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California Real Estate Exam: Everything You Need to Know
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San Diego's real estate market is one of the most competitive in the country, with a Redfin Compete Score™ of 83. According to Redfin, the median home price in San Diego is $800,000, up 16.1% compared to last year.
According to Realtor.com, San Diego County is a seller's real estate market right now, which means more buyers than active listings.
If you've been thinking about obtaining your San Diego real estate license, there has never been a better time than right now, as these trends should continue in 2022.
To become a real estate agent in San Diego, you'll need to get your California real estate license. The licensing process is relatively easy, affordable, and well worth the time, effort, and expense, especially considering the opportunity to build a lucrative career in the San Diego real estate market.
This article will explain, in detail, the steps you will need to take to obtain a San Diego real estate license.
There are essentially four simple steps you need to take to obtain your San Diego real estate license. In most instances, the process will take approximately 6-months to complete.
The steps are as follows:
Here are the steps in greater detail.
To obtain a San Diego real estate license, the State of California requires candidates to complete 135 hours of college-level coursework before they can qualify to take the state's real estate agent exam.
While there are some in-person real estate schools, most are offered online through live instructor-guided or self-guided instruction.
The DRE requires that candidates take the following courses:
Once you have completed all 135 hours of course material from a DRE-approved real estate school, you will receive a certificate of completion and a transcript of the courses taken that you can use to apply for your California real estate exam and license.
Qualified applicants can submit their real estate exam and license application online, using the DRE's eLicensing portal, mail, or fax.
You will be required to include the following:
It typically takes the DRE six weeks to process the application. Once the DRE has processed your exam application, you are allowed to take your exam at one of the state's five examination locations, including a San Diego real estate licensing exam location. You will need a valid form of identification issued in the last five years. Due to the pandemic, all sites are currently administering the exam in electronic format.
When you take the exam in electronic format, you will receive your results upon completion. If you take the exam in a paper format, results will be mailed to you within five business days from your exam date.
Although it is possible to apply to take the licensing exam and apply for the licensing separately, each application can take up to six weeks to process. So, you can save two and four weeks on the entire process by applying for both simultaneously.
According to Indeed.com, the median yearly salary of a San Diego real estate agent is $94,776.
Agents with a San Diego real estate license earn their salary based on commission from sales. Based on the current housing market and the median price of a home in San Diego ($800,000), a selling agent can expect to make approximately $9,600 per home sale, which breaks down as follows:
That means that to reach the median real estate agent salary in San Diego, an agent must sell at least ten houses in a year. But, since a significant number of homes sell at a higher price than the median average, and commission percentages will change in your favor as you gain experience, the ability to earn a bigger salary selling fewer homes is possible within the first couple of years.
According to Redfin, home prices statewide were up 14.6% this year, and the median home price in the state is $725,000, which slightly lower than the median home price in San Diego ($800,000).
Also, indeed notes that the median salary for an agent in California is $99,550, although this is slightly higher than the median salary for a San Diego real estate agent ($94,776); both are near the national average for agents across the county, which is $95,193.
As we mentioned at the beginning of this article, the current real estate market is hot right now, according to Redfin, which also notes the following key facts about the San Diego real estate market:
That makes for an incredible seller's market and is good news for San Diego real estate agents.
The real estate market in San Diego should remain active as the demand for housing continues. While we may not see a sharp rise in home prices, dramatic decreases are not anticipated. Even if there is an increase in availability due to additional foreclosures, the current demand should balance it out.
But, nothing is a guarantee. Hyperinflation or recession could negatively affect the market. Prices could also increase so dramatically that buyers get cold feet. On the other hand, if San Diego experiences a significant surplus due to foreclosures, a flood in the market may cause a sharp price drop.
So many variables are at play, and so much is unforeseen, but now remains the best time to become a San Diego real estate agent.
According to the Bureau of Labor Statistics, overall employment for sales agents in California will grow by 4% in the next decade. Although that growth rate is considered slow across all occupations, the agency expects 47,500 job openings a year for both sales agents and brokers.
Based on those statistics and the median salary for San Diego and California real estate agents, coupled with the low cost of obtaining and maintaining a real estate license, getting a license may be worth it. But, it would help if you still weighed the pros and cons.
Only you can decide if obtaining a California real estate license and breaking into the San Diego market is right for you.
There are many clear advantages to having a California real estate license which can bring incredible earning potential if you work at it. Based on the current market trends and future forecasts, there has never been a better time to break into the market and take advantage of all the benefits of being a licensed real estate agent.
If the thought of spending hundreds of thousands of dollars on the purchase of "virtual land" sounds absurd, well…
Okay, it does sound a little ridiculous. Still, when you consider the fact that there has been growing interest in cryptocurrency investments and NFTs (non-fungible tokens), it's not surprising that investors have gotten on board the virtual real estate train.
Recently, significant virtual real estate investments have been made inside the metaverse.
For example, one individual paid $450,000 to own a plot in Snoopverse, a virtual world developed by Snopp Dogg in conjunction with The Sandbox, a virtual metaverse where users build, own, and monetize their own gaming experiences using the Ethereum blockchain.
Meanwhile, Metaverse Group, the first real estate firm focused exclusively on the metaverse economy, bought a plot of land in the Decentraland virtual platform for a whopping $2.43 million.
The metaverse refers to a growing collection of platforms giving users real-time interaction capabilities. A metaverse has its own economy that allows users to buy, sell, and trade objects or mine crypto coins.
There is incredible value in virtual land for those serious about sandboxing, especially when it is in short supply.
Most popular platforms are known as "sandbox worlds," which allows users to build whatever they can dream of within the program's constraints. One such constraint, and the driver behind the value of virtual land, is that limited land is made available for purchase.
While the platforms in the metaverse might look a lot like just another game, and they can certainly offer hours of gameplay, there is no limit to what you might do in these virtual worlds.
Some people simply log on and socialize or attend special events, such as parties or concerts.
If you want to purchase metaverse real estate, you're going to have to join one of the popular metaverse platforms. These platforms include Axie Infinity, Decentraland, and The Sandbox, to name a few. You'll also need to ensure that you have a very fat digital wallet.
Cold hard cash can be converted to cryptocurrencies, such as Ethereum or whatever native currency is associated with your preferred metaverse. You can then store the cryptocurrency in a digital wallet.
Using the metaverse ecosystem, you can rent, buy, sell and flip properties in the digital world.
Messing around in the metaverse is one thing, but becoming an investor in virtual real estate is quite different. While history has demonstrated that virtual real estate has the potential to gain significant value in time, there's an equal chance that the metaverse platform you choose could go bust.
As an investment, metaverse real estate is extraordinarily speculative. Investors need to believe that the platform will exist long enough to yield a profit. While that is possible, the concept remains shaky, so much so that even its members have trouble defining themselves uniformly.
Knowing which metaverses will succeed or fail is anyone's guess, and it is impossible to tell if the hype around virtual real estate is driving the prices instead of long-term interest.
Digital real estate and the metaverse as a whole operates, for the most part, free from government regulation. However, don't expect the metaverse to be the wild west forever.
As cryptocurrencies and metaverses grow stronger and step on the toes of world governments, you can expect governments to exert more influence. For now, most legal issues connected to the metaverse involve intellectual property disputes, which aren't unique to the metaverse.
If you are already a real estate agent or interested in becoming one, perhaps you can become an agent specializing in metaverse real estate. It's certainly not unheard of. For example, Tal and Oren Alexander, two of Douglas Elliman's top brokers, now sell real estate in the metaverse.
To advertise a digital property, many agents use Facebook Ads and other types of sponsored content to reach prospective buyers.
Currently, those selling property in the metaverse are not required to have a real estate license, but taking some online real estate courses may not be such a bad idea.
If you have money to burn and love dealing with risky investments, buying and selling virtual property in the metaverse is right for you.
However, you should proceed with caution because investing in virtual real estate is nothing like investing in real estate here in the real world.
Unlike real estate in the real world, folks in the metaverse don't need a virtual property for survival. They don't require a roof over their family's heads or a place to raise livestock or build a business.
Virtual real estate isn't necessarily the way it is here on Earth, and that has to count for something.
In today’s competitive real estate market, who you work with matters — especially when it comes to buying and selling your own property.
But what if you don’t want to work with another agent and instead, are looking to represent yourself in a real estate transaction? While it is often legally allowed, if you’re considering getting a real estate license so you can buy and sell a property without working with another agent, there are some things to understand first.
The simple answer is yes – as a licensed agent, you can represent yourself in buying or selling real estate for yourself, so long as you disclose that you representing yourself upfront in the deal. But it’s not as easy as just getting your real estate license!
Just having a license is not enough to buy or sell your own property – you have to make sure you also are affiliated with a brokerage. To begin that process, you need to find a local real estate company, interview with them, and subsequently, get hired to hang your license there. Keep in mind that a brokerage will often take a percentage of the commission you receive in exchange for being affiliated with them.
