High School Diploma
All states require prospective real estate salespeople to hold a high school diploma as a requirement for licensure. Today this is considered the minimum education necessary to engage in the real estate field. Prospective agents who have not completed high school should consider taking the GED equivalency test.
Students interested in a real estate career can begin working toward this goal in high school. Since the real estate field requires both business and mathematical skills and the ability to communicate effectively, a student is advised to take a balanced course of study featuring both English and math. A suggested curriculum would include:
English-3 or 4 years
Social Sciences-2 years
(Consider taking psychology.) History-1 year
(Students also should consider taking economics, if this course is offered.)
If the student intends to go on to college, he or she should include one or two years of science and one to two years of a foreign language. Other courses that would be beneficial to those considering a real estate career include: public speaking, debate, accounting or bookkeeping, and typing. Needless to say, if your school offers a course in real estate principles, take it. However, few such courses are found at the high school level. Do consider any courses that relate to real estate or finance. For example, many schools offer consumer information courses on home buying, which will provide background on buying and owning a home.
Even high school is not too early to begin working on another important element in the real estate field-public contact. Become active in school and community groups that interest you. Contacts and public visibility are extremely important to success in the real estate field.
Getting a College Degree
Unlike many business fields, real estate does not require a college degree for entrance. However, as we have seen, the trend in real estate is toward a college-educated sales force. In 2000 approximately 87 percent of the salespeople and 90 percent of the brokers in the 2001 National Association of REALTORS (NAR) survey had at least some college background. Although a selling ability is still the important factor in real estate, today's salesperson must be able to deal with complex financial and legal problems. For this reason many firms prefer to hire college graduates who they believe are better able to deal with these new complexities.
If a would-be real estate agent does decide to continue his or her education, the next question becomes what to study. According to the 1999-2000 Occupational Outlook Handbook., approximately one thousand schools nationwide offer real estate training. Some offer graduate or undergraduate degrees in real estate, urban land use, construction, or related subjects. Among the courses that are usually found in real estate majors are business and real estate law, accounting, psychology, marketing, management, financial analysis, economics, construction, appraisal, investments, and business communications. More advanced degrees usually put greater emphasis on urban planning and/or financial analysis, while associate degrees often put emphasis on business and marketing skills.
Degree programs in real estate are still a relatively new academic discipline. In the past most real estate courses either have been directed toward urban planners or have been designed primarily to satisfy requirements for licensure. Today more and more schools have expanded and developed real estate departments and professorships. As many real estate departments are located at state-supported schools, real estate instruction is readily available and very affordable to most students. The trend of the future is toward college- and graduate-level real estate education, and those considering real estate careers in the future will need to be better educated than ever to succeed.
College Courses Other Than Real Estate
Although it may be desirable to take courses in real estate, there are many other courses of study that will provide a valuable background for the agent. If the student does not major in real estate, he or she should consider at least a few courses in business and accounting, finance, and economics. As with the high school curriculum, the student is advised to take some courses in English, psychology, Web development, and marketing. Prelaw courses with emphasis on business or property law will help to introduce the agent to the important legal principles inherent in real estate transactions. A course in architecture will give the prospective student some knowledge of housing styles. A course in drafting or architectural drawing will help the student understand housing construction. These suggested courses also would serve as adequate credits toward an undergraduate degree before undertaking graduate work in real estate. However, students should check catalogs carefully for graduate program requirements.
Home Study Courses
Although it is usually not possible to get a degree in real estate through home study, there are quite a few schools that offer one or more courses in real estate for home study. Some of these courses are part of a degree program in business or prelaw, while others are offered for high school credit. (Only some states will accept home study courses to meet licensing requirements.)
Private Real Estate Schools
In addition to colleges and universities, real estate courses are offered by for-profit business schools. These schools usually concentrate on courses that are required by the states to sit for the licensing exam. Few offer any degree program. Though some of these schools provide excellent exam preparation, it is advisable to check carefully before enrolling, since the cost is often higher than comparable courses at a community college. Check to see if the school appears on the list of approved schools issued by the licensing agency of your state. Courses offered by local real estate boards or recognized brokerage firms may give some guarantee of quality.
