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California Real Estate Exam: Everything You Need to Know
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How does a real estate agent help their client buy a home?
You get the idea of how it all works: agent meets buyer, buyer meets home, dreams are made, and you get paid!
But, when you zoom in on the process, what’s really going on? How does it all come together?
Here’s a step-by-step rundown of the home buying process to help you close that deal.
Your client’s pre-approval letter is your ticket.
The pre-approval letter, also known as a prequalified letter, determines how much of a mortgage loan the homebuyer is qualified for.
This will determine your client’s price range. As an agent, this is important information to have because it will help you narrow the parameters during the next step.
This is when the search begins. To find the perfect home for your buyer, you must use two qualifications to narrow your search.
The first qualification is that it must fit within your client’s budget. Based on the pre-approval letter, go to MLS and search for listings that are within the budget. The second qualification is that it is a property that your clients might be interested in.
Once you have found 5 to 6 properties, it’s time to showcase them to your client.
Previewing properties with your client will give them a chance to interact and see themself in the house. To set up a preview, go through your list of properties and contact the listing agents for a showing.
Once your client are there it is important for you to observe how they react towards the property. Take note of every comment that they have. Whether it’d be something they like or dislike. This is valuable information.
This is where you actually see if the property fits their lifestyle. Based on this information, you can adjust your parameters to find the perfect home.
It will also give your client an opportunity to check out the condition of the home as well as the surrounding area.
Time for negotiation.
After you and your client found the perfect home, you have to make an offer on it. You will use the Residential Purchase Agreement (RPA) to pitch your offer. The RPA is a contractual agreement between the buyer and seller on an agreed upon price of the home.
In the State of California, the RPA is always utilized when making an offer. So, discuss with your client about what the right offer should be. Based on the economy and the real estate market, what is a reasonable offer for that home?
Use this opportunity to consult with your client and share your thoughts. You’re the real estate expert!
When the offer is accepted – it’s a great day! Escrow opens and you’re off to the races.
Opening escrow starts the exchange of money. This is where money is deposited into an escrow account, inspections and appraisals start, and other payments are made. An escrow company holds the money in a secure location to ensure that the seller gets paid and the buyer receives their home at the end of the transaction.
Here’s one of the most important steps in the home buying process. The next step is for the homebuyer to do their inspections, lenders to perform appraisals, and to review the disclosures. In California, the buyers have 17 days to finish these tasks – so time is of the essence!
The buyer will hire the inspector, which you can recommend to them. This will help identify problems with the property before they become disasters. Property issues will also be noted in the disclosures.
In California, real estate agents are required to disclose defects on a property. But, sometimes, they go unnoticed. That’s why hiring an inspector is vital to ensure your client isn’t about to invest their money into a house of cards.
Also, the lending company will send an appraiser to value the property of the home. The buyer often finances the appraisal. By doing so, they will get an updated price on the property. Sometimes, the buyer might find out that the home is actually undervalued.
Once the inspections are done, appraisals are made, and disclosures are sent, it’s time for one, final step: the final walkthrough!
This is where you and your client confirm that the property is in great condition. You’d want your clients to sign the Verification Property Condition (VP.) This document states that the client agrees that the property condition meets their standard.
Always schedule the final walkthrough at the end of the transaction. Here’s why:
The final walkthrough confirms the status of the property. If the final walkthrough is conducted before inspections are made, appraisals conducted, or disclosures are sent, then your client can sign off on a property that has unforeseen problems.
The final walkthrough lets the buyer give the “green light” on sealing the deal. That’s why you need to be absolutely sure that the property is in the buyer’s preferred condition before the final walkthrough.
This is the step where the bank gets involved. The bank will go ahead and verify that the appraisal looks good. This is where the bank now wires the money to either the title or the escrow company. Funding is a great day in the home buying process!
This is where the county declares that the ownership of the property has been transferred to your client. Congrats – the deal is done! The seller gets their money, the buyer gets their home, and you get your commission check. It also signifies the end of escrow.
What separates the newbie agents from the pros is this final step.
You helped your client buy their dream home, you made the process as easy as possible, and everyone had an incredible experience. At this point, emotions are high and the rewards are amazing.
The relationships you make in this career are your lifeline. They help you get more business so you can help people and get paid for it. That’s why you should always ask for referrals or, the very least, a review.
A referral to a friend is all you need to get your next client. If the client had a great experience with you, then they will have no issues recommending you to the next person they know who is buying or selling a home.
Working with homebuyers is an exciting experience. You help people’s dreams come true! With high stakes and high reward comes responsibility.
The home buying process has many steps and it’s easy to get lost along the way or do something out of order. That’s why this process exists. Not only will it help you understand what needs to be done and by when, but it will also help you ensure the best quality experience for your client.
At the end of the day, isn’t that the goal?
A real estate license packs a lot of perks.
With a license, you can represent buyers and sellers in real estate transactions. But, that’s not the only way to see a real estate license.
It’s a tool to make money and create the life you’ve always wanted. The benefits of a real estate license pay major dividends if you know how to use it in your favor.
So, what can you do with a real estate license? A lot. Here’s a list of what you can do with one:
Now, let’s take a closer look at each one of these so we can examine the true benefits of a real estate license.
Becoming a real estate agent is one of the most obvious benefits of a real estate license. The majority of people get their licenses because they want to help people buy and sell real estate.
Working as a real estate agent is unlike any other career. Real estate agents have limitless earning potential, control over their schedules, and can work wherever they want. That’s hard to beat!
Real estate agents are entrepreneurs at heart. They find leads, solve their client’s problems, and they collect a big commission when the deal closes. A real estate license is most people’s ticket to their dream job.
Diving headfirst into real estate is overwhelming. That’s why people will become part-time real estate agents. There are no rules on how much you work as a real estate agent. So long as you have a license, you can work as much as you want.
Becoming a part-time real estate agent is a great way for people to transition into a full-time career. They can test the waters to see if this career is the right fit. If not, they don’t have to commit to changing their lifestyle.
Also, people become part-time real estate agents because they need financial support. There are fees to get a real estate license. They can avoid an all-or-nothing mentality by keeping their day job.
You don’t have to go all-in with a real estate license. You can use it to start that side hustle you’ve always dreamt about. This is a secrete real estate license benefit that most people never think about.
Half of a real estate agent’s job is finding clients. But, if you refer a client to an agent, you can get a cut of that agent’s commission check. This is a finder’s fee, also known as a referral fee. Referral agents are real estate license owners who refer clients to other agents.
If you don’t want to interface with clients, you can create a lead-generating side hustle that makes money through referral fees.
Also, you can choose to work with people who are only in your immediate sphere of influence. This will remove the lead-generating part since you already know the client.
One of the greatest benefits of a real estate license is the ability to use it whenever you want.
Another license perk is the ability to shift careers if you don’t enjoy being a real estate agent. There are 3 jobs you are eligible for with a real estate license. Those jobs are a commercial agent, a leasing agent, and a property manager.
Working in the commercial sector is different than residential. You get bigger checks, different clients, and bigger property. It’s a nice change of pace for agents who want a competitive market with high rewards.
A leasing agent works only with owners who want to lease their properties. They are representatives who find prospective renters. Also, leasing agents will help with various admin responsibilities.
Property managers ensure the well-being of a given property. That includes the physical well-being, legality, and usage of the property.
If you want a job done right, you gotta do it yourself! At least, that’s a thought for some people who buy or sell their house. One of the uncommon benefits of a real estate license is the power to represent yourself.
Real estate agents can buy or sell their property without the help of another agent. But, they can still hire another one if they want. Some do this because they have the experience, time, and capital to do so. By doing the deed themselves, they can save on paying the agent’s commission.
It's not recommended to get it solely to buy or sell one house. It's a lot of time and energy spent. If you are an investor or someone who wants to buy multiple properties then the cost-benefit will be in your favor.
Agents get exclusive access to the Multiple Listing Service (MLS.) This is a database that stores real estate listings in a given area.
If you have a real estate license, you can use the MLS to find properties that meet your specific needs. This is a high-demand perk that real estate investors want. This is because it helps them find the best property possible to invest in.
One of the benefits of a real estate license is the ability to find the best properties first. The MLS is only accessed by those with a real estate license. That means you can beat out listing directories like Redfin or Zillow to be the first one to make an irresistible offer on your dream property.
Real estate investors will find this beneficial because they can have exclusive access to properties before anyone else. For those with the right kind of capital, this will help get the most bang for their buck.
To get a real estate license, you need to pass an accredited real estate school. That means you take college-level real estate courses to learn how real estate works. This means you will learn a lot about the industry and how real estate controls the economy.
The real estate industry connects with everyone. Everyone needs to rent or buy land. At some point in everyone’s life, they will need to have some knowledge about real estate. You can gain another level of knowledge that you can take with you anywhere you want in life.
Not to mention, after you complete your real estate schooling, you can get a job that will make you a ton of money. What’s not to love about that?
When you hang your real estate license at a brokerage, a community of experts will welcome you. A brokerage houses people from all parts of the industry. Some brokerages create an environment that connects you to mentors.
Mentors are professionals who have been there and done that. They have the wisdom that comes with years of experience. They will also take mentees under their wing to teach them their ways. This is a great opportunity for new agents or people who want to learn other skill sets in the industry.
One of the unspoken benefits of a real estate license is the skills you will learn as an agent. Working in real estate will expose you to circumstances you won’t experience anywhere else.
This career is people-focused. That means the skills you learn in this career are something that you can transfer to every part of your life. Whether talking with people, negotiating, or learning how to sell, you can apply the skills you learn in this career anywhere you go in life.
The benefits of getting a real estate license keep coming for those who know how to use it. That’s why you should see a license as a tool. It’s something you can use when you want to earn more money in your life.
There is no limit to what you can do with a real estate license. With an entrepreneurial spirit and a real estate license in hand, you can unlock endless opportunities that will help you craft the life you’ve always wanted.
The foreclosure process is the bank’s (or other financial institution) final effort to collect money owed to them.
What often results from the foreclosure process is a repossessed house, damaged credit, and displaced living.
Despite the gloomy impacts, understanding how the foreclosure process works in California is important because it will help you learn about property ownership, mortgages, and homeowner’s financial options.
So, let's dive in with first understanding, what is a foreclosure?
Foreclosure happens when the property owner fails to make their mortgage payments to the lender and defaults on the terms of the mortgage loan. The lender then repossesses the property and tries to sell it in hopes of retrieving the amount of money that was owed by the borrower. This process functions similarly throughout the country, so it's not specific to California.
Here's a quick overview of the foreclosure timeline:
In California, the foreclosure process typically begins when a borrower misses a mortgage payment, triggering a Notice of Default (NOD) after about 90 days.
Following the NOD, the borrower has approximately 90 days to remedy the default before a Notice of Trustee’s Sale is issued.
This notice sets a date for the property to be auctioned, usually within 21 days.
If the property isn’t sold at auction, it may be listed for sale by the lender.
Throughout this period, the borrower can still avoid foreclosure by paying the overdue amount or negotiating alternatives such as a short sale.
Now, let's investigate each one of these steps in closer detail:
When someone wants to buy a home, chances are they will go to a loan lender to finance the purchase. They will withdraw a home loan, also known as a mortgage loan.
What exactly is a home loan? A home loan is a sum of money lent to the borrower for the purpose of buying property.
But, before the money is given to the buyer and transferred into escrow, the borrower must first sign a promissory note. This is a written contract agreeing to repay the borrowed money under specified payments in a period of time.
In other words, the borrower could promise to pay the lender a fixed rate of $1,500 monthly for the next 30 years.
The borrower’s obligation, outlined in the promissory note, is to pay the lender back their money. When the borrower fails to make a payment, a red flag is raised and the lender will notice.
The promissory note was an agreement made between lender and borrower. The lender had to make a financial decision based on the borrower’s ability to make payments. Now that the lender is not receiving money, they will look for alternative ways to get compensated. Otherwise, they’ll be out the money loaned to the borrower.
This is how pre-foreclosure starts.
Pre-foreclosure is when a property is in the process of being repossessed. The minute a borrower defaults on their promise, a pre-foreclosure takes place.
Once a lender flags a borrower for missing their loan payments, they send a Notice of Default (NOD). A NOD is a court-filed public notice that declares the borrower has defaulted on their loan.
