It’s a big step from real estate agent to real estate business owner–and a giant leap if you’re not yet a REALTOR® (AKA, a trademarked realtor)!
For many of us, just knowing where to start is a challenge, and right now, you might be feeling nervous about making the move.
If so, that’s understandable.
But if over 3 million US citizens can get a real estate license, and 106,548 of those can open their own brokerage, so can you.
It’s often said that “the best way to remove doubt is to gain knowledge,” and that’s what I have for you here today.
I’ll tell you how to become a real estate agent and then a broker, how to start your real estate business on a solid foundation you can build upon, and how to brand, advertise, and promote it to capture your slice of the real estate market pie.
Let’s get to it!
Your first step in your real estate career is getting your real estate license.
But as there’s no national real estate license, requirements, timelines, qualifications, and costs of obtaining one varies between states.
For example, you can open a brokerage in Florida without a license as long as you employ a Floridian registered broker.
But in Colorado, you must complete 160 hours of education, 2 tests, and background checks, just to become a real estate agent.
To find your state requirements, consult the real estate regulatory body or your state’s real estate bureau. You can find those on the Arello.com (Association of Real Estate Law Officials) state directory.
In most states, you just have to follow 3 steps and pass an exam to get your real estate agent’s license:
Before doing your real estate exam, you must take your real estate pre-licensing course.
All real estate pre-licensing courses cover federal real estate laws applicable to all 50 states, and the regulations and rules for your home state.
You can get a sneak preview of what your state’s real estate exam looks like and find valuable test prep materials by visiting The Real Estate Prep Guide website.
Your state’s real estate exam will cover the same topics as the pre-licensing course.
Most states use multiple-choice questions that test your knowledge of both state and national real estate laws and principles.
The pass rate ranges from 70% to 75%.
Once you pass your exam, submit your license application along with any fees to your state’s real estate board.
Your state might also run a criminal background check.
Many people use the terms ‘realtor’ and ‘real estate agent’ interchangeably, but you can’t call yourself a REALTOR® until you join NAR (National Association of Realtors).
The National Association of Realtors has 1,564,547 members, making it the largest trade association in the real estate industry. It provides access to a vast support community, continued education, and industry updates.
And, of course, the increased credibility the REALTOR® trademark brings to your business is worth the $150 annual fee.
Once you have your license, you can trade as a real estate agent in your state.
However, before opening your own real estate business, most states require agents to work in a brokerage for 2 to 4 years.
When choosing a brokerage, ensure it aligns with the direction you’d like to take (also called your niche), pays a reasonable percentage rate, and has skilled mentors who can teach you the trade.
We’ll look at real estate niches and how to choose yours in just a minute.
A real estate brokerage is an umbrella agency that employs real estate agents. It’s licensed to oversee your transactions, to ensure you follow state and national level legal and ethical standards.
Brokerages primarily work by paying you a percentage of the commission it collects from your real estate sales.
And depending on the brokerage and your arrangement, they may charge you an annual fee to cover desk costs (if working in-house), using their branding materials, marketing channels, and their legal team.
In return, you learn from their experience, form business relationships with mentors, and use their reputation to grow your client portfolio.
While commissions are great, few realtors enter the business to live off them forever.
We all want something better–like a brokerage perhaps! So….
Your last step in the journey from real estate agent to real estate business owner is opening your own brokerage.
The procedure for getting your real estate broker license is similar in most states:
1. Get your real estate license. Pass your state’s licensing exam, submit your application, and pay any necessary fees.
2. Gain experience. Depending on your state, realtors/estate agents must gain 2-4 years of work experience within the real estate industry to be eligible to take the brokerage exam.
3. Fulfill pre-licensing education: Every US state requires applicants to complete the pre-licensing education, varying from 45 to 160 hours.
4. Pass the broker’s exam. There are courses available to help you gain the necessary knowledge to pass this comprehensive exam.
5. Submit application and fees. File your broker’s license and pay your fees, ranging from $100 to $200.
Once you have your license, you’re ready to claim your stake in the real estate pie!
The real estate market is highly competitive, and there are probably several established brokers already serving your local marketplace.
So, how do you land your first clients?
You plan your business strategy, form your company structure, build a strong brand identity, and implement marketing tactics that engage your target audience.
But first, you must choose your niche:
A niche is a segment of your local real estate market, and your choice of niche will define how you set up and operate your business.
Ideally, you should choose a niche you have experience in, with limited competition, reasonable consumer demand, and scope for future expansion.
Your niche could serve a specific demographic of society or a geographical location, such as investment properties, rental and property management, vacation homes, or beachside condos.
