability to create their own schedule.
Most online courses are self-guided, which means you can study on your own time and at your home pace, from wherever. Online real estate schools also tend to be more affordable than in-person schools.
The downside to online courses is that you need a lot of self-discipline to complete the course, and since they lack the personal interaction of an in-person program, you miss the opportunity to network or ask questions.
On the other hand, in-person classes tend to be more structured and hold students more accountable. Online learning isn't for everyone, and face-to-face learning and the social interaction among peers looking to enter the same field may be more beneficial in the long run.
But, in the age of COVID, more and more students are turning to online classes as the safest way to obtain their real estate license.
Again, every state is different, but once you apply to take your real estate licensing exam, you may have to wait for up to three months before you can take it. The reasons for the wait vary, but it could be the sheer volume of people taking the test, government red tape, or a backup caused by the pandemic.
Either way, there isn't much you can do about the time it takes between applying to take the licensing exam and actually taking it. If there is a wait, use the time to continue to study what you learned in real estate school or sign up for some extra classes to stay sharp.
Once you pass your licensing exam, you are officially a real estate agent. You can start working as a real estate agent right away. The documents will be mailed to you, but you can also receive the information via email as well.
Depending on the license application form you filed before the exam, your license can be associated with the brokerage of your choice, so you can start right away.
As we mentioned earlier, you're not going to get your real estate license overnight. Still, if you follow the required steps in your state you can complete all of the steps necessary and be working as a real estate agent within six months, on average. Once that happens, you can be well on your way to a lucrative career in real estate.
In real estate, it is standard practice for different brokerages to represent the parties involved in a transaction to ensure the full protection of everyone’s interests. However, it is also possible for both the buyer and seller to be represented by the same real estate agent.
This article will help you understand what dual agency is, how it works, and give you insight into the controversies associated with it.
A dual agency is an arrangement where the buyer and the seller are represented by the same agent during a real estate transaction.
A real estate transaction will consist of a buyer’s agent and a listing agent. However, this is not the case with a dual agency, as both the buyer and seller work with the same agent.
For this to work, it is very important for real estate agents to fully disclose that they are working with one of the parties involved in the transaction before agreeing to work with the other party. If either of the parties rejects the idea of using a dual agent, they have the right to opt-out of the deal.
Before a dual agency can move forward, both the buyer and the seller must consent to the agent representing both parties. Even after consent has been given by both parties, the agent is legally required to remain neutral and keep all information about each party confidential.
Although dual agency agreements may appear as an easy and convenient option to carry out real estate transactions, there are still some disputes surrounding it, which has led to the banning of this practice in some states in the U.S.
One of the major issues with a dual agency is that most agents do not properly represent both parties to their fullest extent. In other words, they may prefer one party over the other. For example, the buyer could worry that the realtor intentionally keeps the listing price high because they want a bigger commission check.
Another problem is that some agents will give confidential information to the other party, hence breaking the ethical code of neutrality to both parties. Some of these questions include the value of the property for sale, how to come up with counter offers for the property, and how to dispute the result of an appraisal carried out on the property.
Investors often mistake the use of the terms designated agency and dual agency. While these terms might be similar in certain aspects, they describe different situations in real estate negotiations.
In a designated agency, different agents within the same brokerage are delegated to work exclusively with the different parties of a transaction.
In a dual agency, the seller pays the commission. In fact, this is the standard for all types of agencies because the commission is split between the listing agent and the buyer’s agent.
Although there is no standard commission rate, typically agents will make between 5-6% of the home’s listing price.
In the case where the buyer and seller each have different agents representing them, the agents will have to divide the commission in half. This means that each agent receives about 2.5% – 3% of the purchase price.
This is relatively similar to the standard practice in a regular representation structure where the seller pays the commission.
Realtors maintain a fiduciary duty to their clients, that is, they are expected to be loyal and work toward the best interests of their clients.
However, the following states have made it illegal to practice dual agency:
To this day, single agency is still the most common form of agency in real estate. But, when you do find yourself in a dual agency, it is important that the realtor maintains the integrity of their career by serving the best interest of both parties.
In real estate, it's all about getting the listing.
When marketed correctly, listings lead to sales. You have the listing, buyers come to you, they make an offer, and you get paid.
Having the listing is also a great opportunity to capture buyers who may not be represented by another agent.
