Like many of my colleagues, real estate wasn’t my first career. I had been working in an office for over a decade, spending all day sitting in a cubicle and staring at a computer screen. Don’t get me wrong—I’ve got nothing against working a 9-5 job if it makes you happy, but that just wasn’t for me. I started looking for a new career that would get me out of the office, meeting new people, and learning new skills, but that didn’t require a college degree or years of experience to get started. I reached out to some trusted friends for career advice, and heard the same answer over and over again: “Get into real estate!”
Though the idea seemed promising, I was a little hesitant because I knew I needed a license to become a real estate agent or broker. There are classes to take and exams to pass, and the requirements vary depending on what state you’re in. I didn’t even know if I was going to like working in real estate, so I wasn’t sure if all that hassle and expense was worth it. Luckily, I knew a successful agent and investor who I could turn to for real estate career advice. I asked whether I needed to get a broker license or any other kind of formal licensing to start a successful real estate career, and now I’m passing his real estate career advice on to you.
What’s the Difference Between a Real Estate Agent, Real Estate Broker, and Real Estate Investor?
As a layman, I used the terms real estate agent, broker, and investor somewhat interchangeably. I assumed they were similar careers that required roughly the same amount of training and licensing, but that’s not the case.
- A real estate agent is licensed to help people buy, sell, and rent properties. They bring buyers and sellers together and try to arrange a deal, acting on behalf of their client in negotiations. Real estate agents must take a class and pass a licensing exam in their state, and generally need to continue their education to maintain their license. Real estate agents must work under a sponsoring broker or brokerage firm. They earn a commission-based salary, though their sponsoring broker or the firm takes a share of every sale.
- A real estate broker is an agent who has earned additional licensing from their state so they can start their own brokerage and/or hire other real estate agents to work under them. Real estate brokers earn a share of the commissions made by the agents who work under them. When a broker makes their own sale, they get to keep their full share of the commission rather than needing to give a percentage to the firm.
- A real estate investor buys and sells properties on their own behalf, rather than on the behalf of a client. That means they use their own financing to purchase and renovate properties, and they also keep whatever profits are made from the sale of each property. A real estate investor can be a business entity or a private individual, and there are no licensing requirements for most types of transactions. Rather than making a fixed percentage from a deal, real estate investors get to keep the profits from every sale.
Should You Get a Broker License?
So, with all that said, the question still remains: should you get a broker license? It really depends on your real estate career goals.
Becoming a licensed real estate agent is the conventional first step to a career in real estate. You’ll need to attend classes and pass an exam to earn that license. This may not be a barrier to most people, but if you’re a poor test taker like me, that can feel like a daunting first step. However, once you’ve earned that license you should be able to get a job at a brokerage fairly easily, at which point you’ll have the support of more experienced agents and brokers to train you in the field. Unless you’re dealing with multi-million dollar properties, you’re unlikely to strike it rich as an agent, but you should get a fairly stable paycheck as long as you make regular sales.
Some agents go on to earn their broker license after they’ve gained some experience in the field. To follow that path, you’ll need to take more classes and pass another exam. After that, you can take a couple of different routes. You could start your own brokerage firm and hire other real estate agents to work for you, or you could join a more established firm as an associate or managing broker and oversee your own team of agents. Brokers usually make more money, because they keep a cut of the commissions earned by their agents, but they’re still limited to a small percentage of the sale price of a property.
Becoming a real estate investor, on the other hand, doesn’t require any classes or licensing. Anyone with enough capital or credit can get started buying and selling homes without needing to work for a licensed brokerage. Real estate investing is a little riskier than becoming an agent or a broker because you’re using your own money and putting your own credit on the line when you purchase a property. However, the rewards are also much greater, because you get to keep all the profits from the sale (minus any commissions).
Get More Real Estate Career Advice from HomeVestors
Ultimately, my real estate career advice is that you don’t need a broker license to succeed. I was able to quit my office job and invest in real estate full-time without any formal classes or licensing exams. As a real estate investor, you can be your own boss, set your own schedule, and potentially make more money than real estate agents and brokers combined.
But if you’re like me, you might not like the idea of working completely alone. I wanted the independence of owning my own business, but I still wanted support and guidance from a real estate mentor who knew my local industry. That’s why I joined HomeVestors®. As a HomeVestors® independent franchise, I was assigned a Development Agent—a real estate industry veteran who provided one-on-one mentorship and advice as I started my business and made my first deals. Plus, with their UGVille® platform of proprietary software tools, I can list my properties, manage payments, and communicate with buyers and sellers without needing a real estate license.
Get more real estate career advice and learn how to become a real estate investor by contacting HomeVestors® today!
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