Even if you have completed a degree in real estate, you cannot immediately enter the real estate field. Like many professions from law to barbering, real estate agents must be licensed in the state where they will do business. All states and the District of Columbia require real estate salespeople and brokers to pass a written examination before licensure. In addition many states require applicants to complete some type of real estate course prior to testing, although in some cases those holding college degrees in real estate may be exempted from the requirement.
Because real estate licensure is controlled on the state level, there are variances in requirements. To a great extent these have been lessened through the efforts of the Association of Real Estate License Law Officials (ARELLO), which has worked to establish national standards for licensure. These efforts have made it possible for states to offer reciprocal agreements to each other. A reciprocal agreement between two states permits a broker or agent holding a license in one state to be granted a license in another state without the need to fulfill all of the requirements of the second state.
Because of the differences in state requirements, generalizations are difficult, but there are certain requirements that are widespread. Applicants for a real estate salespersons license are usually required to be eighteen years old and have a high school diploma. Many states require that the applicant has been a resident of the state for a certain period of time (often six months to one year). Those applying for real estate brokers' licenses must usually meet additional requirements. They must often be twenty-one years old and have been active in the business for a set number of years. Since requirements vary, check with the licensing agency in your state to be certain that you have satisfied all requirements.
In addition to age and experience requirements, the majority of states require prospective real estate agents to complete some type of course in real estate principles and practices at a real estate school accredited by the state. Many states require real estate salespeople to complete a course of between thirty and ninety classroom hours of instruction. These courses will cover the basic laws governing the ownership and transfer of real estate. Students will be taught to understand the terms of sales contracts and other documents commonly used in real estate transactions and learn how to fill them out. Students also will be taught the regulations that control the real estate business in their state. Students will learn how mortgages work and the advantages and disadvantages of different types of financing. They will receive instructions in the provisions of the federal fair housing law and other federal and state laws that guarantee equal rights and protect consumers.
Applicants for a broker s license must usually take more complex courses than those required for salespeople. Courses may range from 20 to 120 additional hours of study. Brokers will cover the finer points of real property law and contract law and study the responsibilities of the broker toward his or her clients and to the salespeople under his or her supervision. In addition brokers' courses are often taught on special aspects of real estate such as property management, finance, and appraisal. Some other courses address business and management topics.
In general the trend in real estate licensure is toward more extensive educational requirements. In the past few years many states have increased educational requirements for both salespeople and brokers. This trend toward higher education is also reflected in the growing number of states that require some agents to take a specified number of courses to retain a real estate license. As of 2000, all but one state required some amount of continuing education to keep a real estate license active. Requirements ranged from twelve to seventy hours of class work every two years. Check with your state licensing agency to find out about its continuing education requirement.
Whether or not the prospective real estate agent has to take a real estate course, all states require that he or she pass a written examination to obtain a license. These tests are usually one-day examinations given monthly or bimonthly at various locations throughout the state. Most state exams are divided into two parts-general real estate questions and state-specific questions. The general, or uniform, questions section is always the longest, usually ranging in length from 100 to 150 questions. The questions in the uniform part of the exam cover topics such as:
- Real estate contracts-the meaning of various clauses within a specific contract, the legal obligations of con-tracts, and the elements of that contract. Some state examinations will require the student to complete a real estate sales contract using supplied information.
- Real estate brokerage-the understanding of various functions and responsibilities of the real estate agent and the agent's legal obligations to the client.
- Real estate financing-the types of mortgages available for real estate and the legal obligations of the buyer.
- Real estate ownership laws-the elements of a deed and different types of deeds, different ownership rights in land and the attributes of each, and the fair housing law and any other consumer rights laws.
- Real estate valuation-how to evaluate property and how real estate taxes are determined.
- The broker's responsibility to customers and salespeople
- Leasing and portions of a lease
- Real estate investment procedures
- Closing procedures and computations
Most real estate examinations are made up of short-answer questions that require the student to recall facts and make judgments based on knowledge. Most examinations include a certain number of questions that require the examinee to do simple mathematical calculations. Some states permit the use of calculators; check with the state examining agency before taking the test.
