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Career Descriptions and Job Outlook
Real Estate Agents, Brokers, and Appraisers
Significant Points
- Real estate sales positions should continue to be relatively easy to obtain due to the thousands of people who leave this
occupation each year.
- Real estate agents and brokers must be licensed in every State and in the District of Columbia.
Nature of the Work
The purchase or sale of a home or investment property is not only one of the most important financial events in peoples'
lives, but one of the most complex transactions as well. As a result, people generally seek the help of real estate agents,
brokers, and appraisers when trying to buy, sell, or establish a price for real estate.
Real estate agents and brokers have a thorough knowledge of the real estate market in their community. They know which
neighborhoods will best fit their clients' needs and budgets. They are familiar with local zoning and tax laws, and know where
to obtain financing. Agents and brokers also act as an intermediary in price negotiations between buyers and sellers. Real estate
agents are generally independent sales workers who provide their services to a licensed broker on a contract basis. In return, the
broker pays the agent a portion of the commission earned from property sold through the firm, by the agent.
Brokers are independent business people who, for a fee, sell real estate owned by others and rent and manage properties.
In closing sales, brokers often provide buyers with information on loans to finance their purchase. They also arrange for title
searches and for meetings between buyers and sellers when details of the transactions are agreed upon and the new owners take
possession. A broker's knowledge, resourcefulness, and creativity in arranging financing that is most favorable to the
prospective buyer often mean the difference between success and failure in closing a sale. In some cases, agents assume the
responsibilities in closing sales, but in many areas, this is done by lawyers or lenders. Brokers also manage their own offices,
advertise properties, and handle other business matters. Some combine other types of work, such as selling insurance or
practicing law, with their real estate business.
Before showing properties to potential buyers, the broker or agent has an initial meeting with them to get a feeling for the
type of home they would like and can afford. Often, an agent or broker uses a computer to generate lists of properties for sale,
their location and description, and to identify available sources of financing. Traditionally, they then take the clients to see
a number of homes that are likely to meet their needs and income. Increasingly, however, agents and brokers are able to use
computers in their office to give clients a "virtual" tour of properties in which they are interested, allowing them
to look at various types of images of the property, including interior and exterior images and floor plans.
Because buying real estate is such an important decision of a person's life, agents may have to meet several times with
prospective buyers to discuss available properties. In answering questions, agents emphasize selling points likely to be most
important to the buyer. To a young family looking at a house, for example, they may point out the convenient floor plan and
the fact that quality schools and shopping centers are close by. To a potential investor seeking the tax advantages of owning
a rental property, they may point out the proximity to the city and the ease of finding a renter. If bargaining over price
becomes necessary, agents must carefully follow their client's instructions and may have to present counteroffers in order
to get the best possible price.
Once the contract has been signed by both parties, the real estate broker or agent must see to it that all special
terms of the contract are met before the closing date. For example, if the seller has agreed to a home inspection or a
termite and radon inspection, the agent must make sure this is done. Also, if the seller has agreed to any repairs, the
broker or agent must see they are made. Increasingly, brokers and agents handle environmental problems by making sure
the property they are selling meets environmental regulations. For example, they may be responsible for dealing with
problems such as lead paint on the walls. While many details are handled by loan officers, attorneys, or other persons,
the agent must check to make sure that they also are completed.
There is more to an agent's and broker's job, however, than just making sales. Because they must have properties to
sell, they may spend a significant amount of time obtaining "listings" (owner agreements to place properties for
sale with the firm). When listing property for sale, agents and brokers compare the listed property with similar properties
that have been sold recently to determine its competitive market price.
Most real estate agents and brokers sell residential property. A few, usually in large firms or small specialized firms,
sell commercial, industrial, agricultural, or other types of real estate. Each specialty requires knowledge of that particular
type of property and clientele. Selling or leasing business property, for example, requires an understanding of leasing
practices, business trends, and location needs. Agents who sell or lease industrial properties must know about transportation,
utilities, and labor supply. To sell residential properties, the agent or broker must know the location of schools, religious
institutions, shopping facilities, and public transportation, and be familiar with tax rates and insurance coverage.