If you’re planning to represent yourself, it’s important to look into each state’s legal requirements around buying and selling your own real estate as a licensed agent. Almost every state has laws that require agents to disclose their role and relationship to the property if they are planning to purchase it for themselves. Ensure that you fully understand what laws are in place so you can avoid any legal trouble during the process.
Despite the logistics and legal requirements, there are certainly benefits to representing yourself when buying or selling real estate.
Buyer’s agents generally split a 6% commission with a seller’s agent. When acting as your own buyer’s agent though, that 3% commission would go directly to you, resulting in potentially thousands of dollars back in your pocket instead of another agent.
Keep in mind that by being associated with a brokerage, you will have to split your 3% with the commission based on the agreed split and also finance brokerage related fees.
Another benefit to representing yourself is cutting out the middleman to guarantee you have full control over the transaction.
Generally, the paperwork, listing appointments, negotiating and more would funnel through your buyer’s agent.
But by representing yourself, you can directly communicate and coordinate without relying on another agent who might be juggling multiple clients. Handling this on your own can be valuable if you are an effective communicator, and comfortable with the process.
Even if you qualify to handle your own transaction, it’s not as simple as having a real estate license. Here are key factors to keep in mind:
Your real estate knowledge and familiarity with the market play a huge role in a successful transaction.
If you're new to the industry, consider partnering with a more experienced agent. By splitting a 3% commission, you can learn from them while still earning—preparing yourself for future transactions.
Even if you’re a licensed agent, buying or selling in an unfamiliar area can be risky.
If you're purchasing in a new market, working with a knowledgeable agent can help you make informed decisions and avoid costly mistakes.
Buying a home is one of the largest financial investments you can make, and emotions often play a role in the process.
Even if you have real estate experience, working with another agent might still be beneficial. An outside perspective can prevent emotional attachment from influencing pricing, negotiations, or the overall transaction.
There are certainly pros and cons to getting your real estate license with the sole purpose of buying or selling your own property. Aside from saving money, you can also grow your network and potentially discover a new career path.
If you’re ready to make the time and money investment into getting your license, consider how this will benefit you not only right now, but also in the future. Once you’re licensed and affiliated with a brokerage, you’re able to represent yourself, but also you can assist family and friends when they’re ready to buy or sell a property.
One thing to remember is that there are fees associated with keeping your license active. Unless you’re generating a regular influx of commission annually, having your license may be costing you more than it’s worth. If you’re going to go through the process of studying and passing the licensure exam, consider whether you want to explore this as a new career path!
Representing yourself in a real estate transaction can be a great opportunity to save money and take control of the transaction. If you’re considering getting your real estate license for this purpose, understand that while there are many benefits, it’s important to invest the time and energy to ensure you are properly educated and prepared for the transaction.
With the right experience and mindset, representing yourself in the real estate process is a rewarding way to utilize a skillset and potentially discover a new career path!
An easy way to remember critical concepts on the exam is with real estate acronyms. These are short, brief words that reminds you how a concept works.
The most important acronyms to know for the real estate exam are:
This article reviews acronyms that will help you during the exam. These are useful tricks and tips that you deploy whenever you need it. With that said, let's jump in.
U.P.T.E.E. is an acronym that you can use to remember the five rights associated with a buyer’s bundle of rights:
The term “bundle of rights” refers to a set of legal privileges (U.P.T.E.E.) afforded to a buyer, which comes with the transfer of title.
To have value, a property must possess four essential characteristics:
These characteristics need to be present for a property to have value, but they are also used to determine that value.
Since most people fund investments through mortgage financing and because most buyers borrow money to purchase property, lenders want to know what the property is worth before they loan money to the buyer.
M.A.R.I.A is a real estate acronym used to remember the elements that determine if something is a fixture:
When a person vacates a property, their personal property goes with them, and the real property that goes with the real estate is left behind.
A fixture is a term used to define a personal property that later becomes real property. It may have once been associated with the owner (personal property), but it is now part of the real estate transfer because of its association with the property.
A great example would be a hanging chandelier or a toilet.
P.I.T.T. refers to the four factors used to determine joint tenancy:
Joint tenancy is a type of ownership in which more than one individual enters into an ownership agreement through a property deed.
The parties involved in the joint tenancy may be relatives, friends, or business associates.
You can remember a real estate agent’s fiduciary duties using the O.L.D.C.A.R. acronym:
Agents are expected to follow a set of ethical rules, also known as fiduciary duties. They are outlined in the OLD CAR acronym.
That may involve disclosing all material facts to a client, including bringing all offers to that client and refraining from dual representation in a single transaction, among other things.
P.E.T.E. is a real estate acronym you can use to remember the four powers government has over property:
The four central government powers outlined in the P.E.T.E acronym allow the government to control certain aspects of real estate, including how structures are built and where and the government’s ability to levy taxes on a property.
This one comes in handy when you're answering questions about townships. On the real estate exam, you will need to know how many square feet are in an acre. The answer: 43,560 sq ft.
Here's an easy way to remember it: 4 old ladies driving 35 mph in a 60 mph zone. This paints a funny image in your head or maybe it's so corny that you'll remember it?
Either way, this a helpful way to remember how many sq ft are in an acre.
The yearly interest rate plus other charges such as points, origination fees, underwriting fees, and broker fees.
A database established by cooperating real estate brokers to provide data about properties for sale.
A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.
Real estate term for a property that is being sold directly by the owner.
A mortgage with an interest rate that changes over time.
The components of a typical mortgage payment.
A U.S. government department that administers federal housing and urban development programs.
Property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.
An estimate of a property's value compared with similar properties.
A government agency that provides mortgage insurance on loans.
A loan in which the lender agrees to lend a maximum amount within an agreed period.
Insurance that protects the lender if the homeowner defaults on a loan.
A deposit made to a seller showing the buyer's good faith in a transaction.
An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties in its jurisdiction.
The date when a property transaction is considered officially completed.
An estimated value of a property as determined by a real estate broker or other qualified individual.
A personal finance measure that compares an individual’s debt payment to their overall income.
A mortgage with a fixed interest rate for the entire term of the loan.
A national organization of real estate sales agents.
A measure used to evaluate the efficiency of an investment.
When it comes to preparing for the real estate exam, acronyms can be extremely useful in helping you to remember key concepts that you will need to learn in order to pass your exam.
If you want to make studying easy, then check out our real estate crash course and exam prep program. Get guided help when learning critical concepts, vocabulary words, and historical events. Our exam prep package comes with unlimited real estate practice exams, vocabulary flashcards, an eBook study guide, and so much more.
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Real estate agents earn a living working on commission rather than working for an hourly wage or a set yearly salary. As a result, full-time real estate agents must learn to maximize their time to increase earning potential and how to best manage their commission earnings to ensure that they can survive on an income that has the potential to be irregular at best.
There is no limit on the commission real estate agent can make in any given year. However, most real estate commissions checks don’t exceed 6%-7% of a home’s selling price. Some agents make millions of dollars a year by selling luxury homes. The sale price of the property you represent will ultimately determine your commission.
As an example, consider an agent who sells their home for $1.5M. A typical commission breakdown might look like this:
So, at the end of the day, what do you do with $18,000? Here are 6 smart ways you can invest your commission check.
As a real estate agent, you know the industry like the back of your hand, and you also recognize the value of investing in real estate, especially property that you can use to create passive income.
You can potentially use your commission to make a down payment on an investment property. When you’re working with a conventional loan or an FHA loan, the percentage you have to put down on a house is only a small portion of the home’s value. This makes purchasing property more accessible.
Some agents will use their commission checks as down payments and then turn the property they buy into a rental. That way, they can make a steady stream of passive income to finance the loan and take home some cash. This is a simple way of turning your commission check into a steady stream of income.
Generating new leads and building influence around your real estate career can often mean the difference between success and failure.
You’ll need to spend money on marketing efforts, professional expenses, and other costs to ensure that that happens. Most in the industry agree that agents should commit about 10% of their commission to marketing and other related business expenses.
Smart agents will look for ways they can automate and scale their business. That way, they can focus their attention more on where they can have the most impact and earn even more commission.
Since most real estate agents are independent contractors who are not subject to tax withholding, they are generally required to pay estimated taxes to the IRS quarterly.
Generally, it is wise for real estate agents to put aside 30% of each commission check to cover taxes.
Saving a portion of each commission check to use toward quarterly tax payments is a wise decision so that you can ensure that you are not scrambling to cover your income and self-employment taxes when they are due.
Because agents work on commission and their weekly, monthly, and yearly salaries can be unpredictable, real estate agents should be careful to create a budget that will allow them to live comfortably, even in the lean months.
The nature of the real estate industry is such that you may go through a dry spell occasionally and will have to dip into your savings to cover your expenses. That’s why it is essential for anyone working on commission to put a portion of their income into a rainy-day savings fund.