So, it sounds like a no-brainer. Getting listings is the best way to get sales, right?
Well, not all listings are created equal. Sometimes, it’s smarter NOT to take a listing.
Are there really going to be time to walk away from a listing? The answer is “yes.” You’ll save yourself a lot of time and energy knowing the warning signs of a listing that is just not worth it.
Let's talk about some of those warning signs to look out for.
Here’s the scenario. You get a call from someone who’s interested in selling their home. You meet with them for a listing consultation. You take a tour of the seller’s home, discuss marketing strategies and what their property might sell for on the market.
The seller decides they want you to list their house. You’re excited about the prospect of getting the real estate listing until you hear the reason for selling...
We’re getting a divorce.
Ouch! This is a definite red flag. There are many things that can go wrong when you are dealing with a couple going through a divorce.
They may disagree on the real estate listing price or one spouse is unwilling to sell and both listed on the title.
If there is already tension between the two, this can make the process messy and uncomfortable. You will be spending a lot of time managing your sellers and putting out fires. This would not be the ideal listing to take.
Does that mean you reject a listing based on divorce? No. There are exceptions to every rule.
If you encounter a couple that is divorcing but amicable, by all means proceed with the listing. But proceed… with caution.
Sometimes a listing may appear to have all the right elements.
You find a happy couple, the property is in great condition, and the sales comparables predict a great market price.
Although, when you dig deeper, you discover that the sellers owe close to what it would sell for on the market. That means there is a very small profit margin.
This is another warning sign.
Not because you may not make much on the commission, although that is a consideration.
It’s because when sellers owe close to what the property is worth, it may turn into a short sale. A short sale is when the borrower or homeowner sells a property for less than what they owe on it.
The bank approves short sales and the selling process can be long and complicated. Not to mention stressful for both you and your seller.
So ask yourself if you are willing to take on a listing like this.
Here’s another scenario on a hot button topic: an overpriced real estate listing.
You meet with a seller and prepare the sales comparables. You share with the homeowner the price they would receive on the market. But the seller asks you to overprice the listing, substantially.
Now you have a very important decision to make.
Do you take this overpriced listing?
Some agents will take the listing in hopes that having their sign on the yard will lead to other listings.
They don’t realize that taking an overpriced listing can have negative effects. They figure that any listing is a good listing. As we’ve been discussing, this is not the case.
The fact is, most overpriced listings don’t sell. You will spend a lot of time, money, and effort on a listing that will just sit on the market. What generally happens is that this overpriced listing turns into an expired listing.
Another negative effect? Your reputation. As a real estate agent, you want to convey to potential sellers that if they list with you, their homes will sell fast.
Having expired listings will not instill confidence that you can sell your home quickly.
So are you ready to gamble your good name on the possibility of selling an overpriced listing?
Remember that you are a real estate professional. If a seller is not willing to sell their property at the price based on the numbers, it’s not a listing worth taking.
Yes, we all know that listings are the key to sales. Getting listings will have the buyers coming to you and will lead to a successful real estate career.
Success in real estate doesn't come from selling as much property as you possibly can but knowing which property to sell.
But we now know that not all listings are smart to take and when it’s smarter to walk away.
So, remember the warning signs:
Look out for them and realize it’s ok to take a pass. You are better off letting some else take on these risky listings.
Before we dive into how the term As Is applies in real estate, let’s talk about what this means as a basic concept.
When you buy an item As Is, it means to purchase something in the current physical condition. A seller can sell any item As Is.
There is an understanding that no improvements will be made to the item. What you see, is what you get.
This is common among low to mid-level transactions, such as garage sales or used car sales.
In real estate, the term As Is applies to the purchase of a home but with some added provisions. The Residential Purchase Agreement (RPA), has clauses within it that protect the buyer.
We’re going to discuss these sections to better understand why they are in the contract.
First, let’s circle back to the general description of purchasing an item in its current physical condition.
This would apply at a yard sale for example. You may purchase something and the item sells As Is.
There is no implied warranty for that item. That means you pick it up, pay for it, and it’s yours. Done deal.
Did you know that when you initially put in an offer to buy a home and it’s accepted, you’re purchasing the property As Is? This is technically true. To understand this, let’s look at the verbiage in the contract.