As the name suggests, this is a letter from the lender to the borrower notifying them of their missed payments. The borrower has 90 days from when they receive the NOD to fulfill the overdue payments.
Oftentimes, financial hardships are the reason why borrowers miss payments. They simply cannot afford to make the payments. If that’s the case, the borrower has a few financial options to escape the foreclosure process:
In a pre-foreclosure, the borrower’s first option is their home’s equity. If the borrower has equity in their home, they can sell their home to get the money needed to pay off the loan.
For example, the borrower withdrew a home loan for $1 million. If the house they bought is worth $1.5 million, they can sell it to pay the loan in full.
A short sale is a request by the borrower when their home is worth less than the loan amount. For example, the total amount of the loan is $1 million but the home is only worth $800,000.
Does the borrower still owe the remaining balance on a home loan after a short sale? No. The remaining loan balance is forgiven. But, the borrower does undergo massive damage to their credit score. This will make it harder to borrow money in the future.
If the borrower fails to repay the overdue payments within 90-days, a Notice of Trustee’s Sale is issued. A Notice of Trustee’s Sale is a legal notice stating that the borrower’s property will be sold by a trustee within a given time period.
This is the lender’s way of telling the borrower that their house is being put up for auction. This auction may occur within a couple of weeks from the Notice of Trustee’s Sale.
The lender has the power to put the house up for auction as outlined in the promissory note that the borrower agreed to. In fact, the property is considered an asset of the lenders.
The borrower can still cancel the foreclosure process by paying the money back within this period of time. Although, time is now of the essence more than ever.
A trustee sale of a house is an open auction that rewards the highest bidder. These are operated by the trustee, who has explicit power to carry out the specified direction of the lender.
If the home is sold during a trustee sale, the new owner takes immediate possession of the property. So, the defaulted borrower will have little time to vacant the property.
But what happens if the house isn’t sold during the trustee sale? The lender will still want to get as much money back as possible. So, they will hire a real estate agent to list the house and find a buyer.
When it comes to handling short sales or foreclosures, real estate agents need to weigh the pros and cons carefully. Short sales can be valuable niche for agents willing to dive into the details.
They often involve sellers who are eager to offload their properties quickly, which can mean a faster transaction for you.
Plus, with fewer agents willing to tackle the complexities of short sales, you might find yourself in a less crowded field. Success in short sales can also boost your reputation as a savvy negotiator, which can attract more clients.
However, be prepared for a lengthy approval process and potential roadblocks as you navigate lender approvals and complex paperwork. It’s a challenging ride, but one that can pay off if you handle it right.
Foreclosures, on the other hand, offer a different set of opportunities and challenges. They provide a chance to work with banks and lenders, who might offer a steady stream of properties for sale.
The pricing is often more straightforward, as properties are typically sold at auction or listed at market value by the lender. But here’s the catch—foreclosures can come with their own set of headaches.
Properties might be in rough shape due to neglect, and the foreclosure process can be slow and cumbersome, filled with legalities and strict deadlines. If you’re up for the challenge and have the expertise to handle distressed properties, foreclosures can be a rewarding niche.
Just remember, it’s all about balancing the potential rewards with the effort required.
One of the most crucial aspects of the foreclosure process is time. It’s all about the timeframe. If the borrower is having any difficulty making the payments, the best thing to do is to contact the lender immediately.
Things get messy when the borrower procrastinates the issues. This isn’t a problem that goes away if the borrower ignores it. It has the potential to leave a devastating impact on the borrower’s life.
A real estate license background check decides if you qualify to become an agent in California.
The Department of Real Estate (DRE) requires all California license applicants to take one. This is because they want to maintain the integrity and safety of the industry.
So, what happens when you want to get your real estate license but have a criminal history? Does this mean it can’t happen?
Wrong! Even with a criminal background, you can still qualify for a license in California.
In this article, you will learn what will disqualify you, how background checks work, and how you can submit a real estate live scan.
Outside of not fulfilling the basic requirements, there is one thing that disqualifies you from a license. That is your criminal background check.
A real estate license background check occurs when the DRE reviews what crimes (if any) you have committed. Depending on the crimes, the DRE will stop you from practicing real estate in California.
But, the DRE doesn’t disqualify you for any crime you have committed. According to § 10177(b) of the Business and Professions Code, the DRE will disqualify applicants based on crimes “Substantially related to the qualifications, functions, or duties of a real estate licensee.”
In other words, they only disqualify license applicants based on how relevant that crime is to your career as a real estate agent.
Can you still get a real estate license if you have a felony? The answer is: it depends. If your felony relates to the work or duties of being a real estate agent, then the DRE will disqualify you from getting your license.
This rule goes for any type of crime, whether it be a felony or misdemeanor. But, it does not pertain to infractions.
At the end of the day, the DRE determines what crimes relate to being a real estate agent.
Note: The DRE cannot solely deny applicants based on a pending criminal conviction. The issuance of a license cannot get denied while they are charged with an indictment, arraignment, or similar charging procedure.
You can still apply to get a real estate license even if you have a felony. But, there is no guarantee that you won’t get disqualified. The best course of action, if you want to become a real estate agent and you have a felony, is to be transparent.
Contact the DRE to see if you are still qualified. Don’t try to sweep anything under the rug when you do. You want to learn if the DRE will disqualify you based on your true past actions. Also, the DRE performs an extensive background check. So, you will get caught hiding the truth.
A real estate license background is required to become an agent in California. This is something that every applicant must do.
Applicants must complete a fingerprint live scan. Police departments, notary offices, and other private businesses can conduct a live scan. You can find a state-approved list of California live scan locations by on the DRE website.
After completing your live scan, you must submit your classifiable fingerprint to the Department of Justice (DOJ). Then, the DOJ will inform the DRE of your past criminal convictions and arrests.
The DOJ will put your fingerprints into their database so they can notify the DRE if you get convicted of a crime or arrested in the future.
The background check returns information on an applicant’s entire history. This is why we recommend all real estate license applicants, with a criminal history, are honest and transparent.
Keep in mind, the DRE works with the DOJ to perform your real estate license background check. So, this is as thorough and complete as it gets.
A live scan is an electronic scan of a person’s fingerprint used for identification purposes. Live scans are the industry standard to perform background checks on anyone applying for their real estate license.
The processing and recording of a live scan can take upwards of 72 hours to complete. The DOJ shares the fingerprint with law enforcement agencies to record all criminal activity committed by a person.
Once committed, the DOJ contacts the DRE about the crime. Then the DRE carries out disciplinary actions to the license carrier.
Let’s cover how you can fulfill the live scan part of your license application.
First, download the RE 237 form from the DRE website. Once completed, you should print 3 copies of this form.
Second, fill out the 3 forms as much as possible. Some sections of the form need the live scan service provider to fill out.
After you have filled out all 3 RE 237 forms, the live scan service provider has filled out their sections, and the fingerprint has been taken, you can mail the forms.
The fingerprint service provider will take one of your copies. You will hold onto one of the copies. Then, you will mail your final copy to the DRE at the following address:
Department of Real Estate
P.O. Box 137002
Sacramento, CA.
95813-7002
Attn: Fingerprint Desk
The cost of a real estate live scan varies based on the service provider. Typically, you will spend no more than $50. But, every provider will have 2 separate fees:
The provider, on the DOJ’s behalf, collects your fingerprint processing fee.
The service fee is charged by the service provider for taking the electronic fingerprint. This is typically the fluctuating cost, depending on the provider.
The real estate license background check is a DRE requirement. This is to ensure the integrity and safety of all California real estate agents.
A criminal history can disqualify you from becoming a real estate agent. But, this depends on whether the crime relates to the duties and responsibilities of being an agent.
Applicants with a criminal history should always be honest about their past. Transparency can work in an applicant’s favor. But, nothing is guaranteed and ultimately comes down to whether the DRE decides how the past will affect the future.
A real estate license can qualify you for more than a career as a Realtor®.
When you get your license, you can become a property manager in California.
Property managers handle the paperwork and ensure the well-being of the property. A property manager is a licensed third party who manages the property for the landlord. It’s a job that’s in high demand!
So, let’s explore what you need to do to become a property manager in California.
Short Answer: In most cases, yes, a real estate license is required if you plan to handle the core functions of property management—such as collecting rent, negotiating leases, or managing trust funds—on behalf of an owner for compensation. However, there are some limited exceptions, which we’ll explain below.
Under California Business & Professions Code §10131(b), any person who, for compensation, does any of the following on behalf of another is performing a licensed activity and must hold at least a Salesperson License (under a Broker) or be a licensed Broker:
If you want to offer comprehensive property management services for multiple clients or owners—marketing units, signing lease agreements, and collecting rent—you typically need to hold a California real estate license.
Getting a real estate license is the first part of becoming a property manager in California. This guide gives you instructions on how to get your license and become a property manager.
To become a licensed property manager, you need to meet the following requirements:
Meeting these requirements ensures that you can get hired at a real estate brokerage and service clients.
An accredited real estate school is where you will fulfill the pre-licensing educational requirement to get your real estate license. A real estate school provides students with three required courses:
Each course has concepts that help you understand real estate as a practice.
You get a certificate of completion after you pass an accredited real estate class. The certificate is proof of completion. So, to schedule your California real estate exam, you need to collect all three certificates.
The final step before getting your real estate license is to schedule and pass the California real estate exam. Students have to apply before they schedule the licensing exam.
Their application must include:
After compiling the paperwork above, you can mail your application to the Department of Real Estate (DRE.)
Property managers must hang their license at a real estate brokerage. In other words, a broker must hire an agent to work for them. Once you pass the state exam, the DRE will mail your real estate license. Once it arrives, you can sign with a brokerage.
Property managers can also go on to get their real estate broker license. Once they do, they no longer have to work for a real estate brokerage. Instead, they can represent themselves.
The next step is to get a property manager certificate in California. Although not required, it is recommended to get a certificate to provide extra credentials to your expertise. A certificate is proof of your accreditation and proper educational training.
Getting your property management certificate requires more schooling. You have to attend a 10-coursework class and pass the state exam to get your property management certificate. This process takes 18-24 months to complete.
The final step is to start your property management company. This is a requirement for everyone to complete if they want to book clientele.
In the state of California, the Department of Real Estate will not recognize a property management services company as an LLC. You will have to incorporate your company to be an approved business to operate and help clients.
Property managers have a lot of responsibilities.
One of the biggest duties of a property manager is handling rental contracts. They’re responsible for screening any tenant that sends an application. Whether it’d be through background checks or checking the credit scores of the tenants.
Also, property managers schedule home inspections. The first inspection happens when the tenant moves in, and the second happens when they move out.
Communication is also another part of the property manager’s job. As the property manager, you are the middleman. Regardless of what is happening in the property, you must update both the landlord and the tenant.
On top of that, property managers manage finances and accounting. From collecting rent payments to paying the expenses. All while ensuring they handle marketing and schedule showings.
To ensure a smooth business, there are a few things that you need to know before you become a property manager.
First, you need an accountant and a real estate attorney. These two are essential to know your business complies with California laws and regulations.
Understanding the financial side is also vital to your operations. You will need three (3) separate bank accounts.
From there, you will need to set up your Errors and Omissions Insurance. The Errors and Omissions Insurance covers you in case you get sued or enter a legal quagmire. Accounting software such as QuickBooks can help you track your money.
Also, join a trade association. Trade associations such as the California Apartment Associations have every form you need. You also should join a credit bureau association. These associations can help you perform background checks for your tenants.
Finally, you need to consider how you market your business. A website, signs, and other lead generation investments are a great way to market yourself. Also, ensure you align and document your policies and procedures. These help people understand you conduct business.
Data from the U.S. Census Bureau’s Residential Vacancies and Homeownership Annual Statistics shows that California’s homeownership rate has stayed around 54–56% from 2019 to 2023.
This means that about 44–46% of the state's housing units are occupied by renters. With an estimated total of about 14.76 million housing units in 2023, there are roughly 6.5 million rental units.
The following chart displays the estimated percentages of renters, which are calculated as 100% minus the homeownership rate, for these years.
Sources: U.S. Census Bureau’s QuickFacts and Residential Vacancies and Homeownership Annual Statistics.
