Many real estate property purchases and sales in California involve real estate agents who help facilitate the purchases and sales of real properties and are licensed by the California Department of Real Estate.

 

Agents are broken down into two categories: brokers and salespersons.  Most new real estate agents become a real estate salesperson and are required to place their real estate license under a real estate broker.  Real estate brokers oversee and are liable for all of the salespersons transactions.  Many decide to remain as salespersons during their entire real estate career; others may down the road decide to obtain their real estate broker’s license in order to become more independent and possibly start their own real estate brokerage company and hire real estate salespersons under them. 

 

A career in real estate can be both challenging and financially rewarding.  If a person is willing to devote the time and effort necessary to learn the real estate business, the sky is the limit.  Careers in real estate include: 

 

Real Estate Sales of:

• Existing Single-Family Homes

• New Single-Family Homes

• Income Properties (Residential and Leased Investments)

• Leased Investments (Leasing Only)

• Land

• Business Opportunities

Loan Brokering

Property Management of:

• Single-Family Homes

• Income Properties (Residential and Leased Investments)

 

Existing Single-Family Home Sales

Many people who are new to real estate start their career in existing single-family home sales.  Everyone you know is a potential prospect.  On average 25% of all the people you know will be selling and/or buying a home in the next year. Also, all the friends of your immediate sphere of influence will be buying and selling homes in the near future. 

 

The sale of existing single-family home is a good starting point because the product is the easiest type to master.  Valuing single-family homes in a subdivision is relatively simple compared to other property types.  Most new agents can readily start selling single-family homes with minimal product specific training.  Of course, we use home inspectors and pest inspectors to give us an impartial third-party viewpoint of the home.

 

There are many real estate brokerage companies looking to recruit new agents.  The new agent can either pick a smaller company that offers one-on-one training or a larger company that has a structured training program.  Both types of training programs have been known to work well for new agents. 

 

The sale of existing single-family homes allows an agent a great amount of freedom and flexibility with their time.  Time management becomes a critical element in a new agent’s success.  What you do with your time will dictate how effective you are and impact you income. 

 

Prospecting for new clients will take up much of your time as a new agent.  New clients may come from your sphere of influence/referral base, neighborhood, or other target markets.

 

If you like being “out and about” and like the ability to set your own schedule, your income is unlimited with this type of career choice.

 

One area of concern however, is financial reserves.  Most new agents who start on this career path have two obstacles to overcome:  starting a new business and learning the real estate business at the same time.  Even though many agents start out selling properties during their first six months in the business, many do not close any transactions during this transition time.  You may be transitioning from a corporate position, a sales job, or retiring (your first) and need some time to set up your business, establish yourself, and embark on your new career.  Some brokers recommend that you have a minimum of six months financial reserves in the bank prior to going into this career field.

 

Incomes are a direct correlation with the amount of time and effort made by the sales agent.  The sky is the limit.  It is up to you.

 

Lastly, a real estate salesperson or broker's license is required prior to entering this career field.        

 

New Single-Family Homes

In areas throughout California where there is land available for development, new home sales may be a career option.  Sales licensees who go to work for a new home builder receive several perks. 

 

Great work environment in the model homes.  Air conditioned models with all the amenities of a working office.  Comfortable office furniture. 

 

Great hours which are usually 10 or 11am to 5 or 6pm daily.  You will be required to work most weekends because that is when most of the buyers are available to see the models.   You will probably have two days per week off and they may not be together when you start.

 

New home salespeople also need to have a retail mentality.  In other words, they need to be able to stay in one place all day waiting for prospects to come to them.  A person who needs to be “out and about” all the time will probably not do well in new home sales.  He or she will feel “cooped up” and not enjoy the work environment.

 

Most new home salespeople start as a relief sales agent for the experienced lead sales agent.  Since you will be new, the lead sales agent will train you and you will many times receive a salary in the beginning of your career.  As you become more experienced, the builder will many times move you to an equal level with the lead sales agent and place you on a commission basis. In time, you will become a lead sales agent in your own subdivision.  This allows you to make more money and average commission income can be into six figures in some subdivisions for top lead sales agents. 

 

If gaining access to a new home sales position has been difficult, try going to work for a temporary agency that specializes in new home sales agents.  You will still need a real estate salesperson’s license, however, this may be a great way to get your feet wet in this desirable career field.

 

This career field does not have the pressure of continually prospecting for new clients like existing home sales agents.  However, the financial rewards may be correspondingly less also.

 

Lastly, a real estate salesperson or broker's license is required for new home salespeople and temporary salespeople.

 

Income Properties

The sale of income properties can be lucrative, however, it may be a place to go after you have some experience with single-family homes.  You can sell:  (1) Residential income properties (duplex, four-plex, large apartment buildings, etc.) and  (2) Leased Investments (shopping centers, office buildings, industrial properties, etc.)

 

These product types are difficult to master (compared to single-family homes), the owners are much more sophisticated than average home buyers or sellers, and the properties take a much longer marketing time to sell.  They also fall out of escrow more often than single-family homes.

 

The good news is that the commissions are quite substantial. 

 

Transactions are usually much more difficult than single-family homes and the resulting stress can be incredible.  However, the rewards can be huge.

 

Prospecting is usually via telephone.  Your sphere of influence probably will not be worth much with this market.  You need to specialize with one product type (apartments, office buildings, etc.) and know every owner of this property type in your market area.  When you list a property, you merely do a mass mailer of the marketing package to all your “friends” who own this same property type, follow up with a telephone call, and wait for an offer.

 

This market arena has a large number of exchange buyers who have sold another property and need to replace it during a specified period of time.  These buyers have to make a deal and are a large source of transactions for commercial investment brokers.