Reinvesting in yourself is one of the best ways to grow personally and professionally. Although you are not required to take continuing education until it is time to renew your license, you can grow your business and take advantage of new opportunities when you enhance your knowledge and skill set through continued education.
If there’s a conference that would be a great networking opportunity, a training on cold calling, or even an online course that will teach you a new skill set, education is a vital part in growing yourself so you can grow your business.
If you have taken all of the responsible steps outlined in this article and are confident that you have enough money set aside to live securely, grow your business, and cover your expenses, perhaps you should consider letting your hair down and doing something for yourself.
As a real estate agent, you spend a lot of time looking out for the well-being of your clients, and maybe your next commission check can be used to splurge.
Whether it’s a mini-vacation, a shopping spree, or just spending the day doing something you love, focusing on your well-being every once in a while is just as important as every other activity outlined above.
Just like folks earning a steady paycheck at a traditional 9 to 5 job, there are countless ways to use your commission check once you have it in your hands and are ready to go to the bank and cash it out.
However, because of the nature of the real estate industry and the fact that commission checks are not as steady as paychecks from more traditional careers, real estate agents should think about how they can best maximize their commission checks.
With proper planning, you will be able to pay your bills, grow your business, and quickly work at a pace that will allow you to live comfortably and turn your career in real estate into a lucrative career.
If you are currently taking a real estate licensing course and are preparing for your real estate licensing exam, be aware that you will need to understand the concepts of joint tenancy and tenancy in common.
This article will explain these ownership options and other related issues in greater detail. Please be aware that, although the word "tenant" is commonly used to refer to an individual who rents property, it refers to ownership in the context of this article.
Several ways exist in which more than one individual can own a property together. The most common include joint tenancy and tenancy in common. Although both ownership options recognize the parties as joint property owners, there are several critical differences between them both.
Joint tenancy refers to a type of ownership where more than one individual enters into an ownership agreement through a property deed. The parties involved in the joint tenancy may be business associates, friends, or relatives.
Consider, as an example, a married couple who purchases a home together and chooses a joint tenancy ownership option. In this case, the property deed will name both individuals as owners or joint tenants.
Because each individual is named, they both share in any property benefits. Should they decide to rent or sell that property, they are both entitled to 50% of the profit. However, the relationship goes both ways. So, each party is equally responsible for maintenance, property taxes, mortgage payments, or any other associated fees. Should one party fail to meet its financial obligation, the other named party will be required to assume responsibility.
A joint tenancy agreement features what is known as right of survivorship. Essentially, a right of survivorship states that should one named party die, the remaining party or parties automatically assume full ownership. A right of survivorship eliminates any need for probate. It also eliminates the need to transfer the deceased party's assets to their estate.
A tenancy in common (TIC) is also an arrangement where more than one party shares property ownership. Each owner is independent and may control either equal or varying percentages of the entire property. Unlike a joint tenancy, when one of the tenants in common passes away, their share passes along to their estate, giving them a right to divest their share to the beneficiary of their choosing.
Tenants in common have equitable privileges and interests related to the property, but co-tenants may have different shares of ownership interest.
Consider, as an example, a property owned by three individuals. Doug and John may own 25% of the property each, while Greg owns 50%.
Unlike a joint tenancy agreement, individuals can enter into a TIC agreement at any given time, even years later.
Using our example, Doug and Greg could have each owned a 50% share of the property initially as tenants in common, but, at some later date, Doug could have chosen to bring John into the TIC agreement, splitting his 50% share with him. This move would have created a TIC agreement with a 25/25/50 ownership split.
Parties named in a TIC agreement may also independently borrow against or sell their share of ownership.
The state real estate licensing exam will likely ask you to list the four factors determining joint tenancy.
These four factors (which create the acronym "PITT") are as follows:
As you can see, these four factors apply only to a joint tenancy and not a tenancy in common. Therefore, to remember the difference and the four factors that determine joint tenancy, remember to use the acronym "PITT."
For an individual to terminate a joint tenancy, one of those above factors must be undone. That may be accomplished if one party conveys their joint tenancy interest to a third party, either through sale or gift. Once the joint tenancy has been terminated, a TIC forms between the third party and the remaining co-tenants. Interest may be transferred unilaterally, without any knowledge or consent from other joint tenants.
Tenants in common can get out of a TIC agreement by transferring their property interest to another party. A transfer may be done at any time and in several ways. Tenants in common can do so by gifting, selling, or divesting their interest through a valid will.
In most cases, a tenant in common may not transfer the property interest of another tenant in common.
The best way to remember the difference between a joint tenancy/right of survivorship and a tenancy in common is to enlist the help of the PITT acronym listed above. It is important to remember because there will be several questions on the exam where you will need to know the difference between the two.
Again, in a joint tenancy, the four possession factors of interest, time, and title must be present. In a TIC agreement, parties do not necessarily possess equal rights or equal interest, and they certainly do not have to acquire the property simultaneously or under the same title document. Therefore, PITT separates a joint tenancy from a tenancy in common.
According to Statista, the United States is home to a massive mortgage market, valued at $11.9 trillion in 2021.
This financial sector is divided into two separate markets. These are known as the primary mortgage and the secondary mortgage markets.
Different mortgage markets serve a particular need for homebuyers and investors who put money into the mortgage market.
This article will take a deeper dive into the primary and secondary mortgage markets, comparing and contrasting the two.
The primary mortgage market is the loan market, where homebuyers obtain their mortgage and borrow directly from lenders.
The National Association of REALTORs® has reported that nearly 75% of all home buyers financed their home purchase in 2021. This financing generally came from mortgages obtained through the primary market.
Homebuyers and those looking to refinance can obtain direct mortgage loans through various sources that make up the primary mortgage market, including:
The secondary market allows investors to buy into existing mortgage loans to turn a profit.
Selling a mortgage is commonplace for most banks and primary lending institutions. It is a way to regain capital and continuously offer loans to borrowers.
As a result, several organizations operate in the secondary mortgage market by purchasing existing loans from primary lenders and reselling them to mortgage investors.
They include:
The mortgage investors ultimately keep the market going as they provide funds and the lenders’ guidelines.
This constant financial flow keeps the market afloat by ensuring that lenders have enough money for borrowers and allowing more home buyers to secure loans.
When a borrower obtains a mortgage, they primarily work with a lender. First, they apply for the loan, and once approved, they receive the money needed to purchase or refinance.
Then, the borrower pays back the loan and interest until the debt is paid overtime.
If lenders were to rely exclusively on the monthly mortgage payments, they would not have enough money to offer other potential borrowers.
That’s where mortgage investors come in. Lenders sell mortgage loans to investors through the secondary market, allowing them to secure the funds necessary to issue more loans.
As borrowers pay off these mortgages, payments are distributed to private investors that bought mortgage-backed securities on the secondary market.
Various factors determine mortgage rates. Some factors are within a borrower’s control, and some are not.
Lenders will adjust their mortgage rates based on loan risk. The riskier a loan is, the higher the interest rate.
In determining risk, a lender will consider the likelihood of the buyer’s failure to repay the loan and how much the lender stands to lose should the borrower default.
There are two significant factors in this consideration, including:
Market forces ultimately set the overall mortgage rates. Rates increase and decrease daily, based on economic indicators such as inflation, unemployment rates, job growth, and the economy’s overall strength.
The Federal Reserve also plays an essential role in mortgage rates. While the Fed does not set mortgage rates, they set short-term interest rates based on economic forces.
Because mortgage rates fluctuate based on these same forces, Fed rates and mortgage rates typically move in tandem.
The way that the primary and secondary mortgage markets work together is necessary for borrowers to continue accessing the funds needed to purchase or refinance a home.
The relationship between the two markets is symbiotic.
Primary mortgage markets give borrowers access to the funds needed to purchase a home.
The secondary mortgage market replenishes those funds by allowing lenders to sell those mortgages to Ginnie Mae, Fannie Mac, Freddie Mae, and other private investors.
It’s a win-win situation for everyone involved, and it is the engine that keeps the housing market alive.
California offers a lot in the way of prime property and is definitely one of the top areas of attraction real estate-wise. Now, you would expect that given such a back story, property taxes would be through the roof.
You would be wrong. California home/property owners pay way below the national average.
So, how do property taxes work in California?
Your tax is determined using the purchase price of the property since the purchase price usually equates to the assessed value. From here on out, your assessed value sees an increase annually based on the inflation rate.
The inflation rate comes from changes in the California Consumer Price Index.
In simple terms, property taxes are government-imposed levies on real estate ownership. Taxes are mainly levied at state, county, and local levels. By way of some ancient history, property tax has been for the longest time and can be traced back to the 6th century B.C.
In the U.S., property taxes were levied even prior to income tax. All states, as well as Washington D.C., levy a property tax while certain states do not even levy an income tax.
Owning real property in California implies that you would mandatorily have to pay real property taxes. It really doesn’t matter if you own rental property or if you got the property as a gift, you would pay property tax all the same.