In the RPA, section 11 states, “CONDITION OF PROPERTY: Unless otherwise agreed in writing: (i) the Property is sold (a) “AS-IS” in its PRESENT physical condition as of the date of Acceptance…”
This means that the buyer will receive the property in the same condition or better before escrow closes.
So, what exactly does this mean?
Let’s say during escrow, the seller accidentally spills something on the carpet causing damage, the seller must replace it before escrow closes leaving it in the same condition, or in this case, better because of the new carpet.
This is an example of how the As Is clause protects the buyer and why it’s in the contract.
Without it, there would be no legal ramifications of a seller delivering the property to a buyer in a damaged or altered state.
Although, some buyers are concerned that the As Is clause means that they won’t ask the seller to make improvements or repairs.
This is not the case.
The clause doesn’t mean buyers can’t protect themselves before the sale of the home is final.
That is what Section 14B of the RPA is for. Within that section of the contract, it allows the buyer many protections before the deal closes.
The concept is very similar to buying a used car.
Before you pull the trigger, you can hire a mechanic to check out the vehicle from top to bottom to make sure it’s in good physical condition. This preventative measure protects your investment and ensures you are going to be happy with your purchase.
You can use the same approach in real estate and purchasing a property.
In the case of purchasing a home, Section 14B allows the buyer an opportunity to fully investigate the property within a certain amount of time.
This gives the buyer the right to perform inspections, review reports, and all disclosures to make sure there isn’t anything negative that might impact their decision to proceed with the sale.
Let’s review some of the subsection items of protection built into Section 14B of the RPA to highlight their purpose:
SECTION 14B (1)
Most notably would be the time frame of 17 days after acceptance to conduct the Buyer investigation. The Buyer also has the capability of specifying a longer timeframe if needed, depending on the circumstance.
SECTION 14B (2)
Within the time specified in paragraph 14B (1), Buyer may request that Seller make repairs if necessary, due to the outcome of this investigation.
SECTION 14B (3)
If at the end of the specified timeframe outlined in section 14B (1), if disclosures and reports are not delivered to the Buyer or the Seller chooses not to do repairs, the Buyer has the option to cancel.
As you can see, section 14B (2) addresses the issue of being able to ask the seller to make repairs.
This element is important to the buyer and crucial if the findings would prevent the buyer from wanting to continue with the sale.
To be clear, the seller is under no obligation to agree to or respond to the Buyer’s requests which makes Section 14B (3) so vital.
The buyer can cancel the deal based on the findings or if they did not receive the reports in the specified time frame allowing for a full investigation of the property.
So now you understand that buying a home “as is” really means with added provisions and protection for the buyer.
These buyer protections would not be possible without Sections 11 and 14B of the Residential Purchase Agreement.
Section 11 guarantees that the buyer will receive the property in the same physical condition at the close of escrow as when the offer was accepted. Section 14B allows the buyer to fully inspect the property and the right to ask the seller to make repairs.
Becoming a real estate agent is a life-changing career opportunity.
You might be wondering if becoming a real estate agent is worth it to you. To help you decide, we put together the ultimate real estate pros and cons list.
In this article, we review the perks of becoming a real estate agent and what turns people away. In the end, you decide if this is the career for you.
With that said, let's dive in!
Real estate can be a highly rewarding career, but whether it’s “good” for you depends on your goals, work ethic, and lifestyle preferences. One of the biggest draws of real estate is flexibility—you’re not tied to a 9-to-5 schedule.
Instead, you have the freedom to design your days, but this also requires self-discipline to stay productive. Another advantage is the income potential. Unlike traditional salaried jobs, your earnings in real estate are often commission-based, which means your income can grow significantly as you close more deals.
However, this also means you must be comfortable with fluctuating income, especially when starting out.
Success in real estate hinges on building strong relationships, understanding market trends, and continually sharpening your negotiation and marketing skills. It’s not just about showing houses; it’s about solving problems and providing value to your clients.
If you thrive in a dynamic environment, enjoy working with people, and have a knack for self-promotion, real estate might be the perfect fit.
On the flip side, it’s essential to understand that it’s not an overnight success story—establishing yourself in the industry takes time, persistence, and often a financial cushion for the first few months.
So, is real estate a good career? For those who are driven, adaptable, and eager to learn, it can be a path to financial independence and professional satisfaction.