Because real estate transactions involve substantial financial commitments, parties to the transactions may seek the advice
of real estate appraisers, who are objective experts and do not have a vested interest in the property. An appraisal is an
unbiased estimate of the quality, value, and best use of a specific property. Appraisals may be used by prospective sellers
to set a competitive price, by a lending institution to estimate the market value of a property as a condition for a mortgage
loan, or by local governments to determine the assessed value of a property for tax purposes. Many real estate appraisers
are independent fee appraisers or work for real estate appraisal firms, while others are employees of banks, savings and
loan associations, mortgage companies, government agencies, or multiservice real estate companies.
During a property inspection, real estate appraisers investigate the quality of the construction, the overall condition
of the property, and its functional design. They gather information on properties by taking measurements, interviewing persons
familiar with the properties' history, and searching public records of sales, leases, assessments, and other transactions.
Appraisers compare the subject property with similar properties for which recent sale prices or rental data are available,
to arrive at an estimate of value. They may also estimate the current cost of reproducing any structures on the properties
and how much the value of existing structures may have depreciated over time. Appraisers must consider the influence of the
location of the properties, potential income, current market conditions, and real estate trends or impending changes that
could influence the present and future value of the property. Depending on the purpose of the appraisal, they may estimate
the market value of the property, the insurable value, the investment value, or other kinds of value. Appraisers must
prepare formal written reports of their findings that meet the standards of The Appraisal Foundation.
Real estate appraisers often specialize in certain types of properties. Most appraise only homes, but others specialize
in appraising apartment or office buildings, shopping centers, or a variety of other types of commercial, industrial, or
agricultural properties. The amount of time necessary to do an appraisal varies by the type of property—for a residential
property it may take a week, whereas for a commercial property, several months may be needed to complete the appraisal.
Working Conditions
Because of advances in telecommunications and the ability to retrieve data on properties over the Internet, a growing
number of real estate agents, brokers, and appraisers work out of their homes instead of offices. Even with this convenience,
much of their time is spent away from their desk—showing properties to customers, analyzing properties for sale, meeting
with prospective clients, researching the state of the market, inspecting properties for appraisal, and performing a wide
range of other duties.
Agents, brokers, and appraisers often work more than a standard 40-hour week; nearly 1 of every 4 worked 50 hours or
more a week in 1996. They often work evenings and weekends to suit the needs of their clients.
Employment
Real estate agents, brokers, and appraisers held about 408,000 jobs in 1996. Many worked part time, combining their
real estate activities with other careers. Most real estate agents and brokers were self-employed, working on a commission basis.
Most real estate and appraisal firms are relatively small; indeed, some are a one-person business. Some large
real estate firms have several hundred real estate agents operating out of many branch offices. Many brokers have
franchise agreements with national or regional real estate organizations. Under this type of arrangement, the broker
pays a fee in exchange for the privilege of using the more widely known name of the parent organization. Although
franchised brokers often receive help in training salespeople and in running their offices, they bear the ultimate
responsibility for the success or failure of the firm.
Persons who are real estate agents, brokers, and appraisers are older, on average, than those in most other occupations.
Historically, many homemakers and retired persons were attracted to real estate sales by the flexible and part-time work
schedules characteristic of this field and may enter, leave, and later reenter the occupation, depending on the strength
of the real estate market, family responsibilities, or other personal circumstances. Recently, however, the high startup
costs associated with becoming an agent have made some look elsewhere when looking for part-time work. In addition to those
entering or reentering the labor force, some transfer into real estate jobs from a wide range of occupations, including
clerical and other sales jobs.
Real estate is sold and appraised in all areas, but employment is concentrated in large urban areas and in smaller,
but rapidly growing communities.