Between 2019 and 2023, the number of property managers in California steadily increased. According to U.S. Bureau of Labor Statistics data, there were about 37,870 property managers in 2019.
In 2020, the number dipped slightly to around 37,630, likely due to the pandemic’s impact on the rental market. However, the industry rebounded in the following years.
By 2022, there were roughly 46,810 property managers, and 2023 estimates indicate there were about 50,100 property managers based on payroll employment data. (Note that these figures do not include self-employed property managers, who make up a significant portion of the workforce.)
This consistent growth reflects California’s expanding rental market and the increasing need for professional management services for a diverse range of residential properties.
*Estimated value for 2021 based on the upward trend observed between 2020 and 2022.
Sources: U.S. Bureau of Labor Statistics (BLS); California Employment Development Department (EDD).
California’s property management field is growing fast. The number of property managers increased from about 37,870 in 2019 to an estimated 50,100 in 2023. This shows that more people need professional property management services.
The growth is driven by California’s busy housing market. With roughly 6.5 million rental units and high rates of renters, there is a constant need for skilled property managers. New residential developments, complex regulations, and market pressures—like high rental demand and low vacancy rates—mean there will be plenty of work in this field.
Whether you plan to work for an established company or start your own property management business, the market conditions in California look promising for long-term growth.
Becoming a property manager is a long process and hard work. But, that shouldn’t deter you from starting. The reason why is because there is no other career like that of a property manager.
You create your own company and you can watch it grow as you work hard to expand it. It’s hard-working, but it’s also rewarding work.
Want to learn more about property management? Join our Property Management course. This course offers the most current and thorough overview of the property management industry to get you started in the career. Tap the "Enroll" button below to join today.
Are you thinking about switching brokerages?
Switching brokerages is not unusual in the real estate industry. Yet, most agents think it’s much harder than it is.
Reasons for leaving may vary from agent to agent. But, all you need to do is familiarize yourself with the process.
Not every brokerage can meet your needs. When you’re ready for something new, you can always mix things up. Here is how you change your real estate brokerage.
Now, let’s explore what you need to do during each step.
It is always important to conduct research when looking for a new brokerage. You can ask people you know who work at other brokerages, interview with brokerages, or do a quick internet search. The idea is that you have to make a shortlist of new brokerages to consider.
The best way to start looking for a new brokerage is by giving them a call. Also, you can use this opportunity to get to know the brokerage and ask basic questions. Before ending the phone call, be sure to book an appointment with them.
When you meet with a new brokerage, recall the unmet needs you have with your current brokerage. Ask questions to find out if this new brokerage is a good fit for you and your business.
If this new brokerage checks every box, then you can start discussing making the switch.
Once you have found a new brokerage, you will now have to inform your current brokerage of this decision. It’d be best if you were to inform them yourself. As much as possible, avoid informing them of your decision via email or text message.
Discuss your decision to change real estate brokerages with your leadership. Also, make sure you do it with professionalism and without offending them. Explain to them your reasons for leaving and be articulate as possible. The last thing you’d want to do in the real estate industry is to burn bridges.
It is important to note that not every discussion is smooth. Your leadership can talk you into staying but you have to remain firm in your decision.
Once you informed your leadership of your decision to leave, you have to file the paperwork. There are 2 ways to do this.
Your first option is via the Department Real Estate (DRE.)
You start by getting the form RE-204 from the DRE. This is the application form for changing brokerages.
Once you have obtained the form from the DRE, both your current and new brokerages will have to sign this. After it’s signed by both parties, you can send it back to the DRE.
Your second option is via the DRE website.
Fill in the form and answer the questions on why you’re switching brokerages. The website will forward this form to your current brokerage for their confirmation. Once your current brokerage confirms the form, input your new brokerage’s information.
There may be many reasons why you are considering a brokerage switch. More often than not, it’s because your expectations are no longer met or satisfied.
One of the reasons why an agent switches brokerages are the financial deals offered.
When you started working with this brokerage, they gave you a flat commission split. That may have worked to your advantage.
But, now that you have grown, you are closing bigger deals and a flat fee no longer works for you. Also, it’s possible that the commission split seems unfair to you.
How well does your brokerage treat its agents? Are their values still aligned with yours? Is it still a healthy work environment where you feel happy?
Sometimes, your reasons may not be financial. If you have been with your brokerage for years and something feels off, then it may be a problem with cultural fit.
There could have been a change in leadership. Now, this new leadership no longer provides the support that you need.
It’s possible for agents to feel that their work is not acknowledged enough. Also, it’s possible that there is a lack of transparency between the leaders and their agents.
Poor leadership can drive real estate agents to make the switch.
Continued training and education are crucial to a long-lasting career in real estate. If you are no longer getting the training that you need, then it’s time to move on.
Growth is a cornerstone of progress in this career. The best way for agents to grow is through training and education. If a brokerage no longer offers these (or never had) then seeking them out should be a priority.
Technology plays a crucial role in the day-to-day lives of real estate agents. Outdated technology can lead to poor performance and workplace happiness. Whether it’d be slow processing of data and paperwork or not having the right data at the right time.
These are small things that can make or break a deal. When you change real estate brokerages make sure to seek out one that’s savvy to the times.
In an industry where trust and relationships are the names of the game, reputation means everything. If your brokerage has a bad reputation, it can affect your business.
Sometimes a brokerage can have a poor reputation that deters agents or clients. This is why finding a brokerage with a great reputation (and Google review) will work in your favor.
Growth can come in many shapes and forms. In real estate, it can be in the form of expanding your business or network.
One possibility is that you want a new mentor who can help you build your expertise. Maybe you’d like to expand to a new community or neighborhood. It’s also possible that you’d want to venture into a new segment of real estate.
At the end of the day, you have to remember that you are an independent contractor. As an independent contractor, you have to look out for yourself and what’s best for your career.
Switching real estate brokerages is not unusual and is sometimes necessary. There are plenty of reasons why you should change real estate brokerages.
If you’re no longer happy and your expectations are no longer met, then it’s time for you to move to a different brokerage.
Let’s face it, real estate transactions can be extremely complicated and take up a lot of an agent’s time. But, dealing with contracts and disclosures comes with the territory when you’re in escrow.
While this is a necessary part of being a real estate agent, savvy agents leverage their time, so they can continue cultivating leads and getting new business.
One way to make time for yourself is to hire a transaction coordinator (TC.)
One important thing to know is that a Transaction Coordinator is not an assistant. Their priority is to keep the transaction in order and manage the documents.
So, what is a transaction coordinator, and what do they do?
First, let’s look at the transaction process to see how a transaction coordinator gets involved.
When you’re an agent, you represent your clients. Whether it’s the buyer or the seller, they are the principals in your real estate deal.
Opening escrow starts the transactions process. The escrow company is responsible for ensuring that every stipulation of the contract is met. They act as a neutral third party to protect the deal’s integrity.
But, they don’t exactly work for you. Transaction coordinators get their fees from the seller.
All the required contracts and disclosures involved with the transaction must be completed and signed by all parties. This usually falls on the agent, but you can hire a transaction coordinator to do this for you.
A transaction coordinator’s goal is to handle contracts and disclosures. They are responsible for ensuring that all documents are completed in the proper time frame.
The offer will outline when certain documents are due and which parties get them. The transaction coordinator will calendar all dates and keep you informed.
A transaction coordinator will do the following:
While these are the common duties, every transaction coordinator is different. Ask upfront what services they provide. That way, everyone is on the same page.
A Transaction coordinator does not have to be licensed, but you should hire one that does have one. When a transaction coordinator has a license, they become familiar with the transactions process and disclosures.
Despite whether a transaction coordinator has a license or not, there are a few things you shouldn’t expect them to do.
A transaction coordinator will prepare certain disclosures, but they won’t write them. But, they can explain everything you need to know about disclosures.
A transaction coordinator will talk with all parties to gather signatures or to deliver documents. But, don’t expect them to negotiate terms with the other agent or their client on your behalf.
Your transaction coordinator will schedule reports, such as a home warranty or NHD report. But, they won’t schedule general or termite inspections.
As the agent, you are present at these inspections. You must maintain control and coordinate them yourself.
The benefits of hiring a transaction coordinator are:
On average, completing a file can take anywhere from 8-15 hours. Each transaction is different, so that estimate depends on the deal and how many parties are involved.
As we discussed earlier, gathering all the required documents and disclosures is tedious and time-consuming. They will also save you time by updating all parties on the status of the file. Using a transaction coordinator can help you leverage your time and use it on more productive tasks.
As an agent, you will have time to get more leads, meet with new clients, and network. You will be able to get new listings and secure future income. These activities result in more open deals and more commission checks.
As mentioned earlier, the goal of the transaction coordinator is ensure the success of every document. This will result in flawless paperwork and ensure that you have fully compliant files.
This is crucial. This will limit your liability if you are sued or a complaint is filed against you. Your files may also be subject to a random DRE audit. Having clean files will lessen the chance that you have to use your Errors and Omissions Insurance.
Errors and Omissions Insurance helps protect you from lawsuits. This is a safeguard against people who claim that you made a mistake or were negligent while performing as an agent.
Yes, hiring a transaction coordinator is affordable! They are considered independent contractors. This means they get paid per deal and are not considered an employee.
Prices will differ depending on what services they provide. But the average price you can expect to pay is between $350 – $500 per file. Overall, this is a fraction of what you will receive as your commission.
Most agents will have the escrow company pay the transaction coordinator along with their commission check. This makes payments simple.
Every agent should use a Transaction Coordinator. The benefits and advantages outweigh any cost.
As a new real estate agent, it is always a good rule to have ownership of a task before you give it away. So make sure you are informed of the process and have a good understanding of the disclosure and contracts.
That being said, make the investment to use a Transaction Coordinator. They will literally save you time and money.
A real estate transaction is hard to close. So many moving parts make it stressful and hard to maintain.
That’s why they pay real estate agents the big bucks.
A buyer can back out of the deal at any given time for many reasons. As a real estate agent, you must be aware of these should you ever encounter them.
Here are some of the most common reasons buyers back out of real estate transactions:
One of the most common reasons a buyer backs out is they get cold feet. Buying a home can be overwhelming for any homebuyer.
Aside from the emotional journey that they go through while choosing a home, it is also time-consuming. From going to several open houses to finishing the paperwork, buying a home is no easy feat.
On top of that, it’s a major investment! Most likely the biggest investment they will make in their lives.
That comes with a great deal of pressure and commitment. A buyer may realize that they’re not ready to make a decades-long financial commitment.
A real estate transaction may fall through because of unexpected expenses, even with qualified homebuyers.
Aside from the mortgages, there may be several repairs required for the property. This realization usually happens after the home inspection. A home inspector’s job is to examine and check every square foot of the property and report back to the buyer.
The results may show the need for major repairs and that can scare away a buyer.
To prevent this from happening, it’s worth suggesting to your sellers that they hire a home inspector before the listing. Should they agree, review the results with them and discuss possible options. They may choose to take on minor repairs, major repairs, both, or neither. Either way, it would still be helpful for you and your sellers.
Being aware of the issues and repairs that are needed immediately gives you an upper hand with the negotiations. Also, you can value the listing at an appropriate price post-inspection. This way, you mitigate the risk of the buyer backing out.
Sometimes, the homebuyer changes their mind. The home buyer might see the property for the first time and fall in love.
Then, later, when they have a fresh pair of eyes, it could look different. A buyer can visit the property again after some time and realize that they’re no longer confident in buying.
Unfortunately, this could happen in the middle of the real estate transaction. Remember to always ask questions to understand what it is about the property they don’t like. That way, you can always provide them with the best options later.
Keep in mind that a homebuyer is looking at more than one house. When they walk into your listing, they can be ecstatic – enthusiastic about living in that house. At the same time, they can be making offers on other homes.
This is because they want the best deal on a home. If their dream home breaks their budget, they will opt for their backup option.
As a result, you can lose a lot of time and energy engaging in a deal that falls through. A great solution for avoiding this to set a high earnest money deposit.
A high earnest money deposit will solidify your buyer’s commitment to you. Investing more money upfront creates more stakes and shows the buyer wants to buy your listing.
This doesn’t keep them around, of course. The buyer can still back out of the real estate transaction. But, if a buyer commits to the earnest money deposit, you will be more reassured that your buyer is serious about purchasing the listing.