Take our quick quiz to get an idea if this career is right for you! This is a simple 15 questions quiz that can be completed in less than 2 minutes.
There are great perks to becoming a real estate agent. Most people start this career because they aren’t happy with their current career or they want limitless freedoms that becoming a real estate agent brings them.
So, here’s a list of the pros of becoming a real estate agent.
One of the greatest advantages of becoming a real estate agent is the unlimited income potential. As an agent, there is no limit to how much you earn. That’s because real estate agents work for a commission.
Typically, the agent can negotiate a commission rate of 1% - 3% of a property’s sale price.
Depending on the local housing market prices, the commission can be substantial.
For example, in areas where the average home price is $1,000,000, the agent walks away with $10,000 - $30,000.
That’s for a single sale.
Real estate agents decide how many clients they take on, which means they are in charge of how much they can make per year.
Real estate agents can set their own schedules.
This flexibility gives agents the opportunity to fit work around their lives easier than other professionals.
For agents with children, flexibility is a major benefit of the career. Parents can attend important events and spend more quality time with family.
Additionally, you are guaranteed to work from anywhere you want. This is ideal for people who want to earn money while taking care of their children who are also at home during working hours.
Real estate agents are entrepreneurs.
Although they must work under a broker to legally sell real estate, they run their own business.
Agents can create their own schedule, decide what clients they work with, and how much they work.
Many brokerages have resources to support their agents with marketing and lead generation. But, each agent decides how they use these resources in their business plan.
Real estate is a people business and agents who enjoy working with others do their best.
You meet people from all walks of life when you work as an agent. From first-time homebuyers to investors, there are many clients who have a need in real estate.
Agents can’t sell real estate without people who are ready to buy or sell. So, putting your clients first is imperative.
One of the most underrated benefits of becoming a real estate agent is the reward.
Agents have the power to help people achieve their dreams.
They help sellers get the best price possible for their property and often assist them with their next steps. It’s rewarding to work with home buyers and home sellers.
Many of whom are striving to achieve an important life goal.
The opportunities that are available to people through homeownership are endless. The amount of gratitude they express when they get the keys to their first property is touching.
Of course, closing escrow is a great experience, because everyone leaves happy and full of gratitude.
There's something to be said about control and ownership as an agent.
For those who see the potential in all opportunities, this is great fit. They can make their career exactly how they want it to be.
But being a real estate agent goes a little bit further than that. It becomes a lifestyle choice. Work and personal life will tend to meld together and allow you to align it however you want.
In other words, your career will proportionally grow with you – whatever investment you make in yourself pays dividends in your career.
You have the opportunity to lift up your family but also your community too. Whether it's direct monetary investment in your community, like sponsoring the local little league or finding the perfect home for people who settle down in, you can do it.
Not only that, but being real estate agent can grow into different fields within the industry.
You can use it as gateway to house flipping, real estate investment, starting your own brokerage and hiring locals.
It's one of the only careers that can form in whatever shape you need it to in order to achieve the life you've always wanted.
Most career paths require years of education. If you want to become a real estate agent, you don't need an extensive education.
You don't need a college degree to get started, and some states don't even require a high school diploma or GED. You just need to complete a pre-licensing requirement through an accredited real estate school.
Most states' educational requirement is doable within 3-months. When you complete it, you just have to pass the real estate licensing exam. After passing the exam, your license is issued to you – that's quick!
Like everything, there are also disadvantages to becoming a real estate agent. Don’t let these cons ruin your dream career. Instead, use these as the items you need to prepare for when you get started.
Here are the cons of a real estate career.
One of the biggest cons of this job is the amount of patience it requires.
It may take a new real estate agent months to find their first client or close their deal.
There is a lot of work that agents do before they ever see the profits, such as prospecting, advertising, and conducting open houses.
In fact, most real estate agents quit in their first year. But the reason why they quit is that they don’t have a plan.
Bonus tip: Read the article The First Year Real Estate Agent Survival Guide to get your blueprint for success in your first year.
Another tough part of becoming a real estate agent is dealing with rejection.
Agents get rejected a lot.
They are prospecting perfect strangers as well as their sphere of influence. Not everyone is going to need a real estate agent.
As long as real estate agents don’t allow rejections to stop them from pursuing new leads, they’ll be successful.