Similarly, payment of property tax isn’t designated by property price. In other words, whether you have a $60,000 or a $6,000,000 property, you would still pay based on the respective home values.
There is a possibility that you purchase property mid-year, and when this happens, your real estate agent would likely negotiate to split the real property tax payment for that calendar year with the seller.
To confirm whether this is the arrangement made, review your mortgage interest statement.
Use our free calculator to find out how much taxes are paid on a property.
Assessment of property and calculation of property tax is determined by California's Proposition 13, passed in 1978. The basic principle for calculating is that you multiply the tax assessed value of your property by the tax rate.
Example: If you buy a home for $500,000, your property tax will be approximately $5,000 per year (1%). The assessed value can only increase by a maximum of 2% annually, barring significant property changes.
Tax day comes around pretty fast and if you’re not careful, it might meet you unprepared. In addition to filing your income taxes, you should keep an eye on your property taxes too. The State of California’s fiscal year begins on July 1st and runs through to June 30th.
Property taxes are assessed and collected by the county your home is located in.
First off, it is essential to remember that there are two installments due, as well as recall the date of these installments.
The first installment runs from July 1st through December 31st and tax payment is slated for November 1st, and only becomes delinquent on December 10th. Failure to make a payment by 5 p.m. on the delinquent date attracts a penalty of 10%.
The second installment is due by 1st February and becomes delinquent on 10th April. To recall, just have the mnemonic “No Darn Fooling Around” (representing the first letter of each month) ringing in your head and you would remember for sure!
Remember that failure to pay property taxes as at when due see your penalties rising consistently.
If you pay your property taxes alongside your mortgage, you would not have any unpaid balance by November 1.
Now, this is a question that many property owners ask. What happens to all the property taxes that you pay? Well, your property tax is what keeps the state and local governments functioning. They comprise a bulk of the revenue that goes into funding public safety, infrastructure, public schools, as well as the county government.
Particularly for public schools, it is easy to find that the best public schools are located in municipalities that have highly-priced homes and as a result, significant property taxes.
County projects are funded by some states, while others leave the counties to carry out the levying and tax use without interfering. This implies that the county has only property taxes as its source of funding.
Here’s a summary of public services that your tax dollars go towards funding:
You've probably heard the terms property taxes and real estate taxes used multiple times, and you're wondering if there's a difference?
Well, the key difference between property taxes and real estate taxes is that there is no difference. They are identical and used interchangeably. So, next time you hear these terms being used within the same frame of conversation, you know that it's pretty much the same.
Property taxes are necessary for running the county and state by extension, and this is why they are so important. You can easily calculate your property tax ahead of time and now you know exactly where these funds go. And if you ever forget the dates, remember, No Darn Fooling Around!
It’s easy to feel the excitement of your clients when they’re first-time buyers. But, it’s also important to recognize their uncertainty.
Let’s face it, the average buyer hasn’t had all of the licensing and training we’ve had.
Without that background knowledge, everything that goes into buying a home can get confusing. It’s not a simple transaction like going to a store and just buying what you like.
To avoid your client becoming overwhelmed as a first-time home buyer, you can (and should) help them understand the process.
When a client first comes to you to help them find their dream home, you should be prepared with as many questions as they likely have.
Be ready to give a basic overview of what they can expect on the journey and what a typical home search looks like. From there, they can ask any specific questions about different steps in the process.
Affordability is a huge factor in the home buying process. Helping your client with this can be as simple as having them come prepared with their financial information to calculate how expensive of a house they can afford.
After this has been determined, you can exclusively show them homes within their price range.
To take affordability a step further, you should have a conversation with the prospective buyer about the differences between pre-approval and pre-qualified loans.
Encourage them to take at least one of these extra steps before they begin house hunting to make the actual buying process easier. Not to mention, a pre-approval will give them extra peace of mind to know that they’re able to secure a specific amount in a mortgage.
After financing has been discussed and you have a budget to work with, you need to help the buyers understand what they’re looking for in a house.
An important distinction to help them understand is their wants versus their needs.
First, your client will need to let you know things like their family size, how much time they spend at home and any home-based activities that are important to them. This will help you and them determine what their just-right size home is.
Next, you’ll want to get an idea of what type of neighborhood they’re looking for.
Living in a more rural area is completely different from a cul-de-sac. Plus, it’s important to remind them that these different neighborhoods will have different property taxes to contend with.
All of this information plays a significant role in the properties you’ll choose to show them once you begin house hunting.
House hunting is supposed to be the fun part of this journey. So, keep an upbeat attitude as you search with your clients.
When taking your prospective buyers to look at houses, you should also remind them of a few key things to make the process easier:
It’s easy to see a house and immediately fall in love with it. It could be the size, location, price, aesthetic, or any other reason.
But, your client must remember that their fate is ultimately in the hands of the seller.
If the seller receives a better offer or likes another potential buyer better for some reason, then they can decide not to sell you their house.
This is why it’s important to keep your buyer’s minds open and to encourage them to not fall completely in love with every property they see.
Looking at homes is exciting for buyers. They tend to look through rose colored glasses and overlook potential issues.
Be honest with them when you see something wrong with a property, and point out things that could be changed for the better.
To avoid them having to spend a significant amount of money on repairs, you can even show them the easy home repairs they can do themselves. They’ll appreciate both your honesty and attempt at saving them money in the long run.
Remind your client to know where they have power and where they don’t.
This particularly comes into play when thinking about the current market. With the current seller’s market, your client will have less power than they would in a buyer’s market.
Still, there are circumstances where they’ll have some power even in the current market.
This is most true with a house that’s been on the market for a long time. By accepting that there may be significant repairs needed, your client can make a lowball offer to secure the house if there’s something else about it that they love.
You can even encourage your client to gain some power as they write their house offer letter to the seller.
Including personal details and their hopes for their future in the home can help them appeal to the sentimental side of the seller and potentially gain them something they want (maybe even an inspection or faster closing).
Closing will be the most confusing part of the home buying process for your client. With so many legal aspects involved, it’s easy to understand why.
Be patient with them at this stage, as their mixture of confusion with the process and excitement to move into their new home will often get the best of them.
If they show an interest, try to explain more in depth about what’s happening at this stage. Otherwise, offer a high-level overview to keep them informed.
Communication will be of the utmost importance here. Especially if things get complicated.
You should try your best to both explain and actually add in contingencies on the sale of the home. Adding in even one of the most common real estate contingencies into your client’s contract can help protect them.
You should also remind them that closing is equally dependent on the seller to complete their part of the agreement.
Knowing that you have their best interest at heart will help make them more accepting of any delays in closing.
First-time buyers are equally excited and nervous about beginning the home buying process.
As the expert, you can help to calm their anxieties and keep them from becoming overwhelmed by simplifying the process for them.
Sometimes all it takes is spending time to explain what’s happening and what they can expect. By doing that, you can all find the process to be successful in the end.
Before you become a real estate agent in Florida, you have to apply for the Florida state exam.
Only after you pass the exam will you be rewarded your real estate license.
So, how do you apply to the Florida real estate exam?
This article is your guide on what you need to do to apply for the exam and which forms to include in your application.
Let's show you everything you need to know about your application.
You must meet the following requirements to be eligible to take the Florida Real Estate Exams:
All of these requirements are important to be eligible to take the real estate exam in Florida.
After meeting these requirements, you’re ready to put together and submit your Florida real estate exam application.
Your Florida real estate exam application should include the following:
You will have to fill in all the necessary details about yourself and your application in the form. You also have to provide necessary background information about yourself.
A live scan fingerprint is an ink plotted copy of your fingerprint. This is official government documentation that is used to identify any criminal history.
You can do it from any accredited Livescan vendors.
You can choose to have your fingerprints taken by Pearson VUE, the same company that administers the exam.
At the venue of the exam, you will be required to bring some important documents as part of your exam application.
You need two forms of identification:
After completing your real estate exam application, the next thing to do is to submit it to the Department of Business and Professional Regulation.
There are two available means through which you can submit your Florida real estate exam application.
You can complete and submit your real estate exam application via the DMPR’s online portal. All you have to do is create a new account, follow the necessary prompts and complete your application for a new license.
If you choose to submit your application by mail, you have to send your completed application, documentation, and required fees to this address:
Department of Business and Professional Regulation
2601 Blair Stone Road
Tallahassee, FL 32399-0783
When mailing your application, package documents into a large manilla envelope, which you can get at any post office. Don’t forget to use a paperclip to collate the documents!
The FDBPR has a maximum of 90 days to complete the entire review and processing of license applications.
However, for real estate license applications, it typically takes them about 10 to 30 days to review and process the application.
While you are waiting, you can take a real estate exam prep course to help you study for the big test. You can do this by taking practice exams and reviewing important concepts and terminology.
Focus on a select number of tests that reflect the style of the exam. This will help to test and help you assess your level of preparation for the examination.