It’s not unusual for a buyer to buy or sell a home at the same time. This is called concurrent closing. Most buyers get their funding from the sale of their previous home.
So, the buyer can back out of the real estate transaction because they can’t sell their first home.
What’s important in this situation is communication. Keep an open line with the other agent or the homebuyer to verify their progress.
If you receive a concurrent closing offer, you will know to change your expectations for the real estate transaction should you accept it.
Have you ever bought something and asked yourself, “why did I buy this?” Sometimes, a buyer may not have any other reason for backing out other than a buyer’s remorse.
This usually happens after a buyer makes a huge investment. They may feel anxious and change their minds after committing out of the blue.
When someone experiences buyer’s remorse, it’s important to be patient with them. As the listing agent, it’s your job to lay down the facts with your potential buyer and remind them of why this is a worthwhile investment.
Understanding why people back out of the real estate transaction is hard. From cold feet to buyer’s remorse, there are tons of reasons why that would happen.
This is what makes the job of a real estate agent so emotional.
The answer to coping with the ever changing real estate transaction is to do everything you can to close the deal. So, if things go awry, remember that it’s a-okay. It happens. It’s part of the job.
Everyone has their reason for terminating the real estate transaction. Staying positive, not becoming obsessed with closing, and fulfilling your duties to the best of your ability help you increase your chances of closing and also creates the best possible experience for all parties.
You have to build strong relationships with your clients to have a long, lucrative career in real estate.
The top producing agents earned their fame and fortune because of the people they know.
So, how do you build a strong, reliable, trusted relationship with people?
The answer: provide good customer service.
When your clients like working with you, they will recommend your services to other people they know. That’s how successful real estate agents create their careers.
Their network starts finding work for them.
Now the question becomes, “how do you provide great customer service to your clients.” To do this, you have to build trust with your client.
The National Association of REALTORS® created a method to build trust that has helped millions of agents generate satisfying customer service.
This method is a set of ethical rules that agents follow to foster a trustworthy relationship with clients.
It’s called fiduciary duties. So, let’s learn about the fiduciary duties of a real estate agent so you can foster trust.
What does fiduciary mean?
In its simplest form, fiduciary refers to a trust.
Once a client signs a contract with you, a fiduciary relationship forms.
This relationship means that the client now places their trust in your hands. In return, you perform your work with your clients’ best interests in mind.
The fiduciary duties of a real estate agent are:
Now that we know the fiduciary duties of a real estate agent, let’s explore what they mean.
Real estate agents must fulfill their fiduciary duties. By doing so, they uphold the credibility of not only themselves but agents across the country.
So, let’s see how you can apply the fiduciary duties of a real estate agent to your career.
Loyalty refers to an agent’s responsibility to be loyal to their principal (client.) Regardless of the situation, you must always put the interests of your client ahead of your own.
For example, you represent a buyer who wants to buy a 5-bedroom property with a maximum budget of $1,000,000. If you find a listing that meets your clients’ requirements for $700,000, you have to tell them.
Monetarily speaking, you earn a bigger commission check if your client buys a $1,000,000 listing. But, because the $700,000 is a better deal for your client, you must tell them about it.
On the other hand, if you represent a seller, then you must do everything in your power to sell the property. You must market the listing and close it while getting the best deal for them.
One fiduciary duty of a real estate agent is to adhere to the lawful requests of their clients.
If your client asked you to take a break from marketing their home for a week, then you are legally obligated to follow their instructions. Also, if your client asks you to stop showings while they aren’t around, you have to stop showings.
But, you may encounter a client who asks you not to entertain offers or showings for people of a specific religion or race. In this situation, you should not follow the order because doing so is discrimination, an unlawful act.
A client may also request that you do not disclose a property defect. Withholding this information may help you sell the property fast and earn more money, but it’s illegal. So, you are obligated to disclose all information about a house – even if it goes against your client’s wishes.
This fiduciary duty instills the client’s confidence in you as their representative.
Confidentiality of information means not sharing information that your client gives you. This information is vital if the disclosed information damages the reputation of your client and affects ongoing negotiations.
Here’s an example: if you represent the buyer and discover they are comfortable paying more, you shouldn’t disclose this information to the listing’s agent.
On the other hand, if you’re the seller’s agent, you cannot inform buyers that your client is willing to accept low offers.
Always ensure you’re getting the best deal for your clients.
If you have information that can benefit your client in the negotiations, you must disclose it.
For example, you must share information about the property’s well-being with your client. This information will position your client better for negotiating a lower price if there is a property defect. Also, if you represent a seller and find out that the buyer urgently wants to sell, you can tell your client.
Another piece of information you must always disclose to your client are offers. Regardless of how bad an offer is, you should share it with your client. Also, You must inform your client should a potential buyer or seller be someone with whom you have a relationship.
Another fiduciary duty of a real estate agent is to take good care of the client’s funds. The first part of this duty is understanding the elements of financial transactions and how you should handle them.
You have to let your client know where their money is going.
Whether you’re a buyer’s agent or a seller’s agent, you have to keep track of the money.
You can’t accept your client’s funds. For example, if your buyer hands you their deposit for the property, you must send it to escrow. Do not deposit it to your account, even if you intend to send it to escrow.
The last fiduciary duty is to apply reasonable care.
As a real estate agent, people expect you to act as a capable professional.
You must apply and exercise your skillset and knowledge with diligence. By doing so, you create a strong, trustworthy relationship with your client.
Do fiduciary duties of a real estate agent apply to third parties? To put it simply, no.
But, just because you don’t have a fiduciary relationship with them does not mean that you are allowed to break the rules. You’re a licensed professional, so you should uphold your professionalism with everyone you work with.
The fiduciary duties of a real estate agent demonstrate how to uphold integrity. When you practice these duties in every relationship, you will build trustworthy relationships.
These relationships will provide long-term benefits to your career because you provide exceptional customer service. That’s how real estate agents become successful. In short, don’t try cutting corners or sneaking your way to money because the best way to earn success is with integrity.
As a real estate agent, you will encounter the terms ‘law of eminent domain’ or ‘eminent domain’ in real estate. But what does it mean?
Eminent domain is the government’s right to expropriate private property for public use. In exchange for this, the homeowner gets compensated with the property’s fair market value. Let’s break this down a bit further:
The process of eminent domain starts when the government or agency has a public interest project. This project would then need to be in a specific location that gives the greatest return to the public.
Once they have identified a specific property, an agent will evaluate it to determine its fair market value. So, the amount determined by the agent will represent the compensation that the owner of the property will receive in return.
The appraiser must be independent, accredited, and knowledgeable about the property.
After the fair market value is determined, the offer gets presented to the owner. But, if the owner finds this unreasonable, they have the right to hire an appraiser. If the buying party and owner can’t agree, then negotiations may begin.
That is why the owner should have an attorney throughout this process. A real estate attorney can ensure that the owner is aware of their rights.
One of the first requirements of eminent domain is public use. For a project to be considered as “public use,” it should serve a purpose that can benefit the public. That means if a project benefits personal interests or a specific group of people, no eminent domain shall take place.
Some examples of valid projects for public use are bridges, reservoirs, freeways, roads, and parks.
There are some occasions when people other than the government have the power to exercise eminent domain, such as public utilities.
Projects such as electricity lines or new pipelines get presented to the California Public Utilities Commission. Should the Commission find merit in the case, the public utility must win the case in the Supreme Court.
Once that is done, the Supreme Court will order the public utility to compensate the property owner with fair market value.
There are three different approaches to determining a property’s fair market value.
The appraisal agency notifies the owner of the property in advance when their home will be appraised. Also, the owner should be present during the appraisal.
Here are the methods used:
Comparable sales is based on the idea that no one else would be willing to pay more than they would for a similar property. This approach utilizes data from the recent sales of comparable properties to determine the value of a parcel of land.
Agencies will use this approach when determining fair market value for residential properties. Characteristics such as the number of bedrooms, bathrooms, and other features are used to identify similar houses.
The income approach is ideal for income-generating properties. The fair market value of the property is based on the income that the property can generate. This method determines the value of the property as an investor.
This method is used for specialty structures wherein the property of interest is unique and is designed to operate for something specific. In cases such as this, the only acceptable way to replace it is to reproduce the structure elsewhere.
To determine the fair market value of the property, the experts would evaluate two different components. The first component is the value of the land without any structure. The second component is the value it would take to replace or reproduce the existing structure on the land.
It should be noted that under this approach, depreciation is also considered and is deducted from the final fair market value.
There are several different types of eminent domain, here are some of them:
A complete taking occurs when the government takes an entire parcel. The owner’s compensation is equivalent to the fair market value of the property under its best use.
The partial taking only assumes a part of the land. The just compensation for partial taking consists of two different components.
The first component is direct damages. Direct damages refer to the acquired land’s value of improvements. The other component is indirect damages, which are referred to as severance damages.
As the name suggests, this type of eminent domain will only require the owner to give up their parcel of land for a fixed time. Typically, the just compensation for this taking is the rental value of the property that is being occupied.
Permanent taking means the property, condemned by the government, will never return to the owner. The most common projects with permanent takings are roads, highways, and other public infrastructures.
Eminent domain is an emotional experience. Nobody wants to lose their home. But, this is a power that the government holds over property owners.
For eminent domain to go into effect, there must be “public use” involved. Examples include building highways, schools, or other necessities. If not, then there are no grounds for eminent domain to stand on.
If your client is buying a house with defects, they don’t have to stay silent. Nobody wants to buy a house with structural problems!
Homebuyers can request house repairs before they buy it. Doing so is common across California.
A buyer’s agent can issue the request for repairs during the transaction. When the deal closes, the buyer has a house they love, without the added need for repairs.
So, how do request for repairs work in California?
Buyers should request repairs after a home inspection.
A professional will find every issue that is not obvious. Surface-level blemishes are easy to spot, but buyers need a professional to see the real problems.
The home inspector will create a list of property defects to fix. This list is called the inspection report.
The inspection report is a powerful negotiation tool for agents because it can influence a home’s final cost. The inspection report has this power because it has professional opinions about the well-being of the property.
If the property is in poor condition, the agent has more negotiation power to lower the sales price for the homebuyer.
As an alternative to lowering the price of the home, the buyer’s agent can issue a request for repairs.
A real estate agent should talk to their client about the inspection report. The goal is to decide what, in detail, the home seller should fix.
When they decide on what needs repairs, the real estate agent has two options:
A request for repairs form is a document that lists the home buyer’s repair needs before they buy the home. The buyer’s agent sends this document to the seller’s agent for consideration.
A buyer’s agent can amendment the purchase agreement to get the home seller to repair the property. When amending the purchase agreement, agents should always be specific and direct in their language. This way, there is no confusion about what the seller must do to sell their home.
Homebuyers could be scared of losing their dream home if they request repairs. In a seller’s market, that fear makes sense. But, not all home sellers will react the same way when they see a repair request.
Home sellers can accept all requests, deny all of them, or negotiate which to repair. This is when real estate agents help the transaction. The agents negotiate on behalf of their clients to determine the best option for everyone.
Each agent will take into consideration the market and their client’s priorities. The buyer’s agent will have more leverage in the buyer’s market because they have more options (vice versa in a seller’s market.)
Instead of fixing the repairs, the home seller might agree to offer cash credit.
Cash credit works by deducting the home seller’s earnings to give the home buyer money for repairs. Escrow companies manage cash credits so long as they offer it as an option.
Finding the defects and sending the request for repairs form are the easy parts. The challenge is navigating those requests with the other party.
Some deals crumble because the houses need too many repairs.
A request for repairs runs the risk of scaring away a seller. But, the buyer won’t invest if a seller doesn’t make the repairs. This problem needs a mediator.
Real estate agents negotiate on behalf of their clients. Their goal is to get the best deal possible for their client without dropping the deal. Moments like these are what make agents so valuable. Instead of canceling the deal, they find a middle ground that will make both parties happy.
The agent and buyer must work together to send a request for repairs. The seller might deny them, but you never know if you don’t ask.
First impressions make deals.
The listing presentation is a real estate agent’s opportunity to make a first impression on their prospective client. This is the presentation that pitches them as the best person to hire.
A great listing presentation converts home sellers into clients.