Many states use standardized tests prepared by an outside testing company such as Assessment Systems, Inc., Balacynwyd, Pennsylvania; and Applied Measurement Professionals, Lenexa, Kansas. These tests are similar in format to college entrance examination tests you may have taken in the past. They use machine graded score sheets; the student fills in the space under the correct answer. In some cases the testing service provides only the uniform portion of the examination, and the state section is prepared by a state group. Still other states use a test prepared by Assessment Systems, Inc. called the Real Estate Assessment for Licensure (REAL) program.
When you apply to take a state exam, the licensing agency will usually send a booklet explaining the testing procedure and the types of questions that will be asked. Although each state exam is different, the following will give you some indication of the types of questions that appear on licensing exams:
1. Michele Harper owns a parcel of land. Jack Ryan takes possession of the land after obtaining Harper's permission. Ryan's possession continues for fifteen years. Ryan then tries to get a legal title to the property. Will he succeed?
- Ryan will be successful because he lived on the property for fifteen years without interruption.
- Ryan will be successful because he satisfied all the requirements for eminent domain.
- Ryan will not be successful because he cannot obtain title to the property just by living on it for a certain number of years.
- Ryan will not be successful because not all the requirements for adverse possession have been met.
2. Frank Lane wants to know how much money he still owes on his mortgage. He knows that the interest portion of the last monthly payment was $291.42. If he pays 8 1/4 percent interest on the loan, what is his outstanding balance?
3. The rights of a surviving husband in the real estate owned by a deceased spouse during their marriage are called:
Each state sets its own passing scores for the examination, with most states requiring examinees to have a score of between seventy and seventy-five to pass. In general, students may retake the examination as many times as necessary to pass. Some states do require applicants to wait for a short period before retaking the test, if the applicant has failed twice.
Receiving a License
If the prospective applicant has passed the examination and met all of the other state requirements for licensure, the state real estate commission will issue a license to the applicant. All states require new agents to pay a licensing fee of from $25 to $ 150. Since salespeople must be associated with a broker, persons applying for a salespersons license must submit the name of the broker with whom they will be associated before the commission will issue a license. The broker who "holds" a salespersons license is legally responsible for the actions of the salesperson, and the salesperson can receive a license only after he or she has become associated with a broker.
Other Education for Real Estate Agents
Although the real estate agent must meet only state requirements to obtain a license, additional education is available to those already in the field as well as to those who are training for the business. Many associations and national real estate franchises offer training via the Internet. One option is through the NAR at realtoruniversity.com. Try also realestate.university.com.
The National Association of REALTORS and other real estate associations also offer numerous courses and books to help real estate professionals. Many courses are taught through state and local NAR chapters, called boards. Perhaps the first course suitable for the needs of the new real estate agent is the Graduate, Realtors Institute (GRI) course. This course is made up of several courses, which are usually offered in sequence and cover such topics as real estate law, finance, appraisal, office management, and selling techniques. After completing the courses, the student earns the GRI designation.
Other real estate organizations also offer courses. The Appraisal Institute offers two designations that are available for students who have met certain education and experience requirements. The Member, Appraisal Institute (MAI) designation has higher requirements as to experience and education in all forms of real estate appraisal. To receive an MAI, an applicant must hold a college degree or comply with special requirements; have five years of appraisal experience, three of which must be in specialized appraisal; pass several examinations; and pass a demonstration report. To maintain the designation, members must complete continuing education requirements.
The Appraisal Institute also offers the SRA designation for Specialist, Residential Appraisal. Many of the qualifications are parallel to the MAI, but a college degree is not required.
In the special area of managing residential and commercial real estate, the Institute of Real Estate Management (IREM) offers several designations. The Certified Property Manager (CPM) designation requires applicants to have from three to five years' experience in property management and to complete several courses on such subjects as managing personnel, developing budgeting and accounting procedures, maintaining the building, and understanding legal requirements of leasing. In addition to basic management skills, specialized courses are conducted in managing apartment buildings, condominiums, office buildings, public housing projects, commercial buildings, and shopping centers. The Accredited Residential Manager (ARM) designation requires the applicant to take a basic course in residential management to qualify for the accreditation.