 

Lastly, the sale of income properties requires a real estate salesperson or broker's license prior to entering this career field.

 

Commercial Leasing

Commercial leasing is a great way to enter the leased investment field.  Leasing  is much a easier for a new agent to master and leads to investment transactions.  A new agent will contact the same property owners; however, he will look to lease their vacant space, instead of sell them a property.  This is an easier sale and easier contact than making an investment contact.  Property owners always need help with leasing and this is a lower pressure way to meet a property owner.

 

Leasing commissions are usually a percentage of the total lease amount.  The more $/square foot and longer the lease length, the more commission amount paid to the leasing agent. Leasing commissions may be a straight percentage (example 5%) of the total lease amount or calculated on a sliding scale.

 

Lastly, commercial leasing requires a real estate salesperson or broker's license prior to entering this career field.

 

Sale of Land

The sale of vacant land to developers is a lucrative career field, but can also be a very difficult product type for a new agent to start their real estate career.  Landowners want to sell their land for the highest possible price.  Land developers want to purchase for as low a price as possible.  The real estate agent (you) are right in the middle.

 

A sales agent selling vacant land will generally sell to a land developer.  These people are not builders.  They specialize in taking (for example) agriculturally zoned land and converting it to the highest and best use (office buildings) for the property.  This usually takes 1-2 years to accomplish and you are not paid your commission until close of escrow at that time.

 

You will be involved in land options.  The land developer will give the landowner a significant amount of money as consideration for the option to purchase the parcel for a specified price, and up to a designated time in the future.  If the land developer cannot obtain the zoning he requires, he merely walks away from the deal and loses his option money. . and you do not earn your commission. 

 

You will be paid when the land developer exercises his option and closes escrow on the property.  This may be one or more years from the time a purchase agreement and option is signed by the land developer and landowner. 

 

These are usually large transaction, take a long time to complete, and have a high fall out rate.  Make sure you have a large amount of financial reserves before entering into this field.

 

Lastly, a real estate salesperson or broker's license is required prior to entering this career field.

 

Business Opportunities

Business opportunities are a good place to start in the real estate business.  Prospecting is similar to investment properties, except you are contacting business owners.  They are much easier to find than investors because you know where to find them—at their business location. 

Direct mail, followed up by a telephone call, and then a face-to-face visit is a proven prospecting technique.  Time management is critical for success in this business.

 

A good business broker with a training program is a great place to start your career selling business opportunities.  Valuing a business can be difficult—even if you have a Harvard MBA—which is why most new business brokers seek the assistance of an experienced business broker who knows the business market.  A little accounting background will be helpful also.

 

Income is usually a percentage of the business sale price.  Commissions are generally a higher percentage than the sale of real estate because the prices of the business are lower and the amount of work is more than selling a single-family home.  Experienced business brokers can make a six-figure income selling businesses.

 

Lastly, a real estate salesperson or broker's license is required prior to entering this career field.

 

Loan Brokering

A loan broker originates loans and then sells the loans to mortgage bankers, banks, and other financial intermediaries that participate on the secondary mortgage market.  In other words, you will prospect and find potential borrowers, originate a loan with them, sell the originated loan to a wholesale lender, and receive a fee for your services.

 

This is an excellent place for a new agent to enter the real estate business.  Especially originating loans for single-family homes.  Both purchases and refinances are a lucrative career option.

 

As a loan officer (loan agent) you will find two markets:  purchases and refinances.  The marketing to these target markets is totally different from each other.

 

The purchase market is driven by real estate sales agents.  These agents refer lenders to their clients and are a huge referral base for lenders.  Real estate sales agents expect performance from you or they don’t get paid (and neither do you). 

 

The refinance market is driven by interest rates.  Prospective borrowers can be found with newspaper advertising, referrals from happy past clients, and the internet.

 

You will be paid a commission on the loans you close.  The good news is that you have a conduit to the money and borrowers need to it complete the purchase.

 

Six figure incomes are very common in this field over the last few years.  Again, the sky is the limit on income.

 

Another area within the lending career field is wholesale lending.  Mortgage bankers and larger mortgage brokers many times employ loan agents to procure loans from retail mortgage lenders.  You will call on loan brokers instead of borrowers.  Compensation is usually 100% commission and can be very lucrative.

 

Lastly, a real estate salesperson or broker's license is required prior to entering both wholesale or retail lending career fields.

 

Property Management

The management of real estate properties is another good place to enter the real estate business.  You can either manage a portfolio of single-family homes, apartments, or leased investments.  You will usually be paid a salary and bonus based upon occupancy rates and cost-cutting ability. 

 

You will be responsible for the lease up and tenant management of the properties under your responsibility.  With all types of residential properties you will be constantly placing advertisements in the local newspaper’s “For Rent” section looking for prospective tenants.  You will do walk-thru inspections, handle tenant maintenance calls, and be the point of contact for the tenant.  Property owners usually pay 7%-9% of the gross collected rents (single-family homes) to your broker.  Large apartment owners can pay as low as 3% of the gross collected rents to your broker as property management fees.  Your broker then pays you from these fees, pays his office expenses, and if there is any money left over—makes a profit.

 

Management of leased investments is similar to residential property management, except you are dealing with commercial tenants and they are usually on long-term leases. Their needs are different than residential tenants and they are usually more sophisticated negotiators.  Property managers are usually paid a salary and bonus. 

 

Please be advised that the information contained in this pamphlet is for informational purposes only and should not be your sole source of information prior to making a career choice.  The reader should consult with professionals in their chosen career field prior to embarking on a career path.