Bonus tip: Every time you get a “no,” you’re one step closer to getting the “yes.”
There are thousands of real estate licensed agents in California. In any given area, buyers and sellers will have several options for a real estate agent.
Agents work hard to differentiate themselves. One way to do this is to find a niche, a particular area, type of buyer, or type of property.
But, the best place to start is to tap into your sphere of influence. Agents should get the word out to their friends and family. Often their first deals will come from those in their sphere.
Bonus tip: Create a real estate niche to reduce your competition.
I'll be honest, splitting your commission check with your brokerage blows.
It's why some people will start their own brokerage and assume all legal responsibilities. But as a newbie, I wouldn't recommend doing that.
Some brokerages will take 40% of your commission check, while others will take 30% or 20%. It all depends on what you get out of it.
Usually, when a brokerage takes a portion of your commission, it's because they are offering you high quality services that others can afford. That's really helpful for new agents.
But, it can get old after a while.
As a new agent, I recommend you roll with the punches and pay the cut (so long as the brokerage resources are worth it.)
Some brokerages will even have a cap on their cuts. What I mean by this is, once you exceed a certain number, you can keep the the full cut of your commission. That rocks!
One downside to working with people: you deal with some who hard to work with.
Agents will interact with agents, clients, or third-party entities who are not their cup of tea. People have differing ideas on ways to do business that may not align with those they work with.
Agents need to learn how to negotiate, collaborate, and diffuse situations as they uphold their own professional standards.
Like every career, there are cost and fees to becoming a real estate agent. Comparatively, these are minimal.
Unlike other careers, this one is commission based. Most new agents won't see their first check until 6-months after they start. Sometimes even more.
You might not be able to make back the costs you spent on school, exam fees, board fees, desk fees, etc for a good portion of your first year. This is very intimidating for people – rightfully so!
There's good news, though. Once you start earning commissions, the income is life-changing.
Becoming a real estate agent has its share of pros and cons.
Don’t let the cons rain on your dreams. This career is for those who are dedicated, resilient, and committed to success.
There will be hard times for those who start a real estate career, but the reward and freedom are worth it.
If you are committed to this career and doing the best you can, then nothing will stop you from succeeding and achieving everything you want.
Don’t let the cons outweigh the pros.
The MLS stands for the Multiple Listing Service. It is an online database used by agents and was created to provide information on real estate properties. In essence, it provides agents with an inventory of properties.
Did you know the MLS is not limited to residential listings? It provides information on all types of properties such as income, businesses, land and rentals.
If you are an agent, this database is a crucial tool when it comes to servicing your clients. Let’s talk more about how to use the MLS, some basic features, and other services that the MLS provides to help you with your business.
Let’s start with how to use the MLS for buyers.
As we know, each buyer will be different. They will have specific features that they will be looking for in a property. The first step is finding out what your buyer wants.
Start by having a buyer consultation with your client. This will give you a better understanding of what your buyer is looking for. After you have collected the information, use the MLS to zero in on the listings available.
The MLS can search for properties based on a variety of factors. The most common search features are the city or zip code, type of home (Single Family or Condo), and price.
The more criteria you put, the more the MLS will narrow in on only the listings that fit that search.
So, let’s say you have a buyer that only wants to see 2 bedroom condos in West LA, for under 1 million, that is pet friendly, and has a fireplace. You can get that specific.
On the MLS you would input – Area: West LA – Price: Max 1 million – Bed: Max 2 – Interior Features: Fireplace – Pets: Yes
The MLS will do all the work for you and show you the properties currently available that fit the criteria. You can then set up appointments to preview the homes with your buyer.
Another great feature of the MLS is the Open Houses section.
Maybe your buyer doesn’t know exactly what they want yet. Perhaps they only know they want to live in a particular city. You can see all the properties that are holding an Open House in that area and take your buyer to preview those homes without an appointment.
As an agent, you can also use the Open House section to preview homes and better know the inventory.
If you have a buyer that is hands-on in the process, you can give your client access to the MLS as a guest. You will also be informed of the searches that your client makes.
This potentially leads to an offer made, accepted and gets your buyer in escrow!
Now let’s talk about the sellers.
When you are a listing agent, your main priority to your seller is to get their home sold. You want them to be confident in your ability to get their home advertised and sold quickly. What better way to get that done than to list their home on the MLS.