Most of the other NAR associations offer one or more courses leading to a specialty designation. The American Society of Real Estate Counselors offers a Counselor of Real Estate (CRE) designation, and the Society of Office and Industrial Realtors also conducts courses leading to professional designations. The REALTORS have specialized councils that offer courses leading to several designations, including Certified Residential Specialist and Certified Residential Brokerage Manager. The Commercial-Investment Real Estate Institute (CIREI) awards the Certified Commercial-Investment Member designation to qualified commercial brokers.
In addition to designations courses, both the NAR and its affiliates as well as other real estate organizations, sponsor courses and seminars on topics of interest to its members. State and local real estate boards also offer courses that help real estate agents increase their knowledge and skills. The Institute of Real Estate Management, the Appraisal Institute, the Commercial-Investment Real Estate Institute, and other associations also publish textbooks, journals, and newsletters for their members, such as the IKEM's Journal of Property Management and CCIM Institutes Commercial Investment Journal. These publications keep agents informed about new developments in their fields and provide them with a forum for the discussion of real estate issues.
Other public and private organizations also offer real estate courses. Most of the courses offered by community colleges are designed for those preparing for the licensing examination, but most institutions will admit students on a part-time basis. Another source of education, particularly on selling skills, are independent seminars offered by individuals or firms. There are numerous for-profit schools and individuals conducting courses to help salespeople increase their selling and business skills. Although there are many selling techniques that can be of benefit to prospective real estate agents, the student should be careful to check the credentials of the instructor before enrolling in the often expensive courses. Courses in selling skills, brokerage techniques, and other topics are also offered by many real estate firms. These courses can be of great benefit in increasing your skills, and you should consider the educational program of a firm when you select a prospective employer.
Because real estate is a topic of such interest to everyone, many publishers are issuing books on real estate sales and investment. Although some of these books are intended for consumers, they will give the student some information on real estate transactions and the current issues in real estate. Other books focus on other skills. (See Appendix C for a partial list of books on real estate topics.)
Because you need a license to sell real estate, it is difficult to get any job experience before you complete the necessary education.
However, there are still some options open to those who want exposure to the field. All real estate offices employ clerical personnel to answer the telephone and handle routine office work. These people are not allowed by law to conduct any real estate business, but the attentive worker will learn a great deal about the real estate business through observation.
A middle ground for gaining real estate experience without plunging directly into sales is by becoming a real estate personal assistant. According to the 1999 NAR Profile of Real Estate Firms, 39 percent of firms employ personal assistants. Depending on the duties they perform and the laws in their state, assistants may or may not hold a real estate license. But in many cases, they perform at least some administrative duties and receive a regular salary from their employer. They also may receive bonuses or commissions if they take part in actual selling activities.
If you are already employed in another field, the best way to acquire real estate experience might be to secure a license and try to work in real estate on a part-time basis. This will give you the chance to learn about the business without sacrificing your current position, although part-time work is less available than it once was. You can also gain valuable experience in the field by working in an area closely allied to real estate such as banking, construction, finance, or law. Working in any related field can help you to understand certain aspects of the real estate business and give you that much more knowledge when you do decide to enter real estate.
Another way of preparing for the real estate business is to begin acquiring a good working knowledge of the community in which you live. This will be invaluable to you when you begin your real estate career, since much of the success of a real estate agent rests on his or her familiarity with the community. Learn the location of schools, shopping centers, and recreational areas in your community. Join the civic and social groups that interest you. Read the real estate and business sections of your local paper to increase your understanding of the real estate market in your area and to learn about new real estate developments. These organizations not only will enrich your life but will provide you with valuable sources of clients once you begin your career. Find out about laws such as zoning regulations and housing codes in your area. These can affect the price and construction of houses. Like almost any other field, there are many sources of information that are open to the student who is willing to investigate. By doing research the prospective real estate agent can find enough information to decide whether his or her interests and abilities match the demands of the field.