The Florida real estate licensing exam is administered by Pearson VUE. Pearson VUE offers several testing centers where you can schedule your date and time to take the exam.
You can schedule a date and time for your test on the Pearson VUE website or via 888-204-6289 once the FDBPR approves your application.
Pearson VUE also allows scheduling a remotely proctored exam. This is an online version of the exam that can be taken at home.
If you choose to take the remotely proctored online exam, there are some requirements you have to meet. You need a functioning laptop or home computer with:
Before you eventually write your exam, you will have to run a system test on your computer.
This is to check the compatibility of your computer with the software Pearson VUE uses in administering the exam.
Generally speaking, the passing rate for the Florida real estate exam is somewhere between 50% and 60%.
This implies that the test can be somewhat tough, however, regardless of this fact, you can pass the test if you study and prepare accordingly.
To pass, you have to score at least 70% in the Florida real estate exam. If you fail the test on the first trial, you will be allowed to take a second attempt the test within 30 days and 1 year after the original test.
Keep in mind, that the second test will not be the same as the first test – no memorizing the answers!
The real estate exam requires a handful of documentation from you – some of which you might have never heard of before.
That’s why it’s important to make a checklist and to take your time collecting everything you need. By creating a list, you can make sure nothing is missing when you apply to the exam.
The real estate market in Georgia is nothing short of a booming one. To work in this market as a real estate agent, you need to pass the Georgia real estate exam.
There are certain eligibility requirements to take the exam: you have to be at least 18 years old, complete pre-license coursework, complete a background check, and finally, apply for the exam.
In this article, we will consider all the steps you need to apply to the Georgia real estate exam.
We will also take a look at a few other tips you should consider ahead of the exam. If you are looking to apply for the Georgia real estate exam, this article covers everything you need to know.
The Georgia Real Estate Commission (GREC) has set certain requirements that have to be met to take the Georgia real estate exam. To be eligible to take the exam, you:
If you have completed 10 quarter hours or six semester hours of either eligible real estate coursework or courses in principles, fundamentals, or essentials of real estate from an accredited U.S. or Canadian college, university, or law school, you will not be required to take the compulsory coursework. You just have to submit a transcript to the AMP during your application.
Once you meet these requirements, you can go to fill out and submit your exam application. There are two channels through which you can submit. These are:
You can complete and submit your real estate exam application online. To apply, log in to the portal, follow the necessary prompts, and complete your application for a new license. Once you have submitted your application, you can go on to pay for your exam with a credit card and schedule the time and location for your exam on the portal.
Applying via the online portal is only available to candidates that completed their compulsory pre-license coursework at an accredited school in Georgia.
If you did not undergo the compulsory pre-license coursework in Georgia or you are using an equivalent requirement, then you have to send in your application by mail.
If you are paying for the exam with a money order or certified check instead of a credit card, you also have to send in your application via mail.
You can find the application form in the GREC Application Handbook. Compile all your relevant documents and fees together in a manilla envelope and mail it to:
PSI,
18000 W. 105th St.,
Olathe, KS 66061-7543 USA
After sending in your application, you can schedule the time and date for your exam via telephone by calling 1 (800) 345-6559. It is advisable to do this about 7 to 10 business days after mailing your application.
When applying for the Georgia real estate exam, there are some necessary documents that must be included in your exam application:
Keep in mind that cash, company checks, and personal checks are not accepted, so avoid including them in your application.
Once you submit your application, the GREC takes about 7 to 12 working days to approve your application. After your application has been approved, you can schedule your exam within a week depending on the volume of candidates. This puts the time between the submission of your application and your exam at 3 weeks on average.
During this period, while you wait for your application to be approved and your exam date and venue to be scheduled, you can take your time to study for the exam.
You can only take the Georgia real estate licensing exam in one of the four PSI testing centers in the State of Georgia.
These centers are located in Duluth, Savannah, Macon, and Marietta. The date and venue for your exam will be scheduled on the online portal for those who completed the 75-hour compulsory coursework in Georgia.
Others will have to call PSI at 1 (800) 345-6559 or by mailing in an application to the submission address.
At the venue of your exam, you will be required to show two valid forms of identification. Be sure to have them on you, with at least one of them being a government-issued ID.
The Georgia real estate exam is pretty tough, but it is not impossible. For the exam, you have 4 hours to answer 152 multiple-choice questions. The exam has two parts, the National and State portions. In the national portion, you have to answer at least 75 out of 100 questions right. While the second portion is state-specific and you need to answer 39 out of 52 questions right.
Only around 60% of candidates pass the exam. This makes it important to utilize all of the free time you have before your exam. Prepare adequately and you are good to go.
Getting your Georgia real estate license allows you to start and build your career as a real estate agent in Georgia.
While getting your license may seem tasking, it could eventually be worth every bit of the work you put in. Once you pass, you are ready to get your license.
It is all just fun and games until someone sells a house using drone footage on TikTok.
Real estate agents can leverage technology to generate new real estate leads. This article discusses using social media, drones, apps, and email to get new leads. Let's look at how we can use tech to find new customers.
We all know that open houses have been one of the most important ways to generate new real estate leads. Instead of reinventing the wheel, we can use technology to give us an edge at doing what already works well.
One of the newest ways to leverage technology to find new leads is live streaming open house events.
We can share the live stream on social media. Potential buyers are more inclined to attend the next open house in person if they see a live stream first. When people attending open houses in-person notice the event is streaming online, they'll realize there is more competition than they initially imagined.
Live streaming is a great way to expand open houses beyond the neighborhood. While joining online isn't the same as attending in person, buyers across state lines can get a good idea of what the property looks like with people inside.
In addition, broadcasting busy open houses shows demand, something buyers and sellers both love to see.
Use drone footage to set listings apart from others. New leads like to see every property angle, and aerial footage is an attractive addition to high-quality pictures. Drone footage could save buyers a trip out to the property.
Giving new buyers as many views as possible will improve their understanding of the property. In addition, you can turn your videos into ads to improve your online engagement. We should expect our ads to perform better when enhanced with drone footage.
We can use footage like this during open houses and live streams to exhibit the property features and acreage. It also shows the distance from schools and nearby attractions like shopping and dining. Drone footage can even give examples of the weather during different seasons.
Creating video ads is essential because new generations of homebuyers respond well to video advertisements. For example, a video fly-through is engaging content for social media. Uploading interesting footage to YouTube on a regular basis will expand your outreach and bring in more leads.
Social media is a crucial way to generate new leads. It helps us share listings in different cities and states. Facebook is almost 20 years old. There have been a lot of new channels developed along the way.
Set up free accounts on Facebook, YouTube, Reddit, LinkedIn, Instagram, TikTok, and Pinterest. Remember to add some time to your calendar to do social media marketing every week.
Doing as little as one post a week is enough to notice a difference in new leads. Sometimes the most challenging part is getting started. Once we have a routine, it is easy to keep the content going.
Here are a few examples of how to use social media:
Besides posting content, we can leverage social media to network with other industry professionals. We should also ask for reviews from buyers and other professionals we've worked with in the past.
Social media is a great place to find ideas for content to emulate from other agents, especially if we get writer's block.
Curb appeal is fundamental to capturing the people viewing our listings and seeing our signs. It includes everything exterior to the house that makes them attractive to buyers. We'll want to work with sellers to suggest the most valuable upgrades.
A fresh coat of paint works wonders for curb appeal. Encourage sellers to pick colors that match the neighborhood and features found in nearby listings. Neutral colors appeal to most buyers.
A bright-colored door that contrasts nicely with the neutral exterior color can be a great way to draw attention. Doors are small enough to paint if the new owner decides they want something less noticeable.
Nowadays, there is an app for everything. Suggest a design app that helps homeowners get a clear timeline of how long the enhancement will take to complete.
Contractors sign up with the design apps to get their painting leads, making it easy for homeowners to find a trustworthy tradesperson. Apps like this make it easy to collaborate with sellers.
They can ask for input on the upgrades they should do before they sell the house.
Besides paint and a bright door, trimmed bushes and a freshly mowed lawn go a long way in the eyes of potential buyers.
Planting trees can be a great way to add value and curb appeal at the same time. Agents should encourage sellers to make strategic landscaping decisions that fit the community.
The idea is to make the outside look well-kept with professional maintenance. We can use apps to find the best landscapers in our areas.
One of the easiest ways to increase curb appeal is with the mailbox. Mailboxes are great ways to add flare to the exterior of the home. Antique mailboxes can be appealing in some neighborhoods.
In others, a natural wood post may be more attractive. If the mailbox is in front of the house, upgrading it is a great way to catch some additional attention. Recommend using an app to make finding a handyman easy for homeowners.
The ROI from email marketing is hard to beat. Newsletters are among the best ways to establish a relationship with new customers. Advertise the newsletter on social media channels and ask people to sign up.