Training, Other Qualifications, and Advancement
In every State and in the District of Columbia, real estate agents and brokers must be licensed. All States require
prospective agents to be a high school graduate, be at least 18 years old, and pass a written test. The examination—more
comprehensive for brokers than for agents—includes questions on basic real estate transactions and laws affecting the sale
of property. Most States require candidates for the general sales license to complete between 30 and 90 hours of classroom
instruction, whereas those seeking the broker's license are required to complete between 60 and 90 hours of formal training
in addition to a specified amount of experience in selling real estate (generally 1 to 3 years). Some States waive the
experience requirements for the broker's license for applicants who have a bachelor's degree in real estate. State licenses
generally must be renewed every 1 or 2 years, usually without reexamination. Many States, however, require continuing
education for license renewal. Prospective agents and brokers should contact the real estate licensing commission of the
State(s) in which they wish to work to verify exact licensing requirements.
Federal law requires appraisers of most types of real estate (all property being financed by a Federally regulated
lender) to be State licensed or certified. In some States, appraisers who are not involved with Federally regulated
institutions do not have to be certified. State certification requirements for appraisers must meet Federal standards,
but States are free to set more stringent requirements. Formal courses, appraisal experience, and a satisfactory score
on an examination are needed to be certified. Requirements for licensure vary by State, but are somewhat less stringent
than for certification. In some States, college education may be substituted for a portion of the experience requirement
for licensure.
Individuals enter real estate appraisal from a variety of backgrounds. Traditionally, persons enter from real estate
sales, management, and finance positions. However, as real estate transactions have become more complex, involving
complicated legal requirements, many firms have turned to college graduates to fill positions. A large number of agents,
brokers, and appraisers have some college training, and the number of college graduates selling real estate has risen
substantially in recent years. College courses in real estate, finance and business administration, statistics, computer
science, economics, and English are helpful. Because many workers start their own company, business courses such as
marketing and accounting may be as important as those in real estate or finance.
However, personality traits are equally as important as academic background. Brokers look for applicants who possess
a pleasant personality, honesty, and a neat appearance. Maturity, tact, and enthusiasm for the job are required in order
to motivate prospective customers in this highly competitive field. Agents should also be well organized and detail
oriented, as well as have a good memory for names, faces, and business details, such as taxes, zoning codes, and local
land-use regulations. Appraisers should have good judgment, writing, and math skills.
Persons interested in beginning jobs as real estate agents often apply in their own communities, where their knowledge
of local neighborhoods is an advantage. A beginner usually learns the practical aspects of the job, including the use of
computers to locate or list available properties or identify sources of financing, under the direction of an experienced agent.
Many firms offer formal training programs for both beginners and experienced agents. Larger firms generally offer more
extensive programs than smaller firms. Over 1,000 universities, colleges, and junior colleges offer courses in real estate.
At some, a student can earn an associate or bachelor's degree with a major in real estate; several offer advanced degrees.
Many local real estate associations that are members of the National Association of Realtors sponsor courses covering the
fundamentals and legal aspects of the field. Advanced courses in appraisal, mortgage financing, property development and management,
and other subjects are also available through various affiliates of the National Association of Realtors.
Many real estate appraisers voluntarily earn professional designations, representing formal recognition of their
professional competence and achievements. A number of appraisal organizations have programs that, through a combination
of experience, professional education, and examinations, lead to the award of such designations. These professional
designations are desirable because requirements for them are more stringent than State standards.
Advancement opportunities for agents often take the form of higher commission rates and more and bigger sales,
both of which increase earnings. This occurs as agents gain knowledge and expertise and become more efficient in
closing a greater number of transactions. Experienced agents can advance in many large firms to sales or general
manager. Persons who have received their broker's license may open their own offices. Others with experience and
training in estimating property value may become real estate appraisers, and people familiar with operating and
maintaining rental properties may become property managers. (See the statement on property managers elsewhere
in the Handbook). Agents, brokers, and appraisers who gain general experience in real estate and a thorough
knowledge of business conditions and property values in their localities, may enter mortgage financing or real
estate investment counseling.
Job Outlook
Employment of real estate agents, brokers, and appraisers is expected to grow more slowly than the average
for all occupations through the year 2006. However, a large number of job openings will arise due to replacement needs.
Each year, thousands of jobs will become available as workers transfer to other occupations or leave the labor force.