Here are the 4 main types of real estate, all with numerous niches:
A. Residential: Single-family houses, condominiums, cooperatives (Co-op), duplex, triplex, and fourplex properties.
B. Commercial: Office/retail space, apartment buildings, mobile home parks, leisure and hospitality property, self-storage and mini-storage facilities, parking lots and garages, grocery stores, and gas stations.
C. Industrial: Production facilities, freezer, refrigerated storage facilities, storage warehouses, distribution centers, research and development parks.
D. Land: Farms/ranches, timberland, orchards, and planned urban development (PUD) for future residential or commercial development.
Once you have a niche in mind, it’s time to research and validate its growth:
Market research will tell you if your real estate business idea is viable–like if there’s room for you to successfully enter the market, adequate consumer demand, and if your chosen niche is profitable enough and worth pursuing.
Start by researching your local area to see which property types make up the most significant percentage of sales.
Next, assess which markets are growing or declining by conducting primary and secondary market research:
Your experience should give you some ideas of which niches are hot and which are not.
But if you’re new to a location, research the local brokerages and drive around every neighborhood and street to see which property types have a ‘for-sale’ sign out front.
One your market research complete, your next move is to create a plan–a business plan, to be precise:
If you’re unsure of how to write a real estate business plan, don’t worry, it doesn’t need to be 100 pages long.
In fact, the best business plans are straightforward documents that answer 5 essential questions; who, what, where, why, and how much?
So, keep it short, focus on your niche and your objectives, and include the following essential details:
When you compare a real estate business’s start-up and running costs to other industries, they`re often pretty low.
And recently, many realtors have begun running their real estate businesses remotely and online, using a website and digital sales materials and removing the need for costly office rentals and physical marketing materials.
Of course, exact start-up costs vary based on the real estate business structure, location, and scale.
However, some typical real estate business start-up costs include:
One sure way of calculating your start-up costs and organizing your future finances is to use an accounting and bookkeeping system.
I’ll explain why next:
Accountancy and bookkeeping software systems keep track of your business finances, such as your income, outgoings, profit, loss, and cash flow. And if you’re self-employed, you’ll need those to file your quarterly taxes.
Even though they usually come together, they do different things:
Bookkeeping systems record, organize, and categorize your financial information so you can update and review your financial records.
An accounting system, on the other hand, records, organizes, and analyzes your company’s financial data–enabling you to make better business decisions and give financial information to your accountant.
Your accountant will then use this information to provide you with better business strategies and plan your taxes.
The following list of accounting software is highly regarded within the real estate industry:
Congratulations, you’ve completed the groundwork for starting your real estate business!
Now it’s time to get legal:
Before starting your real estate business, you must first form a legal business structure.
There are 4 main business structures you can choose form:
A. Sole proprietorship
B. Partnership/general partnership
C. Limited liability company
Most real estate company owners choose an LLC (limited liability company) structure, as it provides practical tax advantages and limited financial liability.
If you’d like to learn more about the different legal structures, check out our post on “The Different Types of Business Entities.”
And if you choose an LLC but are unsure how to start it (been there!), check out my other post, “How to Start an LLC in 7 Steps.”
Now, you’re almost ready to open the doors (virtual doors count) to your real estate business. But first, you should hire a lawyer and get insurance.
Hiring a business lawyer with experience representing real estate agents and brokers can help you in several ways. Specifically, a business lawyer can:
But even when you have the best advice, sometimes things can go wrong. That’s why you need business insurance:
Hiring a business lawyer with experience representing real estate agents and brokers can help you in several ways. Specifically, a business lawyer can:
All businesses need insurance to cover fees associated with liability claims, property damage, and other risks that could be costly to your business.
It’s especially true for real estate business owners, as clients depend on your guidance, management, and expertise while purchasing properties for sizable sums of cash!
And, if your advice or actions are found to be incorrect and a client sues, you’ll need insurance to protect your business. Otherwise, it could be you who pays.
What’s more, operating without specific insurance coverage can violate state laws, resulting in fines and even jail time.
6 types of real estate business insurances you might need:
Once your state approves your articles of organization and your lawyer and insurance are in place, it’s time to get busy promoting your new real estate business
Congratulations, you got yourself a business! Now how do you go about making it thrive? Follow these 6 steps:
A strong, memorable brand identity is essential for any business because all markets are competitive, and consistent branding is how you stand out and get noticed.
But with real estate, branding takes on a whole higher level.
Your clients trust you with their homes, investments, and family stability, and your branding is the first step in gaining that trust.