Setup a scannable QR code to display at open houses and online. Make asking people to sign up for the newsletter a regular part of the sales pitch.
Once we have a list of email addresses, we'll have to get into the routine of sending them content. Draft a marketing schedule for the newsletter. Consider a different theme for each month.
We want to send at least one newsletter per month. Talk about new listings, market trend analysis updates, and success stories or reviews from recent customers. The newsletter is a great place to share social media accounts for people that want even more information.
Besides a newsletter with a monthly marketing plan, it is crucial to have a contact plan for buyers and sellers interested in working together. When fielding calls from new customers, remember to ask for their email addresses.
We can use various customer relationship management (CRM) platforms with automated follow-ups to make sure we're making contact after the first conversation.
We will have more emails to sort through when we ramp up our marketing with newsletters and CRMs. So take some time to organize overloaded inboxes.
Create new folders and labels that make it easy to stay organized and see who needs to follow up. Don't let new leads fall through the cracks.
We can target "For Sale By Owner" listings when looking for new homes to sell. If the listing stays on the market longer than a month, it might be an excellent opportunity to get in touch with the seller.
There are a variety of places owners sell their homes online. Zillow and Craigslist are some of the most popular online directories. Local newspaper websites can also be a valuable source of FSBO listings. We will want to create alerts for new listings and target those that don't sell right away.
Of course, we can always find FSBO listings the old-fashioned way by driving around target neighborhoods and taking pictures of for-sale signs.
But, no matter how we find them, we'll want to make sure we have our online presence on point.
Showing off a similar listing with drone footage and a recording of the last live-streamed open house could be enough to convince the sellers to use our services.
The best way to build new leads is to improve on what already works. Technology has opened the door to do our jobs better in a variety of ways.
Taking advantage of free social networking channels may be the most effective way to leverage technology to build new leads.
Whether you decide to live stream an open house, use drone videos, or record regular market updates for YouTube, the sky's the limit for reaching new leads. The best part is that using technology to build new leads is easy to learn and only costs you in time.
With median prices of homes upwards of seven figures, San Francisco is one of the most expensive housing markets in the country.
Despite these seemingly high prices, the San Francisco real estate is still a fast-paced one, with the average selling period of houses being just 2 weeks on the market.
San Francisco has a large flow of people moving and leaving the city, which makes it primed for prospects.
Starting as a real estate agent in San Francisco is tough, but it is possible.
If you want to start a career as a real estate agent in San Francisco, California, you just have to put in the required effort and time while following the steps in this guide.
Once you are 18 years old and you are eligible to work in the U.S., you can get started on your journey to becoming a real estate agent in San Francisco.
This section will cover, in detail, the step-by-step process you have to follow to get started.
You are required to complete state-specific pre-licensing coursework before you can take the real estate license exam.
For the pre-license coursework, you have to enroll in a California real estate school that is approved by the Department of Real Estate. Approved real estate schools educate and prepare you for the necessary courses ahead of the real estate license exam.
Real estate schools also provide the certification you need to apply for the real estate license exam.
The DRE-approved pre-license education is a compulsory 135-hour coursework that can be spread out to fit your schedule.
You have to complete the 3 required courses to prepare you for the license exam within a year of your enrollment.
Each of the courses has a 45-hour duration:
For your elective course, there are several options you can choose from which will result in a slightly different experience. Some of these courses include:
All of these courses constitute the core curriculum formulated by the California Department of Real Estate (DRE). They cover the topics and terminology that the license exam questions will be based on.
Once you have completed all 3 courses, the next thing to do is to apply for the California Department of Real Estate’s Salesperson Examination.
This exam is the most critical aspect of your licensing process. It is used by the DRE to evaluate your knowledge and understanding of real estate concepts and terminology.
To apply, you will need to provide the following:
You will also have to pass a background check. This is to check for any criminal history and ensure you are eligible to practice as a real estate agent in San Francisco.
If you have a criminal history, you can contact the DRE directly to see if you will still be eligible to take the exam.
After submitting your application and the DRE has approved it, you can schedule the date, time, and location for your exam.
The exam is pretty tough. It consists of 150 multiple choice questions and you need a score of at least 70% to pass.
Until you sign with a brokerage in California, you are not yet officially cleared to practice as a real estate agent. You will need to find a broker or brokerage to work under.
Getting a brokerage that will recruit you is straightforward. You can contact whichever brokerage you are interested in joining to inform them that you are a licensed agent looking to sign.
Once you sign with a brokerage, you are set to start practicing as a real estate agent in San Francisco.
The San Francisco real estate market is highly competitive. There are thousands of real estate agents throughout the city who are vying for a high commission check from the expensive land value.
It’s no secret that there’s plenty of money to be made as a real estate agent here and everyone wants their cut.
So, as you enter the market, remember that it’s important to stand out and connect with the people in your network. That’s the best way to start building experience and a reputation for yourself.
In 2024, according to Indeed.com, the average real estate agent yearly income is $117,613. This can be misleading. Not every agent will make this much money. In fact, most agents may make less than this. This number is greatly skewed by the amount of money that only a few agents make.
Keep in mind that, as a real estate agent, you earn on commission instead of a salary. However, in San Francisco, you can make a decent living even by selling fewer homes because of the real estate prices in California.
In major areas of San Francisco, the median home price is about $1,200,000 and this puts your commission, using the typical 3% rate, at over $35,000 on just one sale.
It takes about 5 months to become a real estate agent in San Francisco. You have to take 135-hour compulsory coursework which will span over at least 2 months.
Then you apply for the exam and your application is processed for about 3 months before you can take the exam.
As a licensed agent in a strong real estate market like San Francisco, you could be living the life of your dreams.
While the journey may be somewhat rigorous, you have to put in the required effort and time.
Once you become licensed in San Francisco, you can make more from selling fewer homes. So is it worth it? Yes, it is definitely worth it.
As the national real estate frenzy continues, many individuals are re-evaluating their career paths and considering real estate for their next job.
Los Angeles is constantly ranked among one of the hottest housing markets and continues to be a top city for real estate agents.
If you’re considering becoming a real estate agent in Los Angeles, read on to learn how to start the process.
Becoming a real estate agent in Los Angeles is a fairly straightforward process that involves five key steps.
California requires all real estate applicants to attend an accredited real estate school and complete 135 hours of pre-licensing coursework.
These educational institutions have been accredited by the state of California and are approved to teach the coursework required for your licensure.
You can review all accredited schools on the California Department of Real Estate website.
This features three fundamental classes:
Once you’ve completed your coursework, you’ll be able to apply for the California real estate exam. To do that, you’ll have to send in an application with:
You can submit your application online, in the mail, or by faxing it to the DRE. Once submitted, it can take up to 6 weeks for your application to be approved.
You can view their current processing times on their website here. Once approved, you’ll receive a notification that you’re eligible to schedule your exam.
Once you’ve gotten approval on your application from the Department of Real Estate, you’ll be able to schedule your exam.
There is a designated testing facility in the Los Angeles area that you’ll have to schedule your exam with, as walk-in testing is not allowed.
You’ll have 3 hours to complete your salesperson exam and can opt to take it on paper or on a computer.
The exam is broken down into the following categories:
In order to pass the exam, you must get 70% of the questions right. That means out of 150 questions, 105 must be correct to get a passing score.
With a 50% passing rate, the California real estate exam is considered difficult and rigorous. If you don’t pass your exam on the first try, you’ll be able to retake the test another time.
If you pass, the DRE will mail and email you a copy of your official real estate license. From there, you’ll have to find a brokerage that wants to sponsor you.
It’s important to find a brokerage that fits your needs and supports your business goals as you start your real estate career in Los Angeles.
This can involve reaching out to various brokerages, interviewing with brokers, and connecting with other agents who are looking to grow their team.
Sometimes your real estate school can also help connect you with brokerages who are looking to add new agents.
Once a brokerage sponsors you, you can start selling and working with clients!
As with many major metro areas right now, the Los Angeles real estate market is incredibly competitive. Los Angeles is home to thousands of agents and is one of the most populated cities in the country.
In 2024, home sales increased 19.4% in Los Angeles county. This is great news for people entering the industry, but it could incentive more people to get their license.
Real estate agents in Los Angeles typically work on commission, so incomes vary widely. According to the U.S. Bureau of Labor Statistics, the median annual salary (income) for real estate sales agents in the Los Angeles-Long Beach-Anaheim metro area is about $57,180.
This means half of agents earn less than that, and half earn more. Key salary data for LA agents (2023 BLS estimates):
For context, California’s statewide average for real estate agents is similar (~$62k.)The National Association of Realtors (NAR) member surveys also show that newer agents often earn under $40k in gross income, while established top producers in luxury markets (like high-end areas of LA) can earn six or even seven figures.
Overall, Los Angeles agents benefit from high home prices (and thus higher commissions per sale), but competition is intense. Many agents supplement income with related work during slow periods. In summary, the typical Los Angeles agent earns in the mid five-figures annually, with significant potential upside for the most successful.