Because turnover is high, real estate sales positions should continue to be relatively easy to obtain. Not everyone
is successful in this highly competitive field; many beginners become discouraged by their inability to get listings
and to close a sufficient number of sales. Lacking financial sustenance and motivation, they subsequently leave the
occupation. Well-trained, ambitious people who enjoy selling should have the best chance for success.
Increasing use of electronic information technology may increase the productivity of agents, brokers, and appraisers
as the use of computers, faxes, modems, and databases becomes more commonplace. Some real estate companies are using
computer generated images to show houses to customers without even leaving the office. These devices enable one agent
to serve a greater number of customers. Use of this technology may eliminate some of the more marginal agents such as
those practicing real estate part time or between jobs. These workers will not be able to compete as easily with full-time
agents who have invested in this technology.
Another factor expected to impact the need for agents and brokers is the ability for prospective customers to search for
properties that meet their criteria themselves by accessing certain real estate sites on the Internet. While they won't be
able to conduct the entire real estate transaction on-line, it does allow the prospective homebuyer the convenience of looking
at properties, as well as the ability to find out about issues such as financing, from their own home.
Computer technology has also impacted the need for appraisers. For example, the length of time needed to do a
residential appraisal has declined as access to electronic databases has increased, streamlining their work process.
Furthermore, specialized computer software programs have allowed lending institutions to derive property values without
as much input from appraisers.
Employment growth in this field will stem primarily from increased demand for home purchases and rental units. Shifts
in the age distribution of the population over the next decade will result in a growing number of persons in the prime
working ages (25-54 years old) with careers and family responsibilities. This is the most geographically mobile group in
our society, and the one that traditionally makes most of the home purchases. As their incomes rise, they also may be
expected to invest in additional real estate.
Employment of real estate agents, brokers, and appraisers is sensitive to swings in the economy. During periods of declining
economic activity and tight credit, the volume of sales and the resulting demand for sales workers may decline. During
these periods, the earnings of agents, brokers, and appraisers decline, and many work fewer hours or leave the occupation.
Earnings
Commissions on sales are the main source of earnings of real estate agents and brokers—few receive a salary. The rate of
commission varies according to the type of property and its value; the percentage paid on the sale of farm and commercial
properties or unimproved land usually is higher than that paid for selling a home. Appraisers typically receive a flat fee.
Commissions may be divided among several agents and brokers. The broker and the agent in the firm who obtained the listing
generally share their part of the commission when the property is sold; the broker and the agent in the firm who made the sale
also generally share their part of the commission. Although an agent's share varies greatly from one firm to another, often
it is about half of the total amount received by the firm. The agent who both lists and sells the property, maximizes his
or her commission.
Real estate agents, brokers, and appraisers who usually worked full time had median annual earnings of $31,500 in 1996.
The middle 50 percent earned between $20,500 and $49,700. The top 10 percent earned more than $75,400 and the lowest 10
percent earned less than $12,600.
Income usually increases as an agent gains experience, but individual ability, economic conditions, and the type and
location of the property also affect earnings. Sales workers who are active in community organizations and local real estate
associations can broaden their contacts and increase their earnings. A beginner's earnings are often irregular because a few
weeks or even months may go by without a sale. Although some brokers allow an agent a drawing account against future
earnings, this practice is not usual with new employees. The beginner, therefore, should have enough money to live on
for about 6 months or until commissions increase.
Related Occupations
Selling expensive items such as homes requires maturity, tact, and a sense of responsibility. Other sales workers who
find these character traits important in their work include motor vehicle sales workers, securities and financial
services sales workers, insurance agents and brokers, and manufacturers' representatives. Other appraisers specialize
in performing many types of appraisals besides real estate, including aircraft, antiques and fine arts, and business
valuations.
Sources of Additional Information
Details on licensing requirements for real estate agents, brokers, and appraisers are available from most local real
estate and appraiser organizations or from the State real estate commission or board.
For more information about opportunities in real estate, contact:
National Association of Realtors, Realtor Information Center, 430 North Michigan Ave., Chicago, IL 60611.
Information on careers, and licensing and certification requirements, in real estate appraising is available from:
The Appraisal Foundation, 1029 Vermont Avenue NW, Suite 900, Washington, DC 20005-3517.
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