1.1.1: A. Residential Real Estate Sales Occupations
- Page ID
- 35508
\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)
\( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)
\( \newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\)
( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\)
\( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)
\( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\)
\( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)
\( \newcommand{\Span}{\mathrm{span}}\)
\( \newcommand{\id}{\mathrm{id}}\)
\( \newcommand{\Span}{\mathrm{span}}\)
\( \newcommand{\kernel}{\mathrm{null}\,}\)
\( \newcommand{\range}{\mathrm{range}\,}\)
\( \newcommand{\RealPart}{\mathrm{Re}}\)
\( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)
\( \newcommand{\Argument}{\mathrm{Arg}}\)
\( \newcommand{\norm}[1]{\| #1 \|}\)
\( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)
\( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\AA}{\unicode[.8,0]{x212B}}\)
\( \newcommand{\vectorA}[1]{\vec{#1}} % arrow\)
\( \newcommand{\vectorAt}[1]{\vec{\text{#1}}} % arrow\)
\( \newcommand{\vectorB}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)
\( \newcommand{\vectorC}[1]{\textbf{#1}} \)
\( \newcommand{\vectorD}[1]{\overrightarrow{#1}} \)
\( \newcommand{\vectorDt}[1]{\overrightarrow{\text{#1}}} \)
\( \newcommand{\vectE}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash{\mathbf {#1}}}} \)
\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)
\( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)
\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)Role of Real Estate Experts in Bridging Buyers and Sellers
Real estate experts play pivotal roles in bridging the gap between buyers and sellers. Real estate sales professionals also provide the connections between their clients and mortgage lenders, home inspectors, photographers, appraisers, and property managers, fostering a seamless real estate experience. In California, the three careers that require a state-issued professional license include real estate salesperson or broker, mortgage lender or loan originator (MLO), and real estate appraiser.
Licensing Links
- The California Department of Real Estate (DRE) licenses real estate salespersons and brokers. Link: https://www.dre.ca.gov
- Real estate appraisers are licensed by the California Bureau of Real Estate Appraisers (BREA). Link: https://brea.ca.gov
- California's mortgage loan originators (MLO) are licensed by the Department of Financial Protection and Innovation (FPI). Link: https://dfpi.ca.gov/mortgage-loan-originators
Figure 1: Representing agent/ lender and appraiser (Source: Stock Image, Canva, Public Domain)
Residential Real Estate Agents
Responsibilities and Specializations
Real estate agents specialize in representing people in buying, selling, and leasing residential and commercial properties, making sure that transactions are conducted legally and ethically. These professionals guide their clients through the sales process, equipping them with the information they need to make the informed decisions that lead to successful outcomes.
Real estate agents focus on working with buyers or sellers or, sometimes, both. A buyer’s agent is a professional who acts solely on behalf of the buyer throughout the home-buying process. Seller's agents represent the interests of sellers in the process of selling their homes. A dual agent represents both the buyer and seller in a transaction.
Becoming a real estate agent requires a real estate license. To apply for a real estate salesperson license in California, you must be at least 18 years of age, be honest and truthful, and meet education and exam requirements. A criminal record could prevent licensure.
Steps to Becoming a Real Estate Salesperson
Real Estate Salesperson Required Education and Examination
Becoming a licensed real estate salesperson in the state of California requires several steps. First, you must complete three college-level courses: real estate principles, real estate practice, and a real estate elective. Once these are completed, you must complete a Department of Real Estate (DRE) online exam application. Next, submit official transcripts from your college showing that the three required courses were completed with a passing grade to the DRE. You will also need to submit LiveScan fingerprints to the DRE for a criminal background check. And, while you wait to get your exam date from the DRE, take time to study daily for the state exam!
In summary, steps required to take the real estate salesperson exam are:
- Complete the three required pre-licensing courses.
- Complete and submit the online application to take the DRE examination.
- Order official college transcripts be sent to the DRE.
- Get LiveScan fingerprints and have them sent to the DRE.
- While waiting to get your exam date from the DRE, study every day!
- Pass the state exam.
Link: https://www.dre.ca.gov/Examinees/salesperson_exam_only.html
Note that these steps are for California licensees; other states have different pre-licensing and post-licensing requirements.
Tip: Find a reputable crash course to help you prepare for the real estate salesperson exam. Some courses offer money-back guarantees if you don’t pass the exam after completing and studying the course materials. Also, check with your local community college for a license prep class—no money-back guarantees, but economical and effective.
Practice Zone
 |
Create a checklist showing the requirements you have completed and those you have yet to satisfy to be eligible for the real estate licensing exam. Once the list is compiled, identify the actions you intend to take to prepare for exam day. |
Compensation Models for Licensed Agents
Compensation for Licensed Agents
Compensation is the money (or other thing of value) that a real estate agent receives at the end of a transaction, that is, at close of escrow. Independent contractors are in business for themselves, and most real estate agents who work as independent contractors earn compensation through straight commission. Real estate brokers usually pay their agents on a straight commission basis, meaning the agents only earn compensation when they close a transaction; they do not receive a salary or hourly pay. However, in some real estate companies, real estate salespeople do earn monthly or hourly pay and are then given a “bonus” for closing transactions.