Los Angeles’s housing prices rose dramatically from 2014 to 2024. The median home price (the price at which half the homes sold for more, half for less) in the Los Angeles area nearly doubled over the decade.
According to the California Association of Realtors (C.A.R.) data, the median price for an existing single-family home in Los Angeles County was about $464,650 in 2014, and by 2024 it reached roughly $912,000. Below is a year-by-year breakdown of December median sale prices in Los Angeles:
Sources: California Assoc. of Realtors, Los Angeles Almanac. (Data represents the median price of single-family homes in Los Angeles County at year’s end.)
Home prices in Los Angeles saw steady growth from 2014–2019, surged in 2020–2021 (fueled by low interest rates and pandemic buying), and leveled off around 2022. By 2023–2024, the median price hovered near all-time highs (around $850k–$900k+).
Such high prices, coupled with rising interest rates in 2022–2023, contributed to a slower sales market – which in turn impacted real estate agent activity (fewer transactions meant tougher competition for agents).
Despite a slight dip in 2022, Los Angeles home values in 2024 are roughly 95% higher than in 2014, highlighting the strong long-term growth of the LA real estate market.
Between the coursework, application, and exam, there are several time-consuming aspects to becoming a real estate agent. You should plan to spend 3-5 months from start to finish to get your real estate license.
With 135 hours of classes and a processing time of around 6 weeks for the application, the time it takes can vary greatly based on your own schedule availability and the DRE’s times.
Becoming a real estate agent can be an incredibly rewarding and lucrative career for many. You’re helping guide clients through one of the biggest purchases in their life while working as your own boss.
In real estate, every day is different than the last. If you enjoy working with people, like a flexible working environment and want to be in control of your own business, real estate could be a great career for you to consider.
According to the Sacramento Association of Realtors®, Sacramento home sales increased by a whopping 44.2% from 2023 to 2024. From June 2024 to July 2024, the inventory for sale increased by 3.2%.
This is a clear sign of an active real estate market! This is excellent news for people who want to become a real estate agent in Sacramento.
So, how would someone get their license and start a real estate career?
In this article, you'll learn everything you need to know to become a Sacramento real estate agent.
You are eligible to apply for and get a real estate license to practice as an agent in Sacramento once you are at least 18 years old and can work in the U.S.
This section will cover, in detail, the step-by-step process you have to follow to get started.
One of the major requirements to become a real estate agent in Sacramento is to complete 135 hours of real estate coursework. This coursework is state-specific, and you must complete it before you can take the real estate license exam.
You can only take the coursework by enrolling in one of the real estate schools approved by the Department of Real Estate. These schools help you complete the required courses and prepare for the real estate license exam.
They also certify you upon completion and passing of the coursework. You will need this certification when applying for your license.
You can spread the compulsory 135-hour coursework out to fit your schedule. The coursework comprises 3 required courses, with each of the courses evenly split into a 45-hour duration.
You have to complete these 3 courses and take the license exam within a year of your enrollment.
You have several options to choose from for your elective course. These courses will provide you with a slightly different perspective depending on your choice. Here are some of the options available to you:
These courses are designed and formulated by the DRE to treat the fundamentals of becoming a real estate agent in California. In addition, you will learn about the relevant real estate topics and terminology that the license exam will be based on.
After completing the compulsory 135 hours of real estate coursework, you can apply to take the California Real Estate Salesperson Examination.
This exam is somewhat difficult to pass, with a pass rate of about 50%, so you have to prepare diligently.
In applying for the exam, you will have to fill out an application form and pay a fee of $60 for the exam. You will also have to submit a valid photo ID, a completed live scan form, and the certificates for your coursework.
Once your application is processed, you can go ahead to schedule the time, date, and venue of your exam. You will also have to pass a background test.
Passing the real estate exam is the most crucial step you have to take. The DRE sets 150 multiple-choice questions, and you need a score of at least 70% to pass.
The exam can be stringent and demanding, but it is not impossible. All you have to do is study diligently before the exam.
You cannot practice as a real estate agent until you sign with a brokerage in California, even after getting your license. You have to work under a broker. Finding a brokerage to sign you can be like the typical job-seeking process.
All you have to do is reach out to a brokerage that piques your interest. Let them know that you have just received your license, and they can schedule an interview with them. Once you scale this phase, you can start your career as a real estate agent in Sacramento, California.
Using websites like Realtor.com and Zillow.com, I can see around 10,000 realtors in the Sacramento area. This could include agents who serve the area, but might not live there. This is also a limited search.
Sacramento is a mid-sized city on the larger end. Close to 600,000 people live here. This means the area is dense with inventory.
Also, the amount of inventory has increased substantially in the last year. Although agents have more competition here, there's plenty of real estate to go around.
Since agents make money based on the value of the home sold, let's look at the average home value in the area. Sacramento's average home value is around $500,000. This is a rough estimate taken from Zillow, Redfin, and Realtor.
Let's assume that an agent negotiated a 1.5% commission rate. That means, they would make $7,500. With the increase in for sale homes, this can set agents up to make good money. If agents want to earn $100,000 (above the national average), they must close about 13 homes.
This number does not include commission splits with brokerages. It also doesn't account for homes higher and lower the city average value.
It should take about 5 to 6 months to become a real estate agent in Sacramento, depending on how quickly you complete your coursework. The fastest you can complete your coursework is 2 months.
You then apply for the exam and have your application processed. After taking your exam, you will have to sign with a brokerage. All of these would typically take about 3 - 4 additional months.
While the journey can be rigorous and challenging, being a real estate agent in Sacramento can be more rewarding than you think.
Other than the robust income, you can have a flexible schedule and take pleasure in helping people make the critical decision of buying their homes. This makes it entirely worth all the stress.
You might be considering a real estate career. This is a big step. With big steps, there comes questions.
As a real estate school, we get a lot of questions about becoming a real estate agent.
This article lists the most common questions we get. Use this guide to learn more about the career and see if it's the right step for you.
Yes, as a potential real estate agent, you can interview brokerages before getting your real estate license. Interviewing before you get your license helps you decide which brokerage you want to join. Not only that, but you could coordinate with the DRE to automatically sign with a brokerage when you pass the state exam.
There is no fixed time frame restricting your time at a brokerage. Instead, the time spent after signing an independent contract with a brokerage is dependent on several factors, including the terms of the contract signed and personal factors such as how fulfilled and comfortable you feel at the brokerage.
Yes, the commission split between you and the brokerage you sign up with is negotiable. However, if you are uncomfortable with the split portion, both parties can negotiate until a compromise is found.
No, joining a real estate team as a new real estate agent is not necessary. Although joining teams may come with benefits, such as establishing a familiar ground and creating exposure in the real estate industry. However, if you feel you have what it takes to go solo and meet your clients, go for it!
You can keep the leads you get from hosting another agent's open house. One of the best ways to stay busy as a new agent is by offering to do an open house for a thriving listing agent in your brokerage. Any potential future clients you get in the process are a bonus and yours to keep.
The answer to this is no. You are not obliged to use your brokerage's preferred service providers. Instead, as an autonomous contractor, you are allowed to determine what works for you and your business, including the choice of who provides your services, such as escrow officers, mortgage lenders, etc.
No, you are not required to go to your office every day. The best place for a real estate agent is outside their office to find more opportunities to meet potential new clients.
However, it is crucial to keep your ears to the ground to know when special events such as masterclass training are being held. Brokerages offer events, classes, and training to help agents improve. So, you don't want to miss out!
As an aspiring real estate agent, a mentor is not required. But, if you can afford the commission split, you may want to find one. Mentors help shorten the learning curve and guide you through problems you might not know how to fix.
Generally, having a mentor will cost you 20% of every commission check. But, this can vary depending on the contract.
Yes, you can represent yourself in purchasing or selling your property once you have passed the real estate state exam and received your license.
No, printing your license is not required. Typically, the Department of Real Estate sends you two copies of your license:
The most important thing is to save these documents for reference purposes.
Yes, you can obtain a real estate license, even with a criminal record. The first step is to contact the Department of Real Estate to inform them.
When explaining your criminal history, be honest and specific. If the DRE finds the information you hide, you will look suspicious and untrustworthy.
Criminality is a significant factor in deciding a person's eligibility because trust is a cornerstone of a real estate agent's fiducial duty.
Staying motivated throughout the process of getting a real estate license is a vital key to passing the exam. To stay motivated, you must remember your reason for embarking on the journey. Your "why" can be financial freedom, independence, or providing for people you care about.
Also, experts recommend studying small volumes. Studying small volumes makes the material less daunting and helps you learn faster.
Becoming a real estate agent is an important decision and should be treated as one. Research and ask all the necessary questions before beginning the process of obtaining your license.
Furthermore, consider this an upfront investment and prepare to make several expenses such as pre-licensing education fees, real estate exam fees, application fees, etc.