There’s a common saying in real estate that goes, “when you list, you last.” It means that agents who work with listings have long-term success.
So, how do you make a powerful listing presentation to get the listing?
You have to focus on building trust. When the prospective client trusts you with their biggest investment, then you have a deal.
Building trust in your listing presentation comes down to 5 steps.
Dressing like a professional makes you feel like a professional. When you feel like a professional, your prospective client believes you’re the professional.
Clients want real estate agents who they can trust. Dressing like a professional sends the message that you are serious about your career. You show the client that you hold your work to a high standard.
From the client’s perspective, they want a real estate agent who wants the best for them. The client’s well-being is their priority, which is why they are looking for a real estate agent.
Communicate to the prospective client that you uphold your fiduciary duties and ensure their well-being. The client expects professionalism. So, deliver on their expectations and become professional – starting with what you wear.
Information sells. The information you share with the prospective client is part of making a powerful listing presentation.
So, what do you include in your listing presentation? You should communicate the value you can give with numbers. A property profile shows their land’s primary selling points. So, add this data:
Collecting this data shows the value position the listing can take in the market. It can show your home seller how much money they can make. At the end of the day, they want the best deal possible.
The competitive market analysis shows how much money similar houses made when they were sold. This analysis collects information from houses that fit the make-up of the property you want to sell.
This information can become skewed if the information is not collected right, which gives your client the wrong expectation.
So, how do you make an accurate competitive market analysis?
Start with learning about the house’s make-up. Contact a title representative to collect information on the square feet, bedrooms, bathroom, age, encumbrances, and anything else that you can find. Next, use the MLS to find similar houses in the area to see the sales price.
Once you have this information, you can make an accurate estimate of the property’s value.
The property value is a powerful piece of information. It shows the seller how much they can make. They don’t just see the number, but they visualize everything they can do with that money. They feel what life is like when they have that much money.
The seller’s motivation to sell tells you how to handle the listing sale. Their motivation determines the goal you set for yourself.
If the prospective client’s purchase of another home is contingent on the sale of their current home, then time is of the essence. Speed is a priority. But, if they are an investor who wants to cash out, then time will come second to earnings. They want the most money possible from the sale.
So, how do you find your client’s motivation for selling?
Make time to understand their motivation. Communicate with the client. Top-producing listing agents get to know their clients because that’s how they get the information they need to satisfy their needs.
Time to pick a price. The price determines how much money the prospective client makes and how much you, the listing agent, make.
The price of the home can become a contentious subject. Sometimes, the seller will ask for a higher price to make more money. They might expect to make more money (especially if the market is in favor of sellers.)
As an expert in real estate, you must share a convincing reason as to why you chose the price. Take the seller’s motivation into consideration along with the market and your CMA. Together, these factors should help you show your prospective client the correct answer.
Remember, at the end of the day, your fiduciary responsibility is to follow your client’s wishes. So, if they don’t budge on the asking price, you can choose to follow their wishes or turn down the listing.
After you and the prospective client agree on a price, you should have them sign a Residential Listing Agreement (RLA). This is an official declaration of converting them from a prospective client to an actual client.
The RLA should communicate, with clarity, the timeline of the representation and the expectations of the parties involved. Now, all that’s left to do is sell the property.
What makes a real estate listing presentation powerful is its ability to build trust. So, your goal is to ensure the prospective client can trust you. You can do this with how you present yourself, the data you share, and how you communicate with the homeowner.
At the end of the day, the homeowner wants everything to go well for themselves. So, practice empathy. What would convince you to hire a specific agent to sell your home?
How do people afford houses? They cost so much money!
The way most people pay for the cost of a house is with a home loan from a bank.
This is a large chunk of money that the bank loans to homebuyers to help them buy their house. Over time, the homebuyer pays the loan back with interest.
Real estate agents should expect their clients to withdraw a home loan to buy a property. Unless they’re sitting on a big mound of money.
So, at some point, you will encounter the word “pre-approved” or “pre-qualified.”
That’s why you should know the difference between pre-approval vs pre-qualified. One guarantees a loan, the other doesn’t, and that will make or break the transaction.
Here’s what a pre-approval letter means: a letter that verifies the approval of a specific amount of money that the bank is willing to lend to the home buyer.
Should the buyer meet the requirements of the lender, they will be issued a pre-approval letter. This contains the type of mortgage, interest rate, and terms and conditions. This letter will also state the amount of mortgage the lender is willing to provide to the buyer.
Securing a pre-approval letter is essential. This is submitted along with the offer when buying a home. A pre-approval letter is important to have because it will ensure all parties that there are funds to finance the purchase.
The bank will need the following information to determine if they can approve the homebuyer for a loan:
But, the pre-approval letter is not a guarantee, only the beginning of the lending process. The lender still reserves the right to either accept or reject your buyer’s request should they deem it.
Also, a pre-approval letter is not a commitment. Should the buyer choose to back out from the transaction, they can do so without facing any financial repercussions.
So, what about a pre-qualified letter? What does that mean? A pre-qualified letter is a letter that informs the homebuyer that they qualify for a home loan. In other words, the letter proves that the homebuyer has the chance to become pre-approved.
Pre-qualification is the first level, not the final level.
The pre-qualification letter is not a verified document. So, it does not have the same reassurance as a pre-approved letter. This is because the home buyer might not get the loan and they can’t afford the house. No money, no deal.
The goal of a pre-qualification process is to show the buyer if lending is an option. From there, the lender will suggest the options that your buyer has to get a loan.
In order for a buyer to be pre-qualified, all it takes is for them to contact the lender. They will then provide them with an overview of their financial history. The lender may ask about their financial status such as their assets and liabilities, as well as their income.
Once the lender has reviewed the information, they will give an estimated loan amount to the buyer.
The pre-qualification process usually only takes a couple of days as it is a high-level assessment. Unlike the pre-approval letter, this does not take into account the analysis of the buyer’s credit history, tax history, and other financial documents.
Before you are able to help your client with their mortgage application process, you must first connect them with the right lender.
When you’re growing your network, connect yourself with lenders. This way, you can find a reliable lender that you can confidently refer to your clients.
Once your buyer is connected with a lender, the lender will connect with your buyer. It is the lender’s job to understand the buyer’s financial situation and verify if the buyer can afford a mortgage. Through this process, the lender will determine if the buyer will be pre-approved or pre-qualified.
Both pre-approval and pre-qualified mortgage letters are in the mortgage application process. But, a pre-approval letter is still not guaranteed, it signifies that a lender has verified their financial status. This will provide the buyer with more leverage when trying to secure a deal.
Leads are everything.
More leads mean more clients. When you meet a lead, you have a chance to convert them into someone who wants to hire you.
That’s why agents always want new ways to find more leads.
Real estate agents have many tools and methods to find leads and convert them into clients.
One method is called real estate farming.
What makes real estate farming stand out is that it’s an easy, practical way to build trust and meet hundreds of potential clients.
Real estate farming is a marketing strategy to find clients in a designated area or demographic. Agents “farm” an area for new leads.
Similar to agricultural farmers, agents plant their seeds in neighborhoods to reap their rewards when the time is right.
In other words, a real estate agent will find a neighborhood they would like to farm. Then, they position themselves as the local expert by saturating the area with marketing. For example, they will buy bench ads, door knock, or mail letters.
The goal of real estate farming is to be the go-to person. When someone in that neighborhood is ready to sell, they will contact the agent who farms that area.
Real estate farms come in many shapes and forms. Before you farm, you should know which real estate farm is conducive to your business. Here are the different types of farms:
Geographic farming is sometimes called geo-farming. A geographic real estate farm has physical parameters that contain an agent’s target audience. A few examples include neighborhoods, subdivisions, and zip codes.
As the name suggests, demographic farming focuses on a specific demographic. Instead of physical parameters, demographic farming focuses on people with specific wants, goals, or interests. For example, people who want to downsize their home, investors trying to make money, or surfers who want to move closer to the beach.
Micro-farming is where agents talk to the neighbors of their listing to advertise an open house. This starts conversations and raises awareness for that listing, but doing so also introduces the lead to an agent.
To pick an area to farm, you should choose somewhere you are familiar with. This is the easiest way to quickly become a local expert.
Your own neighborhood is a good area to start with. You know the land, community, and any events that are coming to the area. Also, connecting with local homeowners is easier.
The size of your area also matters. So, refrain from making your farm too large – the bigger the area, the harder to manage. Also, your expenses will go up! Unless you have the budget to market to a large audience, stick to a small area.
If you are comparing areas, you should compare data. Look at the average sales price, commission per sale, turnover rate, and income potential. These metrics help you learn how much money you will put in and how much you can make.
On average, farming an area can cost $10,000 per year. This includes all marketing material you need for consistent promotion. That’s why you should crunch the numbers first. Farming can cost a lot, and doing it wrong comes with a big loss.
Quick tip: attend local events, community meetups, or council meetings to stay connected with people in the area. These are effective ways to stay current with your target audience.
A plan to farm an area will only get you so far. Staying top of mind calls for creativity and personality. So, here are some ways to connect with locals:
Be the source of information: Let people know how much their land is worth through MLS data or comps. Then, deliver this information on postcards, door hangers, or leaflets.
Gift baskets: Welcome new homeowners with a gift basket and introduce yourself. This helps start the conversation.
Sponsoring: Sponsor a local sports team, school events, or helping local charities. You can also consider co-marketing with a lender and share the cost of marketing materials and events.
Local social media: Connect with local businesses and residents on social media. People love to see what’s happening in their community. You can use this to your advantage to reach locals through engagement and geo-hashtags.
Partner with local businesses: You can leave promotional material in local shops. This is another way you can stay top of mind.
Launch your website: Create a real estate website. If done well, your website can be at the forefront of search results when people look for agents in your farm’s area.
Real estate farms are effective ways to build trust and relationships with people in a specific area. But, don’t think you’ll make big bucks overnight. Real estate farms can take upwards of a year to start building momentum. But, when they do, you won’t have to find business because business will find you.
Making an offer to buy a home can be intimidating — it’s often one of the most significant purchases most people will ever make! To protect themselves, buyers will sometimes add contingencies to the contract.
Understanding this tool and how it affects real estate transactions is crucial. Read on to understand what a contingency is, and the common types you’ll see on a contract.
A contingency is defined as a “future event or circumstance which is possible but cannot be predicted with certainty.” In real estate, this refers to a specific action or item in the contract that must happen for the contract to become legally binding.
While most sellers prefer to receive a contingency-free offer from a buyer, they can be valuable tools for both the buyer and seller to back out of the contract. They provide buyers an out if conditions aren’t met.
There are tons of contingencies, but the four most common are appraisal, inspection, loan, and home sale.
An appraisal contingency ensures that your home’s appraisal is in line with your purchase price. This helps confirm that the buyer is purchasing the home for the appropriate fair market value; if not, they can back out of the contract.
If the appraisal comes back higher than the purchase price, there is generally no issues for the buyer or the bank. But if the appraisal determines the home is not worth the purchase price, there can be issues for the buyer.
Lenders will often not loan money for more than a home is worth. Therefore, a low appraisal can mean the seller might have to decrease the property’s price, or the buyer will have to pay the difference in cash between the appraisal and purchase price.
However, the buyer can back out of the contract if there is an appraisal contingency. It can also stipulate that if the appraisal comes in lower, the seller will reduce the price to the appraised value.
A home inspection contingency is often the most common real estate contingency. The National Association of Realtors® estimates that about 80% of buyers include a home inspection contingency in their contract.
This contingency gives the buyer a window of time to inspect the property professionally by a third party and determine if there are any issues with the house. They will review the exterior and interior structures and systems during this process. This includes things like HVAC, electricity, plumbing, roofing, and more.
If the inspection comes back with major issues, the inspection contingency clause will allow the buyer to back out of the contract, or potentially negotiate with the seller to have the issues fixed before closing on the property. If your seller is unwilling to address the problems, the contingency will allow you to terminate the contract while receiving your earnest money deposit back.
An inspection contingency is crucial to ensure that you’re not stuck purchasing a defective property riddled with problems.
A loan contingency, sometimes called a mortgage or financing contingency, states that the contract is contingent on the buyer getting their financing approved from a lender.