It all starts with the listing appointment. Part of your listing appointment will include a Comparable Market Analysis. A Comparable Market Analysis, or CMA helps determine the estimated price of a home. The MLS will be invaluable when creating the CMA.
It does this by pulling all the properties recently sold. These properties will have the same characteristics as the home you’re intending to list. This helps ensure you are pricing the home favorably with the market.
Once you have the listing, the next step is to enter it on the MLS for maximum exposure.
You will be inputting all the characteristics of your listing for everyone to access. Since the MLS is the primary database for all active listings, you want to make sure that your listing stands out.
You can do that by adding professional pictures and a video of a virtual walkthrough of the home. Your detailed description of the property and added features can also attract other agents to want to make sure their buyers preview your listing.
If you are holding an Open House, don’t forget to enter that information as well. That information also gets auto-populated to the Open House section for buyers to see.
The MLS does have a public search feature so make sure that your listing is complete. Listings with shorter descriptions and few pictures will not get as many inquiries.
Whether you are representing the buyer or seller, sometimes there is information that only the agent will need to see. That’s when you will refer to the “Agent Remarks.”
Agents will use this area for a variety of reasons. Most commonly, this will be used for showing instructions. Here are some other examples of what would be disclosed in the agent remarks section:
The remarks are designed to provide additional information only pertinent to the agent. Regarding the first example, death is considered a “material fact” so it must be disclosed. A “material fact” is considered any information that would impact a decision to purchase.
Not to say that a buyer wouldn’t want to know if a death occurred on the property!
It is more appropriate for an agent to convey that sensitive information to their client than to see it publicly where it can cause a bias.
From agent websites to database management, agents have many tools that help with their business. The MLS is an integral part of that overall picture.
In review, the MLS is a great resource when it comes to conducting business as a real estate agent. Benefits:
And we have only gone over the basics! The MLS is versatile and an invaluable tool. So next time you’re on the MLS, go exploring.
You’ll be happy you did.
The Buyer’s Inspection Advisory (BIA) is a disclosure that is included with the Residential Purchase Agreement (RPA) when you make an offer on a home.
Simply put, it is advising the buyer to have a professional inspect the property.
Disclosures are designed to inform and protect the parties entering into an agreement. In this case, the Buyer Inspection Advisory is for the buyer.
Let’s discuss why the BIA is important, what items are on the Advisory to inspect, and what to do when your client chooses NOT to perform an inspection.
Purchasing a home is one of the most important decisions that people will make in their life. It’s a large investment and buyers will want to make sure that the home is sound.
A buyer is given disclosures by the seller’s agent, but there is only so much that the seller can know.
This is why a home inspection is important.
Some buyers may be tempted to inspect the home themselves. But, they’re not usually qualified to fully inspect the property.
There can be underlying problems with electrical, plumbing, or the foundation that only a professional can identify. Buyers will want to know about these issues before the sale is final. This avoids dealing with any major issues with the home in the future.
Disclosing that the buyer should perform inspections using the BIA, ensures that the buyer has been fully informed and can limit further liability to you as a real estate agent.
If the home buyer purchases a home without being advised to have a home inspection and there are issues that arise later, they could sue the real estate agent for finding them a faulty home.
The Buyer’s Inspection Advisory is a one page document that outlines the importance of inspections. It also has a list of what to inspect:
As a real estate agent, it’s important for you to be aware of the items, why they should be inspected, and the professionals that you would refer to your client.
Let’s discuss a few of those items here as an example.
Typically, a home inspection will cover the general conditions of the home like the foundation, roof, plumbing, electrical, and air conditioning.
But, the list discloses areas beyond the general condition of the home. There are inspection areas that buyers should use a professional – like a termite inspector.
What about the square footage and boundaries of the home? If it’s important for your client to know, they should confirm this with an architect.
Also, property boundaries noted on online maps are not accurate. A licensed land surveyor or civil engineer can identify the physical boundaries of a property.
If the home is located on a hill or a slope, calling in a professional to test the soil stability is crucial. There are companies that test the soil to make sure the home is not susceptible to slippage or movement.
They can also identify and implement erosion control measures.
Because your client has been informed, they can decide what inspections they want to move forward with.
