In the U.S., the real estate market is a major driver of economic growth. Even though the coronavirus pandemic adversely impacted the general economy in 2020, the real estate market retained its resilience with continuous home-buying activity—possibly due to record low mortgage rates. A great way to participate in this industry is by becoming a part-time real estate agent.
In general, real estate refers to buying and selling real estate and real estate construction of residential, commercial, and industrial buildings. The real estate market works by homeowners and business owners who contract with agents to sell their homes or businesses.
In most cities, lIstings are published in the MLS—Mulitple Listings Service. A buyer’s agent finds a property and makes inquiries regarding the property, which the listing agent provides. Together, they set up a showing. If all goes well and the buyer wants to make an offer, the agents will ensure any legal issues are resolved and negotiate a sale.
Real Estate Broker vs Agent: What's the Difference?
Real Estate Broker
Generally, a broker will have more training and a better overall understanding of the real estate market than an agent. A broker with a current license can work independently in most states. However, real estate brokers must be licensed at the highest state levels if they want to hire agents or other brokers to work alongside them.
To become a broker, you’ll need to hold a valid real estate agent license and be a real estate agent first. In some states, you’ll need up to three years of experience as an agent. In other states, you’ll need only one or two years of experience before you can apply for your broker’s license.
In addition to experience, brokers must also complete a training course covering agency and real estate law, finance, contracts, and property management. After they complete classes, brokers can take their state licensing exam. On average, a real estate broker will earn about $10,000 more each year than an agent, with a medium wage of $59,720 in May 2019, according to the BLS.
Real Estate Agent
Unlike brokers, real estate agents cannot work independently but must be employed by a broker. Although licensing requirements to become an agent vary from one state to the next, all agents must take a real estate pre-licensing course and take the licensing exam.
Real estate agents make a bit less than brokers, with a medium wage of $48,930 in May 2019, according to the BLS. In some markets, however, agents (and brokers) can make much more. Although real estate commissions aren’t standardized and buyers can negotiate an agent’s rate, on average, the commission rate is currently 5.45%.
Realtors
Real estate agents or brokers who are members of the National Association of Realtors (NAR) are called realtors. That is the only distinction between real estate agents and realtors.
Is It Better to Be a Real Estate Broker or Agent?
Both real estate agents and brokers have certain responsibilities within an agency. The difference is that brokers usually have many more duties and obligations. If you want to work part-time in the real estate field, becoming a broker might not be the best choice.
That’s because brokers run real estate offices, review contracts, oversee escrow money, oversee listings, and all other financial transactions. Agents also typically work more closely with clients and can often write their own schedules. Many part-time real estate agents make a good living wage.
Can I Become a Real Estate Broker Without Being an Agent?
The requirements to become a real estate broker vary by state, but in most places, an agent must get a real estate license and work as an agent for a while before sitting for the broker’s exam. That said, some states will let someone with a Juris Doctorates sit for the broker’s exam without being an agent first, and/or substitute specific college credits for pre-license training.
How Do I Become a Real Estate Agent?
You don’t need a college degree to get a real estate license, and the whole process is relatively inexpensive. The steps involve looking at state requirements, taking your pre-licensing course and the exam, deciding if you want to become a broker or agent, and choosing an agency to work with.
Steps to get started in your real estate career include:
- Visit the Association of Real Estate License Law Officials (ARELLO)'s regulatory agency directory to find your state’s requirements for licensure. This directory will also tell you whether your state has reciprocal licensing agreements with other states. If so, you won’t have to take another licensing exam to become an agent.
- Take the pre-licensing class. All states require you to take a pre-licensing course from an accredited real estate licensing school before sitting for the license exam. Some schools let you take the course online or on-campus at a community college or real estate school.
- Take the licensing exam. Licensing exams are usually computerized and include two parts: a state-specific portion covering each state’s real estate laws and a national section on general real estate practices and principles. Each section is scored separately, and you must pass each section to get your license. You can’t work as an agent until your license is issued.
- Become a realtor instead of a real estate agent. Realtors are members of the National Association of Realtors (NAR), and must follow a strict code of ethics. Although both real estate agents and realtors are licensed, being a realtor can add credibility and help build trust with clients. However, it can cost nearly $200 to call yourself a realtor.
- Join a brokerage. When you join a brokerage, you’ll work with other agents under a supervising broker. You’ll earn a percentage of the commissions the brokerage collects from each of your transactions/sales. Depending on the office arrangement, you may have to pay tech fees, desk fees, marketing materials, and business cards. You’ll also likely take turns holding down the office for a weekend rather than work with clients.
How Much Does It Take to Become a Part-Time Real Estate Agent?
Costs vary a lot from one state to the next, one brokerage firm to the next, and how much marketing an agency does. But on average, you can expect to pay:
Pre-licensing and training = about $300. Of course, the cost varies depending on where you get your training—community college, online, or real estate school—and the state you live in.
Real estate exam and fees = $375 on average.
Broker fees = anywhere from $50 to $225 per month.
Membership dues to be a realtor with the NAR = estimated cost about $200 per year.
Maintaining your license = about $1,200 per year, including MLS fees, association fees, and lockbox fees, but actual costs vary by state.
Marketing and lead generation costs = varies, but can range between $500 at the low end and $1,500 at the high end.
Ongoing continuing education = about $50 to $300 per year.
Part-Time Real Estate Agent Earning Potential
You may not make much starting off, but top-performing agents can make up to six figures per year. The Bureau of Labor Statistics (BLS) reports that, on average, real estate agents make about $48,930 per year. In New York, agents can make on average a yearly wage of $102,000. Whereas in Montana, agents earn $42,000 on average.
Five highest paying states
New York: $102,310
Texas: $72,480
Hawaii: $72,470
Alaska: $71,030
Rhode Island: $70,450
Five lowest paying states
Ohio: $41,650
Arkansas: $41,660
Montana: $42,010
Indiana: $43,230
West Virginia: $45,220
How Much Commission Can I Make as a Part-Time Realtor?
A 2019 - 2020 survey by Real Estate Express reports that the average yearly income for real estate agents that work part-time (less than 20 hours a week) is $24,556. Not bad for a side gig. Even so, marketing costs, brokerage fees, and other costs can eat into that figure. But unlike many part-time careers, you can often make your own schedule and work weekends or nights if you want. That flexibility may be enough to make you seriously consider a career as a part-time real estate agent, broker, or realtor.