Often a buyer will get pre-approved before starting their home search, which indicates a lender has already taken an initial look at their finances and determined if they are eligible for a loan. But, once the underwriting process begins, there can be problems finalizing or securing the loan.
A loan contingency allows the buyer to back out of the contract and receive their earnest money deposit back if they can’t qualify for a loan by a specific date. This usually gives 30 to 60 days to finalize the loan with a lender.
This contingency can also benefit the seller, allowing them to cancel the contract if the buyer hasn’t gotten financing approval by the set date. If this happens, the seller will have to put the home back on the market and try to find a new buyer.
If a buyer is prepared to purchase a home with cash, they will waive a financing contingency since they don’t need to secure a loan to go through with the purchase. A cash offer is often seen as more appealing to a seller who doesn’t have to worry about the buyer getting a loan to purchase the property.
If a buyer is trying to sell their old home before purchasing a new home, they can include a home sale contingency — otherwise known as a concurrent closing.
This ensures that the buyer is able to close on their old home, and move forward with purchasing the new home. The buyer might need the proceeds from the sale of their old home or want to avoid paying two mortgages at once.
With almost half of buyers already owning a home, this contingency is extremely common if the buyer has a home to sell. Before accepting an offer contingent on the sale of the buyer’s home, the seller might want to consider a few things, like if the house is already on the market or under contract.
If the buyer’s home doesn’t sell or get under contract within the specified time, the seller can walk away and put the home back on the market or negotiate with the buyer to extend the contract.
Sometimes a “kick out” clause is included in this contingency, which allows the home to stay publicly on the market while the buyer tries to sell their home. In this case, the seller could accept another offer and move forward with that contract instead.
If there is an offer with contingencies, the buyer and seller generally have 30-60 days to ensure the contingencies are met. This is also known as the “contingency period.” This time frame can be shorter or longer depending on the terms agreed on but time is of the essence when contingencies are included.
If the buyer doesn’t take the necessary steps to ensure the contingencies are met, the contract could fall through and they could lose the home. This also means that sellers will have to put the home back on the market — something that no one wants to happen!
Contingent vs Pending in Real Estate
A home that is under contract can be a contingent or pending offer. In the case of a contingent contract, the seller can keep the listing active in the MLS if the buyer's contingencies aren’t met. But if the property is listed as “pending,” it means there weren’t any contingencies in the offer or all the terms were met.
During the contract negotiations, a seller might accept a contingent offer but still continue showing the property or even accept other offers — like the “kick out” clause explained earlier.
Final Thoughts Contingencies in Real Estate
Many different types of contingencies can be included in your home purchase contract. While these can help protect the buyer, sellers often see these stipulations as hurdles to selling their house.
A great real estate agent can guide clients through the offer process and ensure the right contingencies are in place to protect their best interests.
When you see a home listed as contingent, it means there’s an accepted offer with contingencies that still need to be met. The seller may keep showing the property or accept backup offers.
If a home is pending, the contingencies have either been met or waived, so the sale is closer to final.
A: Yes, sellers can refuse or counter offers with contingencies—especially if they receive multiple offers. They might prefer an offer with fewer contingencies to reduce the risk of the deal falling through.
A: Absolutely. If your inspection uncovers issues, you can request repairs, a lower purchase price, or a seller credit. If the seller refuses, you can typically walk away without losing your earnest money.
A: With a financing contingency in place, you can back out of the contract and keep your earnest money. The seller may also decide to walk away if you’re unable to secure a loan within the agreed timeframe.
A: Home sale contingencies are still used, but in a competitive market, sellers might be less willing to accept them. If you must include one, make your offer as strong as possible in other areas—like a higher earnest deposit or flexible closing date.
If you want a career as a real estate agent, it all starts with getting your license.
Remember that getting a real estate license is a privilege. As with any license, it comes with rules and regulations that you must adhere to.
If you break rules there will be consequences. Some of those consequences can result in more than a fine. You can be subject to having your license suspended and, in some cases, revoked.
It is crucial to your career to understand what actions may put your license at risk. First, let’s define these terms in more detail. We will then discuss potential resolutions to reverse a suspended or revoked license.
A suspended real estate license means that the licensee is prohibited from conducting real estate.
A real estate agent will still hold their license, but they are not allowed to do business. Like a driver's license suspension, the person still has their license but can't drive.
Some circumstances will lead to a license getting suspended.
A real estate license is suspended based on the condition. This is also known as a “conditional suspension” and can be reversed when those conditions are met.
This occurs when the licensed party must complete requirements to maintain their license, such as education. For example, after the 4-year mark, you are required to complete your continuing education.
If you don’t prove that you fulfilled the condition to the DRE before the expiration date then your license status is under “conditional suspension” until completed. Once these terms have been met, the suspension is lifted.
A revoked real estate license means that you are no longer authorized to conduct real estate or real estate-related activities.
This happens if the licensee is in multiple violations of the Business and Professions Code. Each case is different and is investigated by the Department of Real Estate to determine whether or not the actions warrant revocation of a license.
Yes, a real estate license can be revoked for a multitude of reasons. The answer to which actions lead to revocation is complicated and depends on many factors.
Instances are not limited to one particular area. But, licensees who violate one or more regulations concerning finances are more at risk of losing their real estate license.
The Business and Professions Code Section 10176(g) allows the Real Estate Commissioner to temporarily suspend or permanently revoke a real estate license if the licensee is found guilty of claiming or taking any secret or undisclosed amount of compensation, commission, or profit.
One of the most common reasons for revocation while licensed is the “non-disclosure of an action” that violates the Business and Professional Code.
For example, if you get a DUI. A first offense DUI is considered a misdemeanor. This is not grounds for having a license revoked, it can be if you fail to report it to the DRE. Here is the section outlined in the code:
ARTICLE 3. Disciplinary Action [10175 - 10186.9] ( Article 3 added by Stats. 1943, Ch. 127. )
10186.2. (a) (1) A licensee shall report any of the following to the department:
(A) The bringing of a criminal complaint, information, or indictment charging a felony against the licensee.
(B) The conviction of the licensee, including any verdict of guilty, or plea of guilty or no contest, of any felony or misdemeanor.
(C) Any disciplinary action taken by another licensing entity or authority of this state or of another state or an agency of the federal government.
(2) The report required by this subdivision shall be made in writing within 30 days of the date of the bringing of the indictment or the charging of a felony, the conviction, or the disciplinary action.
(b) Failure to make a report required by this section shall constitute a cause for discipline.
There are more than 50 disciplinary actions listed by the Department of Real Estate.
First, let’s talk about how to reinstate a suspended license.
Here is how you can reinstate your California suspended real estate license. When a license is suspended, it’s due to a condition that needs to be satisfied. When you satisfy those conditions, the DRE will reinstate your license.
Reinstating a revoked license is different. In all cases of revocation, you are required to wait one full year before requesting reinstatement. Here are the general steps in the process:
During this investigation, the DRE may review your criminal, court, and employment records. The Commissioner will also examine your behavior and conduct an interview with you since your disciplinary action.
From this investigation, the Commissioner will evaluate if you have made the necessary changes in your behavior to prevent future offenses. They will then submit a recommendation to the DRE, who will then decide whether your petition is granted or denied.
If the DRE grants your petition for reinstatement, they will send you some final terms and conditions to satisfy.
The request for reinstatement can get complicated. It would be in your best interest to hire legal assistance to help navigate you through the process. This will also ensure that all the documentation gets properly submitted.
Whether you have your license suspended or revoked, don’t despair. Nobody is perfect. Remember, there are procedures in place to help you get your license reinstated.
But, be proactive and don’t put your real estate license at risk. Be an informed agent. When you follow all the rules and regulations, you can avoid suspension or revocation of your license.
A real estate agent means more than being a real estate agent.
It also means you can become a leasing agent in California.
Leasing agents have the responsibility of finding new tenants for their properties, providing customer support for them, and handling the signing of leases.
Let’s talk about what you need to do to become a leasing agent in California.
Leasing in California falls under the property management category. You don’t need a real estate license to act as a property manager or lease agent for your properties. But there’s a catch.
There are specific leasing or property management activities that require either a real estate license or a broker license.
Here’s a list of leasing activities that require a license:
Leasing agents have more power and freedom with a real estate license. They can’t compete in the market without it.
The first step of becoming a leasing agent in California is to get a real estate license. This guide gives you instructions on how to get your real estate license and become a leasing agent.
To become a licensed leasing agent, you need to:
If you meet these requirements, you can get hired at a real estate brokerage and practice leasing.
An accredited real estate school is required to fulfill your pre-licensing education before getting a real estate license. A real estate school will provide three required courses for students:
Each course will help you understand real estate as a practice and efficiently do this job.
After you pass an accredited real estate class you get a certificate of completion, which will serve as proof of completion. To schedule your California real estate exam, you need to collect all three certificates.
This is your final step before getting your real estate license. Schedule and pass the California real estate exam. Students must apply for the exam before scheduling it.
The application must include:
After putting together the paperwork above, you can mail your application to the DRE (Department of Real Estate).
Leasing agents must hang their license with a brokerage, which simply means committing to work with a brokerage. After passing the state exam, the DRE will mail your real estate license. The license is required to sign with a brokerage.
If you don’t want to sign with a real estate brokerage and represent yourself, you can get a real estate broker license instead.
The next step you need to follow is to get a leasing agent certificate in California. This is how you become an accredited leasing agent. A certificate is proof of proper educational training and accreditation.
Getting your leasing agent certificate requires more schooling. You also need to have six months of leasing experience, which can be obtained while taking the course as well. You must pass the examination within 6 months of declaring candidacy.
Leasing agents are hired without experience and they receive the training they need from the brokerages. This experience will be needed to get the leasing agent certificate as well.
The additional on-the-job training leasing agents receive helps them learn the specific skills and systems they will need to use in their careers. This training is often part of the leasing agent’s hiring process at a new job. On-the-job training can last anywhere between a few weeks to months.
Customer services and sales experience is handy when becoming a leasing agent.
The average salary of a leasing agent in California is $17.79 per hour in 2021 according to Indeed, and you can find full-time and part-time positions as well.
Leasing agents have many responsibilities.
They meet with prospective tenants and take them on tours of the units, highlighting the benefits of the property.
Leasing agents also deal with preparing and executing lease documents, conducting credit and background checks of potential tenants, and collecting payments such as monthly rental payments from existing tenants and security deposits from potential tenants.
They also have the role of informing residents of any upcoming issues with the property or changes of their rental agreement and monitoring the use of common areas and community facilities.
Leasing agents create promotional materials to advertise vacant units on the properties they manage.
Becoming a leasing agent is a long process that requires a lot of work. But the results you get in the end are fulfilling.
If you always wanted to be a leasing agent and land a job in this field, now it’s your opportunity. Getting your leasing agent license involves schooling and on-the-job experience, but you can build a career that is both rewarding and well-paid.
As a real estate agent, you can’t go completely alone. If you want to help people buy and sell properties, you need to have a broker.
You might be wondering what is the best real estate brokerage firm for new real estate agents.
Choosing a broker is one of the biggest decisions in a real estate agent’s career, and it’s not an easy choice to make. Simply looking at company websites is not going to make things clear.
Brokerages are very different from one another, but they share some similarities. So, how do you choose the right type of brokerage?
Let’s evaluate the differences between national franchise, boutique, and virtual brokerages to help you determine which one you prefer.
National brokerages are large national companies (franchises) that sell the rights to use their branding, business model, and name to brokers. Some examples are brokerages like Century 21, RE/MAX, and Keller Williams.
The broker that buys the franchise has to pay a set percentage for every deal they close in the office. And while many franchises are independent businesses, all of them follow regulations and rules set by the head office.
You get instant credibility working with a trustworthy and familiar brokerage name.
You get access to hundreds or thousands of offices all over the country, which means you can use those in the states that are better suited for clients.
National franchises give you access to discounted transaction management software, website-building software, and CRM software. You also get plenty of prepared marketing solutions such as website building tools, direct mail, and online advertising templates and drip campaigns.
Another important advantage of a national franchise brokerage is the training you get. Many franchises have developed incredible training programs for new agents to help them achieve success faster.
Some new agents find large franchises more impersonal and they don’t feel valued as they would feel in a boutique brokerage. There’s also a lot of competition for leads, as they are often distributed by management.
