Wait a minute, did you just conceive the idea of becoming a real estate agent? What a beautiful thought it is.
And here’s why,
Every month, tens of thousands of people Google “how to become a real estate agent,” as they consider joining the nation’s estimated 2 million active real estate licensees. This is just for the U.S alone except for the rest of the world.
With this crazy data, you know there has never been a better time other than now as the number of people keeps increasing which shows the number of people wanting better housing.
Moreso, real estate has become a means of livelihood for millions of people either as a business or investing. The real estate business is ever involved and the opportunities are limitless. All said and done, our core of this article would be how to become a real estate agent to milk out these opportunities as opposed to what a real estate investment or business is. But before discussing the nitty-gritty of the subject matter, let’s examine what real estate is, and the advantages as well as the disadvantages of investing in real estate.
What Is Real Estate Investment?
According to Wikipedia, real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this an item of real property, buildings or housing in general.
On the other hand…
Real estate investing involves the purchase, management and sale or rental of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a subspecialty of real estate investing called real estate development. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor
Definition: Real estate investing refers to the purchase of property as an investment to generate income rather than using it as a primary residence. In simple terms, it can be understood as any land, building, infrastructure and other tangible property which is usually immovable but transferable.
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Advantages Of Investing In Real Estate
As a business when playing the long-term game, Investment in real estate can prove to be beneficial. If done wisely, it may generate lucrative returns.
The advantage of investing money in real estate includes the following.
Hedge Against Inflation:
Unlike other assets, real estate is not adversely affected by inflation. Instead, its value and income increase with the rising economy.
Rent Pays Off For Mortgage:
Residential and commercial properties are the only assets which have the capability of generating income through rentals to pay off the interest on their mortgage.
It can be seen as the most significant source of generating passive income. The investors can rent out their property to ensure regular and steady cash inflow.
Real estate investors relish tax exemptions on the rental income up to a specific limit. Even the tax rates for such investments when made for the long term, are quite low.
Self Decision Making:
A real estate investor is free to make his or her own decision, similar to running any other business entity. In short, the investor is his or her boss.
As we know, putting money in real estate is a long term investment. The investor has the possession of a physical asset, hence providing financial security to the person.
Real estate investment is the purchase of property which encounters capital appreciation in the long run.
Disadvantages Of Investing In Real Estate
Investing in real estate is a profitable business and a great choice to make, it has some disadvantages which are advisable for one to consider as well as the risks involved before embarking on it. These disadvantages are as follows:
Huge Transaction Cost:
Buying and selling properties is a costly business affair. The transaction cost, including registry charges, legal expenses, diversion, etc which takes place in the process is so high that the cost of investment increases for the buyer.
High Maintenance And Management:
This is a major drawback and should be considered giving thought and time to how to go about it. Real estate investment is buying a physical asset which involves the expenditure on its maintenance. The investor also needs to manage the source of income so generated.
Creates Financial And Legal Liability:
As an investor, you may become overburdened by the financial liability and possibly lead to acquiring debts if he or she buys a property on loan. Even the transfer of ownership at the time of property purchase creates a legal obligation on the investor.
Less Liquid In Nature
Unlike other investments like stocks, shares or agriculture, real estate cannot be easily bought and sold regularly. Therefore, it may not prove to be a suitable investment option for investors seeking short term profits as it rewards long term investors. The business model requires one to be dealing with the Market and be aware of the trend of the market.
How To Become A Real Estate Agent.
If you want to become a real estate agent, then you’re looking at an upfront investment of money and time, both of which vary although depending on where you get your license. Be reminded that the specific requirements differ by state. Therefore, here’s a general rundown of steps to becoming a real estate agent.
1. Research Your State’s Requirements Estimated Cost
Just like any business venture, it will require you to learn first but you earn.
It’s a must you meet your state’s unique licensing requirements. A good place to start your research is your state’s real estate regulatory office website, which you can find through a simple Google search for “[your state] real estate regulatory office” or by visiting the Association of Real Estate License Law Officials (ARELLO)’s regulatory agency directory.
Each state typically has specific requirements for:
- Education requirements (such as a high school diploma or GED)
- Pre Licensing courses and post-licensing requirements
- Exams and exam eligibility
- Application process and fees
- Background checks and fingerprinting
- Continuing education
- How to achieve the next level of licensing
- Reporting criminal history
2. Take A Pre-licensing Course
First of all, is to know what you’re venturing into which involves researching. The next step after that and when you’ve made a decision is to take a pre-licensing course from an accredited real estate licensing school before you sit for the real estate license exam. Bear in mind that the required number of hours varies by state.
Some states offer several ways to fulfil the pre-licensing course requirements, including online classes, brick-and-mortar real estate schools, and classes at community colleges.
3. Take The Licensing Exam
Your instructor should tell you about how to schedule, register, and pay for the licensing exam. Otherwise, visit your state’s real estate commission website. Exams are computerized and consist of two parts: a national portion on general real estate principles and practices, and a state-specific section that covers your state’s real estate laws. The exams are in multiple-choice format, and the number of questions and time allotted for the exam vary by state.
4. Activate Your Real Estate Agent License
This is the next stage after you might have completed and passed your exam. Next, will be to submit an application and any required documents and fees to your state’s real estate regulatory organization.
When your application is approved, you’ll receive an email from the state issuing you a license certificate which is going to make your name searchable under the licensees’ section of the state’s website. Keep in mind that you’re not allowed to work as a real estate agent yet until your license is issued by the state’s real estate authority, so you’ll have to wait until you have that license in your hand.
5. Consider Becoming A Realtor
There’s a difference between the terms real estate agent and realtor although most people use them interchangeably. Although both are licensed to help buyers and sellers throughout the real estate transaction process.
Realtors are members of the National Association of Realtors (NAR) and subscribe to its strict Code of Ethics.1
Although joining is optional, it gives you credibility as a real estate agent. As a Realtor, you enjoy certain benefits, including business tools, real estate market data, research, statistics and educational opportunities, etc.
6. Join A Real Estate Brokerage
You cannot operate alone as a real estate agent, you’ll have to work under the umbrella of a supervising broker who is licensed by the state to oversee real estate transactions and make sure you (and the other real estate agents) follow the required legal and ethical standards.
The research above presents you with the basic information you need to know about real estate and how to be a real estate agent. The steps are what to put into consideration but to get a full glimpse or in-depth learning of any field, it is always advisable to do your due diligence.