To create a strong brand identity, your branding must reflect your target audience. Use styles, colors, and fonts that reflect the type of real estate you are selling, so your ideal clients can relate visually and connect emotionally.
And, your values must connect. Your target audience (be they young families, retirees, or investors) value one specific element of real estate; so, ensure your values embody theirs and are identifiable.
Pro tip: A tagline is a great way to reflect client values. Here are some excellent examples:
1. “Let us Guide you Home”-Compass
2. “Your Gateway to a Richer Life”-Town and Country Real Estate
3. “Where Dreams Come Home”-Coldwell Banker
Remember, your brand identity combines your business name, logo, tagline, design style, colors, and fonts, so make sure you make all of them cohesive and memorable.
Now, real estate thrives on generating leads; that’s why you need a marketing plan. Let’s look at how to create yours next:
At first, many of us can find business marketing bewildering; there are so many options!
However, there are proven marketing strategies in real estate that work every time, both on and offline–starting with:
Handwritten letters, postcards, and other mailers are an excellent way to reach potential clients.
But for direct mail to work, you have to be consistent and design your campaign so it highlights the benefits your business brings to your clients.
Make your correspondence catchy, humorous, and memorable so people open it and pin it to the refrigerator, not throw it in the trash.
Pro Tip: If you’d like to learn how to nail direct mail marketing without paying for an expensive course, read the Gary Halbert newsletter.
Real estate bandit signs have been with us forever on billboards, transit advertising (spaces such as trains, buses, platforms), and every popular highway intersection.
You know the ones with messages like “We buy houses” and “Call us today for a cash offer.”
Why do we use them?
Because they work.
And while bandit advertisements aren’t cheap, they’re a proven way of successfully promoting a real estate business.
Email marketing takes consistency, time, and an email list to work.
But email marketing still provides the highest return for your marketing dollar and is the #1 strategy to reach potential leads. In fact, a recent NAR survey showed that “89% of REALTORS® contact clients via email.”
So, how do you get those email addresses?
The best way to collect a potential client’s email address is to build a website that provides free helpful advice and information in return for them giving you their email.
But for that to happen, you need a website:
“In 2020, 97% of homebuyers used the internet in their home search, and 51% found their new homes online.”
That’s why you need an online presence.
But to attract online leads, you need an SEO-optimized website that integrates with IDX (Internet Data Exchange) listings, and funnels your potential clients into your CRM.
Okay, what am I talking about here?
Once your website is in place, you can begin your social media strategy and increase those all-important leads.
Facebook, LinkedIn, Instagram, Pinterest, and Twitter are the proven platforms for real estate businesses building a social media presence.
For example, Facebook and Twitter are the 2 most used social channels for connecting with potential leads.
Instagram and Pinterest are perfect for maintaining and updating an online feed, promoting your listings using beautiful imagery.
And LinkedIn meets all your professional networking needs.
A recent NAR survey shows us that:
But if using social media to promote your real estate business leaves you feeling a little lost (most of us over 40 do at first!) these 2 management tools can help you:
Tailwind: Perfect for real estate agents who use Instagram and Pinterest. It helps you schedule posts, create pins, and increase engagement.
Loomly: Usable on all your social media accounts to find content inspiration, schedule post-release dates, and track your competitors’ content.
Now, did you know that acquiring a new lead can cost 5 times more than retaining an existing one?”
That’s why you have to love and stay on top of your leads!
Not all the leads you land will become instant clients, so you must track and follow up with them at every opportunity.
This is because clients aren’t always ready to buy, but you’ll earn their trust and be there when they are by nurturing relationships.
Here’s where your CRM comes into play:
CRM programs like Insightly, Hubspot, Apptivo, AgileCRM, and Zillow Premier Agent CRM are excellent platforms for building your client portfolio and nurturing those leads.
Search for CRMs offering free trials and pricing plans that suit the number of leads you have and hope to work with in the future.
Last but not least:
The real estate business thrives on networking, and quite often, it’s who you know that matters.
Actively increase your network by attending any real estate events in your local area. Join platforms like Meetup.com and Facebook to expand your network, and use your social media platforms to reach out to other real estate agents at every opportunity.
Now’s the time to put yourself out there and get social.
There’s a lot to consider when starting a real estate business, and it’s normal if you’re feeling a little overwhelmed.
But remember, every successful real estate business owner started where you are today.
So don’t fret; follow our steps on how to start a real estate business; stay focused, confident, believe in yourself, keep smiling; and before you know it, you’ll be opening the door to your own brokerage!
This portion of our website is for informational purposes only. The content is not legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information as well as has not been evaluated the accuracy and/or completeness of the information.