And since we are talking about a corporate office, big decisions take a long time to process and creative freedom is limited. Making positive changes or reaching someone in management is very difficult.
Boutique brokerages are typically owned by one small company and managed by one broker. Examples include Bayside Real Estate in Los Angeles, Webb Realty in Northern California, and Core Real Estate in Manhattan.
Even if boutique brokerages are much smaller than a franchise brokerage, they are not limited in earning potential. Some of the most successful brokerages in the country are boutique brokerages, pulling the highest numbers in sales per year.
An individual agent’s contribution is much more important for a boutique brokerage, therefore the brokers spend more time nurturing and coaching new agents.
You have less competition for leads since there’s a small number of brokers and agents. Experienced agents will often let newer agents handle the majority of new leads.
Another great advantage of boutique brokerages is teamwork. Everyone helps each other for the benefit of the brokerage, and that makes every agent feel like a valuable part of the team.
Having no corporate office makes room for quick and easy decisions. Best practices and policies can be changed overnight. And all agents get more creative freedom when it comes to advertising and marketing compared with national brokerages where there are always strict creative rules.
One disadvantage of boutique brokerages are smaller marketing budgets and lower online traffic to websites that bring leads. That can make things hard for new agents.
You also have no brand recognition outside your immediate town and no discounted access to technology that you need to use for lead generation and follow-up systems.
The invention of SaaS real estate software and the reliance on online advertising has made virtual brokerage a viable option for experienced and independent real estate professionals.
You don’t need to walk into a brokerage office anymore, you can handle your real estate work from your computer.
One of the biggest advantages of virtual brokerages is the attractive commission splits. Since they don’t pay for expensive office spaces, they can offer between 70% to 100% to agents.
The absence of a desk fee can also mean you can put that money towards marketing. An extra few hundred dollars in Facebook Advertising or Zillow Premier Agent can have a great return on investment.
Virtual brokerages also come with better real estate tools. You get access to integrated transaction management tools, CRM tools, and websites.
One last advantage of virtual brokerages is the independence you get. There are no more weekly sales meetings, training sessions, or social outings that you need to participate in.
when going virtual, there’s less potential for networking. While with a boutique brokerage you get the opportunity to build a network and get leads from other professionals, this option is not available for virtual brokerages.
You also get fewer training opportunities since you won’t be in contact with more experienced agents to grow your expertise.
And working alone can be isolating and it’s not for everyone. Dealing with all the highs and lows of this profession by themselves might be too stressful for some agents, while an office culture can give them moral support.
There is no perfect solution for all agents and therefore choosing the right type of brokerage comes down to the professional goals and skill sets of each individual agent.
National brokerages come with the reputation, training, and technology access advantage of being a franchise. But it can also be a competitive, inflexible, and impersonal environment.
Boutique brokerages are more personal, and they offer a great team environment with creative freedom. But, they don’t come with a national reputation or big budgets for marketing or software.
Virtual brokerages come with high commissions and instant access to all the software you need. But working alone from the computer might not be ideal for everyone and you can’t get training from more experienced agents.
If you analyze the pros and cons of all types of brokerages, you can figure out which one suits you better before making the next move in your career as a real estate agent.
Did you know that one of the scariest things for real estate agents is filling out contracts? Contracts means legalities and there's nothing more stressful than putting your client into a legal quagmire. Some of the contract terms that agents mix up are "valid," "void," and "voidable."
Whether you're learning about contracts for the first time or studying for the real estate exam, knowing the difference between these terms is vital! So, let's clear up the confusion so you don't find yourself in a legal situation down the road.
By the way, this video below is a great explanation of void and voidable, how they're different, how they're the same. I recommend you watch it for a quick and easy understanding of the two terms.
Let's first start with the valid contract. A valid contract is an agreement between two parties that creates mutual legal obligations. The legal obligations are enforceable by law.
The contract can be oral or written, however oral contracts are much harder to enforce and they should be avoided. Making the valid contract written and clear with all the terms and conditions is the best way to make sure the agreement is respected if you need to enforce it by law.
There are 5 important elements that all valid contracts should have to be legal:
1. The parties signing the valid contract have to be of legal capacity
That means the required legal age and mental capacity to sign a contract.
2. Must have an offer
One of the parties must make an offer in the contract.
3. Offer acceptance
The offer made in the contract must be accepted.
4. The valid contract must have a legal purpose
No illegal activity can be used in a contract.
5. Adequate consideration
Consideration means that both parties agree to provide something of value in the agreement they sign (money, car, property, manual labor, etc.). For example, I give you a car and you give me money for it. I give you property and you give me another property in exchange.
That means gifts can’t be legally enforced even if you sign a contract, because they are offered in generosity and that’s not legally binding. If you offer someone a gift in exchange for manual labor, that will be legal because there is something of value offered in return.
A void or null contract means a contract that cannot be enforced (unenforceable) by any of the parties. That happens when one of the elements required for legal contracts has not been met.
A void contract is considered not executable by design.
A simple example would be to include something illegal in the contract, like giving drugs in exchange for property. That contract is void because it is illegal. There are many situations when the contract is void from the start.
However, a contract can be valid when signed and then become void due to changes in law or some situations that make the contract impossible to fulfill. For example, you could sign a contract that is legal, but before fulfilling the contract the law changes and makes the contract illegal, and therefore it becomes void.
A voidable contract is a contract in which one of the parties has the option to reject or enforce the contract when the terms of the agreement are not accurately respected or represented. That could mean the information in the contract was not accurate in the beginning or one of the parties didn’t respect the deal entirely.
One party has the option to void the contract or to keep it valid while the other party doesn’t have this option. A voidable contract is valid and legal until revoked or canceled.
One simple example would be John buying a house from Mark. John likes the house as it is, especially the way the garage was turned into a home gym. The contract states the house should remain as it is, but Mark turns the home gym back into a garage. Now the contract is voidable, and John has the option to void the contract and cancel the deal or keep it valid and accept the new garage.
Another example would be signing a contract with one of the parties under the legal age. The minors can enter into contracts but they can breach the terms without legal repercussions since they don’t have the legal age. When it comes to light that one party was under the legal age at the moment of signing the contract, they can choose to ratify the contract when they are legally capable or void it.
Contract ratification means signing new terms that both parties agree that correct the issue which made the contract voidable.
To clarify the major differences, void contracts are invalid from the start, while voidable contracts can be canceled or kept as they are by one of the parties. Valid, on the other hand, are perfectly legal contracts.
Neither of the parties can enforce a void contract, while one of the parties can enforce a voidable contract if they choose to.
Void contracts don’t give anyone an option, they are invalid no matter what the parties do. Voidable contracts are valid until one of the parties decides to cancel or revoke them for legal reasons.
Valid, void, and voidable can be confusing when it comes to contracts, but there are some things that can help you remember the difference.
In other words, void means null. It means it’s not valid from the start, and it could be illegal or not to respect all the elements that make contracts valid.
Voidable means it COULD be void, and it also means one of the parties has the option to void it or keep it as it is.
Void contracts give no option to both parties while voidable contracts give options to one of the parties. This should make it easy to remember the difference.
If you have a California real estate license can you transfer it to another state? What about if you have an out-of-state real estate license and want to transfer it to California?
Does this mean you have to go through an accredited real estate school, pass the state exam, and sign with a real estate brokerage?
Not entirely.
Let’s explore California’s reciprocity laws so you can learn about how to transfer your real estate license.
So, what is a real estate license reciprocity? Real estate license reciprocity allows people, with active real estate licenses, to skip the education step of another state they wish to get their real estate license in.
In other words, you are eligible to take another state’s real estate exam to get a real estate license, given they have reciprocity.
For example, if you’re an active real estate agent moving from Alabama to Louisiana, you are eligible for a Louisiana real estate license exam, which means you don’t have to complete an accredited Louisiana real estate school.
You still have to take the state exam, pass, and hang your license with a brokerage!
Keep in mind, that your license must not have any suspensions or revocations. Before you get a real estate license in another state, you should resolve all issues with your current license.
Reciprocity rules are different from state to state and some states don’t offer any reciprocity.
Speaking of states that don’t offer any reciprocity, let’s talk about California’s real estate license reciprocity.
Unlike some states, California does not offer license reciprocity. This means that even if you're licensed elsewhere, you’ll need to meet California’s specific requirements.
That means, if you have an active license in another state, you still have to complete a California-accredited real estate school, pass the state exam, and sign with a brokerage.
Bummer.
But, there’s some good news...
If you have a California real estate license, you can transfer it to another state. Some states offer full reciprocity. That means no matter which state you have your license in, you are eligible for the real estate exam.
The states with full reciprocity are:
Also, Massachusetts offers real estate license reciprocity for good-standing license holders from California.
You don’t need to live in California to practice real estate. Although, it certainly helps.
You can get a California real estate license and still live outside of the state. That’s the case with other states as well.
Typically, real estate agents will weigh the pros and cons of getting a real estate license in California to see if it’s a worthwhile investment. If you foresee future clients who are interested in buying or selling California real estate, then it could be smart to get your real estate license.
If you have a client interested in purchasing a California property, but you don’t have a California real estate license, you can still help. As a real estate agent, you can refer your client to a trusted agent in California and still get a referral fee.
This is an effective way to bring value to your client, connect them with a trusted agent, and collect some money along the way.
This works great if you have one client moving to California, but if you foresee more clients doing deals in the Golden State, then consider getting a real estate license.
Real estate license reciprocity makes practicing real estate in other states easy. But, you have to remember that some states don’t offer reciprocity.
Also, if you choose to use reciprocity, then you need to guarantee your license is in good standing with your current state.
One last thing, if you can go the reciprocity route, then remember that you still have to pass the state exam! So, freshen up on those exam topics and don’t get discouraged.
Real estate exams? Live Scans? Mailing addresses? How does any of this work?
Submitting your real estate exam application to the Department of Real Estate (DRE) can stress you out! There’s a lot to include in your application.
And getting your application rejected because you forgot to add something can feel devastating. Not to mention the time you have to wait to get it re-approved.
We want to give you all the information you need to send in an amazing real estate exam application that will get you accepted.
So, let’s start with the requirements. What do you need to do to be eligible for the California real estate exam?
To be eligible to take the California real estate exam, you must first:
The most important thing to remember is the 3-course certificates. You cannot take the California real estate exam without first completing your pre-licensing program.
Those certificates are proof that you completed your pre-licensing education and that you’re ready to take the next step.
Recently, the Department of Real Estate has made it simple to apply for the California real estate exam online.
All you have to do is create your own eLicensing account and follow the instructions on your screen to complete this process. But, keep in mind, you can only do this if you collect all 3-certificates within 1-year of your pre-licensing school enrollment date.
If you received your 3-certificates over the course of more than 1-year, you will have to apply by mail.
To apply for the real estate exam, you must send in an application to the Department of Real Estate containing:
This part confuses a lot of people. So, we want to clear the air.
Live Scan is a digital fingerprinting process that replaces traditional ink fingerprinting in states where it's available. An applicant's fingerprints are securely transmitted to a government agency, which performs a criminal history background check using an Automated Fingerprint Identification System (AFIS).
To properly fill out the Live Scan Service Request Form RE 237, you must make 3 copies. One copy is kept by the Live Scan service provider, one copy is kept by you, and one copy is added to your real estate exam application.
That way, everyone has a copy and there is no confusion. The last thing you want in this application process is confusion!
As of August 2024, the original salesperson exam fee is $100 and the real estate license fee is $350. So, if you use RE Form 435, you should cut a check for $450.
But, if you want to know the total price, typically you can expect to pay $495 altogether. This is because the typical Live Scan service fee is $45. The final total price will come out a little higher if you include shipping fees.
Also, if you would like to reschedule your exam testing date, it will come at an additional cost of $45.
Once you applied for the real estate exam, all you have to do is wait for your application to get accepted. Once it is, you will be eligible to schedule your real estate exam date.
This step is simple and takes only a few minutes. When ready, the DRE will send you an email informing you that you can schedule your real estate exam date. Then, all you have to do is follow the instructions in the email to reserve your date.
We recommend doing this as soon as possible when you get the email notification. Everyone is eager to get their real estate license, so seats fill up fast.
After you send in your application, it takes around 2-months for the DRE to accept or reject your real estate exam application.