On March 15, 2024, the National Association of REALTORS® (NAR) settled ongoing lawsuits concerning commissions charged to home sellers. Currently, when a house is listed for sale, the listing agent negotiates the total commission up front, which covers both the buyer and the listing (seller) agents’ commissions. For instance, a listing agent might agree on a 6% commission with the seller and then offer half of that (3%) to the buyer’s agent through the Multiple Listing Service (MLS).
The recent settlement will alter this commission structure, potentially benefiting home sellers financially. Under the new terms, commissions will be decoupled. Listing agents will negotiate their fee for representing the seller, while buyer’s agents will separately negotiate their commission with the buyer.
New Home and Resale Homes
Working for a new home developer as an employee differs significantly from working for a broker in resale real estate selling. Both new home salespeople and resale home salespeople are independent contractors typically paid by commission. New home salespeople typically earn a lower commission percentage, but they earn a steady stream of monthly income from the developer or builder and close more sales per month than the traditional residential resale real estate agent.
Niches
Let's talk about “Niches for Riches.” In short, this means that focusing on certain types of properties or types of transactions may be more efficient and rewarding than trying to sell everything to everyone. Agents who spend valuable time chasing unqualified leads could instead be working to attract clients within an area of specialty, or “niche.” Recognition as the expert in a niche area and earning the trust and respect of a target audience has potential to produce greater outcomes. Agents who choose to specialize in niche they know and enjoy, while connecting with people with the same interests, are positioning themselves for both financial reward and career satisfaction.
For example, do you love horses? Specialize in horse properties. Do you love historic architecture? Specialize in historic homes. By specializing, your marketing will attract future clients who share your interests.
Here are 37 niches in the residential market:
- 1031 exchanges (Investors can avoid paying capital gains tax when they sell one or more investment properties and reinvest those profits to buy another similar property within an allotted time frame.)
- Agricultural properties
- Agent-to-agent referrals
- Auctions
- Business Opportunities
- Condos/townhouses
- Creative Financing/seller financing
- Divorces
- Down payment Assistance
- Downsizing (moving to a smaller home)
- Equestrian (horse properties)
- Expired Listings
- FHA (Federal Housing Administration)
- First-time home buyers
- Fix and flip (renovation)
- FSBOs (For Sale by Owner)
- Golf course homes
- Historic homes
- HUD-owned houses
- International buyers
- Investors
- Luxury homes
- Manufactured / mobile homes
- Military and VA (Veteran Affairs)
- Multi-unit properties
- New home developments
- Newlyweds
- Physicians
- Probate/estate sales/trust
- PUDs (Planned Unit Development)
- REOs (Real Estate Owned)
- Reolocation companies
- Resort/vacation properties
- Rural property/acreage/ranch
- Seniors communities
- Short sales
- Vacant land
Manufactured Home Sales
Real estate salesperson licensees are authorized to sell manufactured (or “mobile”) homes. In California, licensed salespersons can list and sell manufactured homes if the property has been used as a residence for at least one year. However, selling new manufactured homes requires a different license—a manufactured home dealer license from the California Department of Housing and Community Development (HCD).
https://hcd.ca.gov/occupational-licensing
Residential Real Estate Brokers
Brokers’ Role in Supporting Agents
All real estate salespersons in California must post their license with a real estate broker, who is responsible for ensuring that the licensee has the tools needed to succeed. Real estate brokers manage, supervise, and provide training to their agents.
Beginner, intermediate, and advanced training may include marketing to potential customers, properly filling out offers, negotiating contracts, and following up with clients and prospective clients. Some brokers offer opportunities for role-playing and practice for overcoming common objections.
Requirements for Applying for a Real Estate Broker License
To apply for a real estate broker license in California, you must be at least 18 years of age and be honest and truthful, but residency in the state is not required. Also required is a minimum of two years’ full-time licensed salesperson experience within the last five years, two years of unlicensed equivalent real estate experience, or a four-year degree with a major or minor in real estate. Attorneys who are members of the California State Bar and who have a minimum of two years’ real estate experience may also apply for the licensing exam.
Benefits of Being a Real Estate Broker
Real estate brokers have some advantages over salespeople, but they also carry more responsibility. Brokers earn 100% of the commission for their own completed transactions, and, depending on the content of the contracts, earn a percentage of commissions earned by their agents. Only licensed brokers can employ other licensees (salespersons and other brokers) and earn compensation from their sales.
Real estate brokers can legally earn income from income streams that are not available to salespersons. Such income streams include property management, Mortgage Loan Originator (MLO) endorsement services, Broker Price Opinion (BPO) services, and owning an escrow company. In California, brokers can earn income with a Prepaid Rental Listing Service (PRLS) license and/or a Real Property Securities Dealer (RPSD) Endorsement. All these income sources can be earned by licensed brokers, but not salespersons, in California.
By the successful completion of this module, students will be able to:
- Brokerage owner
- Property management company
- Mortgage Loan Officer (MLO) endorsement
- Broker Price Opinion (BPO) income
- Escrow Company
- Prepaid Rental Listing Service (PRLS) license
- Real Property Securities Dealer (RPSD) Endorsement