Entering the world of a real estate agent is not for everyone in New York City. The market is fiercely competitive, and most new agents wash out in the first year. If you can tough it out and handle the workload, and make it through your first year, the sky can be the limit in what you can earn.
Being a real estate agent is like owning your own business. If the baker did not show up at 5 am there would be no bread to sell. You must stay committed, focused and persistant in building your career. Passion, hardwork and customer service are the key componants for long term success. Education is your greatest assest, never stop learning to stay ahead of your competion. – Gea Elika, Principal, Elika Real Estate
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Should you become a real estate agent in NYC?
To most outsiders, being a real estate agent looks like an easy gig. All you need to do is find a listing, use every trick in the book to make a buyer sign off on it, then hold out your hand for thousands of dollars in commission fees. Easy, right?
Not exactly. Being a real estate agent is a tough business, filled with hidden costs, clients who cancel last minute and listings that don’t sell. To make it as a real estate agent you need to have the extensive market knowledge, be on call 24-7 and have enough savings to hold you up over long periods without any income. The best agents work crazy long days, are extremely dedicated and are always on their feet or the phone chasing down new leads and following up with clients.
So do some soul searching and consider the pros and cons before you take the following steps:
- Be “generally” qualified.
- Find a class (either online or in a classroom) and complete the 75 hours of class time and the in-class exam.
- Register at the NYS Department of Licensing to complete the state test.
- Choose a real estate firm
- Work yourself up to the ladder.
Steps 1-3 are pretty straightforward. It’s step 4 and especially five that things start to get difficult. Now let’s break down each of the four stages.
Be “generally” qualified
As stated in the licensing law (referred to by brokers as “Article 12-A”), to be a real estate agent you must be over 18, have no felony record and must be current on any child support. However, if you do have a felony, you may still be able to get a license. That decision is up to the New York Department of State. The DOS will take several things into account, such as the nature of the felony, the license you desire and the court disposition papers.
Find a class
It’s fairly easy to get a real estate license in New York compared to other states. You only need to complete 75 hours of an accredited real estate course. By comparison, in the state of Texas, you need to complete a total of 180 hours. You can take the course either online or in a classroom at a real estate school. An online course lets you go at your own pace, but there’s something nice about attending a school and meeting your classmates. You might even make useful connections that will help you in your first years in the industry. At a minimum, a licensing course will cover the following:
- Basic principles of real estate
- Commercial and investment properties
- Law of agency
- Mortgage and loans
- Human rights and fair housing
- Real estate finance, construction
- Condominiums and cooperatives
- Environmental issues
- Work ethics
At the end of the course, you’ll have to take an in-class exam. If you pass, you’ll then be allowed to take the state exam and acquire your license.
Complete the state exam and license application
You now have a course certificate, but before you can start working, you need to take the state exam with the NYS Department of Licensing. A little more daunting as only a handful of state exams scheduled each season. For New Yorkers without a car, the only convenient locations are Franklin Square in Long Island and the Financial District in Manhattan. Places for these sites can fill up months in advance so plan.
The 100-question test is pretty easy with most of the questions presented in a “which of these things is not like the other” way. A quick search online can bring up practice exams and sample questions to help you prepare. Before you can take the exam, you need to register for it using the e-Access system. There’s a $15 fee to take the exam and a non-refundable $50 to apply for your license. To pass, you have to get a score of at least 70. If all goes well, you should have your license within a few days.
Also, if you plan on working in states besides New York, then you need to know the real estate reciprocity and portability laws for New York. At present, New York has a reciprocity agreement with nine states:
- West Virginia
Choose a real estate firm
Your career in real estate will depend to a large extent on the firm you choose. Most people drop out in the first year because they picked the wrong one. When deciding on the right brokerage to work for, you need to consider the pros and cons of the two types, large brokerages, and small brokerages.
Also, regardless of the type of brokerage you choose, there are a few main things you’ll want to know when selecting one such as the commission split, what expenses you’ll need to cover and what kinds of leads you can expect. Their goals should be in-line with yours so weigh your options carefully.
A large brokerage is a company that sells the rights to use their name, branding and business model to agents. For each deal you close as an agent, a percentage of your commission will be paid with the company. Most of these large brokerages have their own rules and regulations. Be sure to read them carefully before signing anything.
- Instant Credibility – Brand recognition is the most significant advantage to large brokerages and the reason why most new agents chose to work for them. They’ve already done the hard work of building the brand. A reputation like that can go a long way in helping new agents establish trust with potential clients.
- Multiple Offices – Large brokerages tend to be companies with tens if not hundreds of offices across the state. It is then easy for you to relocate to other offices in the city that are more convenient for your clients.
- Technology – Because of their size, large brokerages tend to get discounts on software and tech support. You get access to top shelf transaction management software and CRM software. Having tech support is also a huge plus as it means you’ll spend less time figuring out why something isn’t working and more time selling real estate.
- Their size makes them impersonal – Some agents, especially new ones, feel that the size of large brokerages makes them feel impersonal. They’re not as concerned with personal growth and development as small brokerages.
In contrast to large brokerages, small brokerages are generally owned by a small company and managed by a single broker. Don’t be fooled; smaller doesn’t mean less successful. A well-managed one can often punch well above its weight.
- More Individual Attention – These types of firms are much smaller, meaning that each agent’s contribution makes a difference to the company’s bottom line. As such, they tend to spend more time showing the ropes to new agents.
- Less Competition for Leads – Since fewer people are working at the firm compared to a large brokerage, the competition for leads is much less intense. It’s pretty standard for experienced agents to let the newbies handle the majority of prospects.
- More Flexibility – A smaller workforce means there’s less red tape and no corporate office to answer too. This mean policies and best practices can be changed overnight making them very flexible in an evolving market.
- More Teamwork – A smaller workforce translates into closer integration. Boutique brokerages are more team orientated with all the agents ready to help one another out at every opportunity. Such a cooperative environment stands in stark contrast to the sometimes cold atmosphere of large brokerages.
- Smaller Budgets – A smaller company means a smaller budget, meaning less money for advertising and tech support.
- Smaller Brand – Depending on how long they’ve been in the game, they may have less recognition outside of their immediate neighborhood. Establishing trust with high-end clients could be challenging to sell.
Climb the ladder
Now comes the most challenging part is making it as a real estate agent. Expect some significant start-up fees (ads, business cards, desk rental fees, etc.) working five, six, seven days a week without a guaranteed income and dealing with sometimes flaky and challenging clients. In NYC, a closing can take four or so months after an accepted offer, so be prepared to wait a while before you can pick up your first commission check.
Becoming a real estate agent is something you very much learn on the job. Your training course may have schooled you ion the theory of it. On the job, is where you will get the experience and feel for it. Good coaching and mentoring are a must in your first year. When starting this should be a top priority when choosing a brokerage.
Even top agents with years in the business still have mentors they look up too. Lastly, make friends. For real estate agents, contacts are everything so put yourself out there. Be aware that everyone you meet is potentially helpful in later years. The same goes for any attorneys, contractors, and architects that you’re sure to meet along the road.