A good indicator of when the DRE is about to email you is when they withdraw the application fee from your bank account.
At that point, you can expect an email within the next week to two weeks.
When you schedule your testing date, you will notice that the DRE will give you a few location options for where you can take the real estate exam. These locations are:
Please arrive 30-minutes early to when your exam starts. That way you can take your time finding parking, collecting yourself, and to get comfortable.
Some people wonder if you can take the real estate exam online. Unfortunately, you cannot take the real estate exam online. It must be done at one of the approved locations throughout California.
Now that you have a date and location picked out, it’s time to pass the real estate exam.
Preparing for the real estate exam takes a lot of effort, but it can be done. The most important thing to remember is to not give up.
The California real estate exam has 150 questions with a time limit of 3 hours, as of August 2024. You must score a 70% or higher to pass the real estate exam.
The real estate exam will test you in the following categories:
According to the DRE, in July 2024, there were 4,599 examinations administered and only 1,305 licenses issued. If we were to take this at face value, this data implies that the California real estate exam has a 28% passing rate – yikes!
But, it's important to know that you can pass the exam and not be issued a license because you have not sent in your real estate license application. Historically, the passing rate is around 55%. Still a tough exam!
To make sure you pass the very first try, I recommend that you join our exam prep and real estate crash course program.
When you join, you will get access to our online student portal, which let's you use our unlimited customizable mock state exams, 1,000's of digital vocab flashcards, an eBook study guide, video explanations, and 2,000+ question & answer videos from our expert exam trainers.
Our crash course is a 2-day (8-hours per day) cram session taught by one of our expert exam trainers who will review the concepts, vocabulary, math, laws, and historical events on the California real estate exam.
This is the quickest, most affordable, and easy-to-use way to make studying and passing the exam easy.
There’s a lot to include in your real estate exam application. That’s why it’s important to keep a checklist when you’re assembling all the materials. By taking your time now, you can save yourself a headache and a lot of waiting in the future.
Best of luck studying! If you need additional studying help, remember that CA Realty Training is the #1 real estate school in California and offers crash courses and study prep to help you pass the real estate exam on your first attempt.
You may be asking yourself, “Why would I need to know how to do this?”
Well, there is valuable information that is linked to a real estate license number. If you are a consumer looking to work with an agent, it is important to know how to access this information.
First and foremost, you can make sure that the agent you’re about to work with is legitimate. There are other pertinent details that you can also find out about the agent simply by looking up their license number.
We’ll go more into detail in a moment.
First, let’s talk about where you can find the real estate license number.
Every agent receives a real estate license number when they are licensed and it’s issued by the Department of Real Estate.
Because the Department of Real Estate, also known as the DRE, wants to make sure that the information is easy to locate, you will find access to it right on the homepage.
You can look up a real estate license number in California by following the steps below:
Now that you know how to find the DRE license number, let's talk about the other pertinent information that you can learn about the agent or broker you are researching.
Of course, verifying that the agent is legitimate may be the initial reason you may be looking up an agent’s license number. Here is some of the other information that you will find on the Public License Information page:
Along with the license number you can also check the expiration date. While it’s important to verify that the agent can legally practice real estate, it’s just as important to make sure their license hasn’t lapsed.
If the agent is licensed and active you will see “LICENSED” under this area. Here are a few common real estate license status types you’ll find, although the DRE has even more listed on their website:
An agent holding a “Restricted License” is still allowed to practice real estate. Although, because the license is probationary, they are more at risk of it being revoked if another disciplinary action is filed.
Occasionally, an agent may have practiced under a different name before legally changing it. This can verify the validity of the agent.
All agents are required to “hang” their license with a brokerage. This confirms what office they are affiliated with. This does not apply to agents that have their broker licenses.
Another valuable piece of information that you can get from the DRE license number is disciplinary actions taken against the agent.
This is also found on the Public License Information page. It is listed as “Comment” and it is usually the last item on the page.
Agents are held to a Code of Ethics and standards by the Department of Real Estate. If an agent has broken any of these Ethics or basic rules and regulations, they can be subject to disciplinary actions.
If the agent is in good standing you will see it as:
Comment: NO DISCIPLINARY ACTION
There are many practicing real estate agents in the field. There is nothing wrong with doing some due diligence before you decide to enter into a legal contract with an agent.
When you are ready to work with a real estate professional, looking up their license number is a good start. This resource is an easy and convenient way to confirm that they are licensed and in good standing.
One of the requirements to get your real estate license is to attend and complete an accredited real estate school.
That’s where you learn important concepts, terminology, and practices to help you become an ethical real estate agent.
But, what exactly do you learn in a real estate school or pre-licensing program?
There’s a lot to unravel! But, first, let’s explore what a real estate school or pre-licensing program really is.
An accredited real estate school is a Department of Real Estate approved pre-licensing program. In the pre-licensing program, students are taught a curriculum that will make them eligible to take the real estate exam.
Each real estate school has its own curriculum that has been accredited by the Department of Real Estate. This curriculum is given to students to help them learn the material that is covered on the Real Estate Exam.
By completing the real estate school’s pre-licensing program, students will receive certificates, also known as proof of completion. These certificates are needed to qualify for the Real Estate Exam.
In California, students must complete 3 courses to get their salesperson license and complete 5 more courses to get their broker’s license.
So, now what should you expect to learn in a real estate school? In California, you can expect to take real estate practice, real estate principles, and one elective of your choice.
Real estate practice teaches you how to build a successful real estate practice. This means you can learn topics from disclosures to marketing to taxation. Along with this is a comprehensive understanding of ethical practices and upholding your integrity as a real estate agent. The course content includes:
Real estate principles will dive into the nitty-gritty of how real estate works. You can expect a lot of terminology in this course because you will learn about property types, ownerships, and escrow and title companies. The course content includes:
When you enroll in an accredited real estate school, you will take an elective course. So, how do you decide which elective to pick? Each one will focus on one subject that will help you in your career. That’s why you should pick an elective that you think will come in handy later in your career.
If you’re unsure what will be helpful later on, we recommend real estate finance. Money is a common concern with homebuyers and sellers. Real estate is the biggest investment that anyone will make, so understanding the finance side of the business will let you speak your client’s language and help you communicate your points in ways that make sense.
Lots of people ask whether or not real estate school is hard. The answer is: it depends. As long as you focus, take time out of your schedule to study and review, and attend class, you will find success in real estate school.
There are methods you can take to make real estate school easy. But, the most important part is to remember to take your time with studying. Some people want to breeze through the program, but that ends up hurting them more in the long run. Alternatively, some people won’t make time to review their notes, do the required reading, or focus in class. That, of course, will make it harder to learn the material.
The best course of action: when it’s time for real estate school, make sure you take time for it.
The real estate exam will cover everything you learned in your pre-licensing program. Each question will be specific to an area of study, so understanding how the concepts work will help you more than memorizing the concepts.
The real estate exam in California covers:
The majority of the concepts you will learn, if not all, will be in the two required courses. So, when you finish your pre-licensing program, make sure you review your notes to help yourself prepare!
Most people will have to enroll in an accredited real estate school to get their real estate license. But, you don’t have to enroll in a real estate school if you had an equivalent learning experience. Some college courses will satisfy the educational requirement.
So, if you believe your college courses have fulfilled your educational requirement, contact the Department of Real Estate to confirm. This could save you some time and money when you get your real estate license.
You will learn a lot when you enroll in a real estate school. There’s no way around it. It might seem intimidating at first, but when you take your time to learn how the concepts work, that’s when you succeed.
Most people will want to memorize terminology or concepts, but that will only get you so far. When you take the time to learn and understand, you can recall information much better and outsmart the real estate exam.
Also, remember that not every real estate school goes the distance that CA Realty Training does. They will teach you the required material only and stop there. CA Realty Training will not just give you the required material, but train you for a successful future as a real estate agent. We will show you how to synthesis what you learn by putting it into practice.
If you’re curious about our program, you can try it for free, from anywhere in the world. Attend a free intro training and see how it works yourself.
To become a licensed real estate agent in California, you can expect to pay, on average, between $635 and $1,210. That includes exam and licensing fees and the cost of enrollment in state-approved mandatory pre-licensing courses.
Obtaining your real estate license is just the first step in launching a real estate career in California. You’ll need to spend more money and time to maintain your license and gain membership to professional organizations that will aid in your success.
Still, it’s a small price to pay when you consider how lucrative a career in California real estate can be.
This article will break down the costs of obtaining your California real estate license and maintaining it, as well as review the cost of remaining competitive in today’s market.
To obtain a California real estate license, you will need to complete the following steps:
These steps will determine the final cost of obtaining your real estate license. Some of the costs remain fixed, like the exam and licensing fees, while others, like pre-licensing tuition, will vary.
California requires the completion of three college-level real estate courses to qualify for a real estate salesperson examination.
These include courses on Real Estate Principles, Real Estate Practice, and another subject of your choice from an approved list, for a total of 135 hours of coursework. The cost of tuition for a pre license education varies, depending on the provider, and can range from $125 to $700.
As of August, 2024, the California Department of Real Estate (DRE) exam fee of $100.
The live scan is a background check that uses your fingerprint to perform a California criminal and Federal criminal history. You can expect to pay a $60 fee directly to the live scan service provider.
As of August, 2024, the DRE’s real estate licensing fee is $350.
In California, real estate agents must renew their license every 4-years and participate in 45-hours of continuing education courses before they can apply for a renewal.
Continuing education consists of 45-hours of DRE-approved courses. These include an 8-hour course covering Ethics, Agency, Fair Housing, Trust Fund Handling, Risk Management, and Management and Supervision.
Real estate agents may also choose to take classes on those subjects separately; 18-hours of courses on consumer protection; and the remaining hours on approved courses related to consumer service or protection. The cost of these courses is relatively low, with packages offered for around $60
The DRE’s real estate licensing renewal fee is $245. But, you only need to renew your license every four years.
As we mentioned earlier, there are other fees that you will likely need to pay if you want to have a successful career in California’s real estate industry.
While none of these fees are required, you will find that, to stay competitive, they may be well worth the cost.
In California, licensed real estate agents must work for licensed brokers.
Brokers will charge a fee to the real estate agent each time that agent makes a commission from a sale. The commission splits between new agents and their broker is usually 50/50. More seasoned agents can strike a deal of a 70/30 or an 80/20 commission split.
Some brokerages charge monthly desk fees or transaction fees in addition to commission splits. This depends on the brokerage model. These fees are particularly prevalent in 100% commission brokerages, where agents keep the full commission from their sales but pay a flat monthly fee to the brokerage to cover operational costs. You may also encounter fees for training, technology, or marketing support.
The Multiple Listing Service (MLS) is the most recognized and widely used database for real estate listings. For agents, MLS is crucial to success in real estate.
Real estate agents can post to the local MLS as members of a local Realtors® association and local MLS. Fees vary by association and MLS database but typically cost between $20 and $50 a month.
The California Association of Realtors® (CAR) is a nonprofit association that helps develop programs and services to enhance a member's business ability through competency and integrity.
To join, you must be working under a broker that is a REALTOR® member. Yearly dues are just under $184, but there are additional fees associated with the application, including your national membership dues, and other related expenses, including new member fees
Being a member of the National Association of Realtors® (NAR) is a nonprofit organization that gives agents the chance to build their expertise and reputation as ethical real estate professionals.
As a member of NAR, you enjoy member benefits such as continuing education opportunities and discounts. To be a NAR member, you must first join your state or local association of Realtors®. The cost to be a member of NAR is $150.
According to Indeed, the average salary for a real estate agent in California is $109,443 per year. Still, the possibilities are endless for making money in the California real estate market.
Real estate agents receive a commission based on the property's sale price. The commission ranges anywhere from 1%-6% of the sale price in California. However, other factors affect the final commission amount, including the broker split and the split between the listing and buying agent.
Still, a successful California real estate agent can far exceed the state's median salary in no time.
There are a lot of varying costs associated with obtaining and maintaining a California real estate license and jump-starting your real estate career. It is a small price to pay when you consider the earning potential that awaits you as a licensed California real estate agent.
It doesn't take long to recoup the money you spent upfront, and when the money starts rolling in from your first few sales, you will be happy you took the leap and obtained your California real estate license.
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