The Buyer’s Inspection Advisory is designed to disclose information to protect the buyer. But, it also protects you, the real estate agent. While your client does look at you as the professional on real estate, your role is clearly outlined in the Advisory:
2. BROKER OBLIGATIONS: Brokers do not have expertise in all areas and therefore cannot advise you on many items, such as those listed below. If Broker gives you referrals to professionals, Broker does not guarantee their performance.
This sets the expectation of what you are responsible for during inspections. Any recommendations you may make to your client about professionals are just that – recommendations.
Despite your best efforts, you might have a client who chooses NOT to do an inspection.
So, what do you do now?
Have your client sign a Buyer’s Inspection Waiver. This is a one page disclosure that informs the buyer on the importance of inspections and states that NOT performing one is against the broker’s recommendation. This will remove your liability if something bad happens to the property.
Also, the waiver has a section to confirm inspections made by the seller and disclosed to the buyer.
So, if your client is electing NOT to perform inspections, the Buyer’s Inspection Waiver is to document what reports they do receive. If your client chooses not to follow any improvement recommendations, the liability will fall on them and not on you.
The Buyer’s Inspection Advisory is another disclosure that informs and protects the buyer during the transaction process. When buyers are properly informed, they can make decisions to best protect their investment.
Although the Advisory is primarily designed to protect the buyer, now we see how the BIA limits the liability of the real estate agent as well.
So, become familiar with the items on the Advisory, why the items are important to inspect, and what professionals are most qualified to make those inspections.
When all else fails, if your client still refuses to have inspections done, remember to use the Buyer Inspection Waiver to limit your liability.
Mindset is everything when it comes to thriving in your real estate career.
As a new agent, adopting a mindset for success is essential to overcoming the tough days—whether it means making phone calls or knocking on neighborhood doors.
Developing the right mindset may not be easy, but it is crucial for making positive changes in your career.
Having the right mindset automatically sets you up for success.
Your thoughts and feelings have a direct impact on your productivity and confidence.
While passion and excitement are great assets for starting your new career, many agents fall into a negative mindset when faced with initial adversity or rejection.
Discouragement at the first sign of difficulty is common, but starting with the right frame of mind can help you avoid career obstacles.
Let’s discuss what to avoid and where to focus to cultivate a success-oriented mindset.
There are a few basic things to avoid that may seem obvious but are worth mentioning.
Negativity is a mindset that can develop without you realizing it. Negative thoughts and actions will lead to a negative business environment.
Another important tip—don’t surround yourself with negative people. Constant negativity only reinforces negative energy and hinders progress.
Remember why you got into real estate in the first place. You have a passion for it, and you invested time and energy to obtain your real estate license. There is no reason for self-doubt.
Self-doubt erodes your confidence, impacts your energy, and ultimately affects your ability to succeed.
Entering a new field naturally comes with some level of insecurity, but continually telling yourself “I don’t think I can do this” will ensure that you can’t. Instead of second-guessing yourself, focus on taking action and improving every day.
Successful people focus on the positive. Let’s talk about what you should prioritize during your first year as a real estate agent.
Confidence comes from within, and it starts with your thoughts and words. Focus on what you do well, and confidence will guide you through challenges. Surround yourself with confident people—their success can inspire you to grow.
Confidence is not only beneficial for you but also builds trust with your clients, making them believe in your capabilities as an agent.
Challenges are a daily occurrence in the real estate business, but letting obstacles cloud your mindset will only hinder success. Approach every challenge with a solution-based attitude.
Being optimistic and focusing on finding solutions will help you keep moving forward.
Continued success is centered around continued learning. The most successful real estate agents know that their learning journey never ends. Seek out opportunities to grow and expand your knowledge.
This proactive learning mindset will help you reach the next level in your career.
Maintaining the right mindset can be challenging, but seeking out positive resources and outlets can help.
Your environment, the people you surround yourself with, and even your own actions can either support or undermine your mindset.
For example, music can be a great resource for keeping you motivated and energized while you work. But be mindful—a slow ballad might not be ideal if you need an energy boost for a run.
Consider where you’re working. If you’re feeling secluded at home, try changing your environment. Working in your office with like-minded people can keep you engaged, focused, and encouraged.
Seek out networking groups and talk to people achieving high levels in real estate—their success can be both motivational and inspirational. Attending seminars can also be beneficial, but be cautious of those promoting a "get rich quick" mindset.
As you embark on your new real estate journey, remember that you already possess everything you need to be successful. Tap into your confidence and stay optimistic.
Be solution-based when confronted with adversity and continually strive to expand your knowledge. Surround yourself with people who operate at a high level to foster growth in yourself and your business.
Just as important, learn to recognize when you are getting in your own way. Be mindful of negativity, avoid self-doubt, and leave insecurities behind. You have the power to actively shut out counterproductive thoughts.
In the end, your mindset controls your actions, and your actions will determine your success.
Everyone is trying to get the best deal for their dollars.
Whether you’re a first-time homebuyer or a real estate investor, it’s tempting to make a lowball offer on a property.
The success of these offers depends on several factors.
Buyers who understand the elements at play in the real estate market have a better chance of having their lowball offers accepted.
Lowball offers are significantly lower than the asking price of a home.
Commonly an agent will recommend negotiating a price on a home that’s lower than the asking price. This is to get a better deal for their client.
But, a lowball offer is even lower than that.
Generally, one would assume that a seller wouldn’t ever consider making an offer that is significantly less than their listing price.
But, there are times when sellers are willing to take a lowball offer seriously.
A major factor that affects how a lowball offer is received is the market trend.
In markets where real estate deals are moving quickly and there’s high demand for property, such as a seller’s market, the sellers are less likely to accept a lowball offer.
There are too many potential buyers who would pay the full asking price (or more) for the property.
Lowball offers are typically unsuccessful in this kind of market environment.
Another aspect that will determine how likely a lowball offer is to succeed in the days on the market.
A seller whose property has been on the market for one week may be less willing to consider a low offer than a seller who has been on the market for 3 months.
Properties that are new to the market have a high chance of securing higher offers, especially if they are priced correctly.
Houses that have been on the market for a while maybe priced too high for their location or not be in the best shape. For buyers looking to purchase such properties, consider including a justification for the low price offer.
Another factor that can determine whether or not the seller will accept a low offer is the seller’s motivation to sell.
For instance, if a seller has purchased another home or is in the process of relocating, they may be in a rush to get the property off their hands. The money may not be as important to them, so they will consider any offer, low or not.
Conversely, if the seller does not have time constraints or is selling specifically for the money, they are more inclined to wait for the best offer. If the owner is motivated to sell, a lowball offer has a higher chance to succeed.
Buyers can always ask the listing agent why the seller is selling the property. This information will give buyers an idea of how likely the seller is to accept a lowball offer.
Buyers need to be strategic when making lowball offers on a property. If a buyer comes across their dream home and the asking price is fair, it’s a good idea to make an offer close to the asking price.
For perspective, there are a few different options a seller has when faced with an offer. The seller can either accept the offer, propose a counteroffer, or reject it outright.
If the offer is too low, especially on a well-priced listing, the buyer runs the risk of having the offer rejected and losing the opportunity to own that home.
If a buyer is still aiming for a lower price on the home but wants to minimize the risk of getting rejected, making an offer no more than 10% less than the listing price is a great place to start.
It shows the seller that the buyer is serious about the home, but believes there is some room for negotiation regarding the asking price.
A real estate investor has different goals than the average homebuyer, so they’ll take a different approach.
The goal for real estate investors is to make a profit from their properties. The general strategy is to buy low, improve the property, and then sell it for a higher asking price.
Again, lowball offers are likely to be rejected. To account for this, real estate investors will submit offers on several properties at a time to increase their odds of securing a property.
While this is a common strategy, investors do not always need to acquire properties through lowball offers.
Many buyers can make reasonable offers on a property and still make a great profit. For example, outdated homes or homes that are in states of disrepair are likely priced low.
Investors can buy those properties at a fair price, then do the necessary repairs and upgrades and add some more square footage to the property.
These are simple ways to create a higher property value and increase the profit margin, especially when the property is in a desirable location.
The success of lowball offers hinges on a few factors.
First, the availability of homes on the market and demand will dictate how likely sellers are to accept a lowball offer.
Markets with high demand (seller’s markets) may not be the optimal condition for lowball offers.
Conversely, sellers who have been on the market for longer periods of time are often likely to consider low offers on the property.
Those who have the motivation to sell quickly may also entertain lowball offers.
Investors have more success when they make offers on several properties at once to increase the likelihood of having an offer accepted.
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