Located in the heart of Silicon Valley, San Jose offers rolling hills and scenic homes nestled in the Bay area.
Real estate agents know the beauty and value of the San Jose region, which is why they spend their time helping clients find a home there.
If you want to become a real estate agent in San Jose, consider the following.
If you’re ready to become a real estate agent in San Jose, there are five key steps to follow.
We’ll walk through what is required to get your license and start working with clients.
Before you can schedule your real estate licensing exam in California, you’ll have to complete 135 hours of pre-licensing coursework.
These classes must be taken at a state-approved accredited school and cover all the information covered on your exam. Programs are offered both in-person and online, depending on your preferred learning style.
Head to the Department of Real Estate’s website to see a complete list of accredited programs you can choose from.
No matter where you decide to enroll, all pre-licensing programs in California are required to teach three main courses:
Once you’ve successfully finished your real estate courses, you’ll be eligible to apply to take the California real estate exam. In your application, you’ll have to submit:
While it’s recommended you submit all your documents and information online, applicants can also apply to mail or fax their application to:
Department of Real Estate
Examination Section
P.O. Box 137001
Sacramento, CA 95813-7001
The DRE will process your application and determine if you’re approved to schedule your exam.
The current application processing times are listed online, so you can know what to expect after submitting your application.
Generally, there is a 6-8 week processing time, so review processing times and plan accordingly.
Once approved, you’ll receive a notification that you’re approved to schedule your exam.
While the real estate exam is done in person at a testing facility, the exams are taken electronically. They must be scheduled ahead of time via the DRE’s website.
On the day of your exam, you’ll have three hours to complete the exam consisting of 150 questions. The exam is broken down into the following categories:
Since you take the test electronically, you’ll know that day - before leaving the testing facility - if you have passed or failed the exam.
You’ll need to score 70% or higher to pass, meaning you’ll need to answer 105 out of 150 questions correctly. The California real estate exam has a 50% passing rate and is considered difficult, requiring proper preparation and study.
The good news is that If you don’t pass your exam on the first try, you’ll be able to retake the test later.
Once you’ve passed the exam, the last step you’ll need to complete before becoming a real estate agent is signing with a brokerage.
You’ll have to interview or reach out to brokerages to see if they’ll sponsor you and hang your license with them. If you’re unsure where to start, your real estate school can often connect you with brokerages looking to add additional agents.
During the interview process, you should find a brokerage that will help you grow as an agent and get you started in your career. In addition, finding the right brokerage will help you get a foundation in the industry and develop your skills.
In San Jose, and California as a whole, the real estate market is highly competitive. The average home sales price is up 20% year over year, with a shallow inventory.
This means that buyers have to pay more for the limited homes on the market.
As a real estate agent in San Jose, you’ll have to help your clients navigate the competition, ensuring they make smart choices when buying or selling a home.
It’s also important to note that there are over 11,000 licensed real estate agents in San Jose.
You’ll be joining a large group of licensees working to contend for the limited number of listings on the market. Keep this in mind when considering how competitive the market is.
One of the benefits of becoming a real estate agent is the limitless earning potential. Since you’re working off commission, every sale or transaction is more money than taking home as a salary.
In California, the average real estate agent earns around $76,400 per year, according to the Department of Labor.
Of course, your earning potential depends on how many transactions you’re completing in a year and your commission rate.
How Fast Can You Become a Real Estate Agent in San Jose?
Becoming a real estate agent doesn’t happen overnight. Considering your coursework, application, and exam, there are some time-consuming aspects to becoming a real estate agent.
With 135 hours of classes and a processing time of around 8 weeks for the application, you should plan to spend 3-5 months from start to finish to get your real estate license.
With a high media price point and competitive market, the real estate industry in San Jose is increasingly active right now.
If you are excited by the opportunity to help clients find their homes in this Bay Area enclave, becoming a real estate agent is a great career move.
The real estate exam will test you on vocabulary words you learned about during your pre-licensing education. There is a lot of them!
So, we compiled a list of the most common real estate exam vocabulary words that you should expect to see on the big test.
These are foundational to learn for the exam and your career. Although, they won't cover EVERYTHING you will see on the exam, studying this list of vocab words will give you basis that will help your real estate knowledge grow.
Real property is all things attached to the surface of the land, the ground below, the air above, and all the legal rights to them.
It is used to refer to things that are typically immovable.
This includes the building itself and other appurtenances, such as landscaping, walkways, and other structures.
Personal property is a real estate vocabulary word that refers to any tangible and moveable objects such as gadgets, furniture, vehicles, machinery, and so on.
This simply means that personal property would be any property that does not qualify as real property.
Another difference between real and personal property is the mode of transfer. A deed is used to transfer real property from an owner to a buyer, while a bill of sale is used to transfer personal property.
A fixture is any item that was once personal property but has become real property by way of permanent attachment to real property.
Examples of fixtures include kitchen cabinets, ceiling fans, chandeliers, and window treatments.
The bundle of rights is a term that describes a collection set of legal rights that is generally vested in an owner of real property upon purchase and receipt of a title deed.
The bundle of rights consists of five rights. These rights may be held by the titleholder alone or may be shared with other parties.
The right of use allows a titleholder to use their property in any way that suits them as long as it is not illegal.
This could include things like hosting guests, renting out the property, or even making changes to the property.
Keep in mind that this right can be somewhat restricted in practice by HOA regulations, and local, state, and federal laws where applicable.
The right of possession gives a titleholder the freedom and power to choose who may or may not enter their property.
This right may be limited in the instances of search warrants, easements, or rental properties.
The right of transfer guarantees the right of a titleholder to dispose of a property.
This means they can transfer the ownership of their property to another party by selling it, willing it, or gifting it. Exclusion to this right exists in cases of mortgages and liens.
The right of encumbrance means that the title owner has the right to take out a loan on the home. By building and using the home’s equity, they can finance development projects to raise the home’s value.
This right permits a titleholder the freedom to engage in any activities of their choice on their property and enjoy the property as they see fit, as long as the activities are not illegal.
A good way to remember the bundle of rights ahead of your exam is the acronym “UPTEE.” It stands for Use, Possession, Transfer, Encumber, and Enjoyment.
In real estate, commingling occurs when an agent mixes their client’s funds with their own funds.
Usually, these funds may be designated for different purposes and in some instances, the funds may be from different sources.
An example of commingling is when the homebuyer provides the money to buy a home but the real estate agent deposits the money in their personal bank account. The money becomes mixed with the agent’s personal funds.
Steering is when a real estate agent discriminatorily influences the choice of a buyer by only showing them properties in certain communities.
This discrimination is often based on factors like the buyer’s gender, race, sexual orientation, religion, or other protected factors.
An example of steering would be showing a person of a race only properties that are located in communities or neighborhoods where their race is prominent while avoiding areas dominated by another race.
Escrow, in real estate, is a legal arrangement between the buyer and the seller to have a neutral third party hold the funds temporarily until specific conditions have been met, usually a transfer of title.
Once the set condition is met, the funds are transferred to the seller.
Escrow typically assures the seller of the seller’s good faith and protects the buyer from a fraudulent transaction.
Escrow companies typically serve as a neutral third party and they hold onto the deed and other related documents.
Remember, escrow is a neutral third party that protects the integrity of the transaction.
Acreage is a real estate term that refers to a large expanse of land that is yet to be divided into small lots for residential purposes.
An acreage is made up of 43,560 square feet. A section is made up of 640 acres and a survey township is made up of 36 sections.
Eminent domain is the power that the local, state, and federal government has to acquire private property from a person for public use. This is usually done in exchange for fair compensation from the government.
For example, if the government wants to expand a highway, they may need to purchase and demolish buildings close to the highway to facilitate the widening.
An easement refers to the legal right of a person to access and use another person’s real property for a specific purpose.
For example, utility companies hold easements that permit them to access power cables on a property.
Here are a few terms that you should know to help you understand how easements work:
The servient tenement in an easement arrangement refers to the property that bears the burden of an easement.
A dominant tenement, on the other hand, is the property that benefits from the easement on another property.
Ingress, in easements, refers to the right of a person to enter a property while egress is the right to leave the property.
In easements, these rights come to play when a property is landlocked. It invokes an easement by necessity so that a person can access their property even if it means crossing another person’s property.
When you obtain a mortgage, the party benefiting from your payments is the beneficiary. In most cases, this is the bank or lender that you're borrowing money from to buy the house. This is because you promise to make payments back to the lender, and they, in turn, benefit from the payments, including the interest on the loan.
Equity is the difference between what you owe on a property and the house's current market value. Generally speaking, the more time that has passed since you bought a property, the more equity you'll have in the house. Then, when you go to sell the house, you'll be able to cash out on this value and benefit from your investment.
An FHA loan is a type of loan insurance that the Federal Housing Administration backs. This program was created in 1934 by the Housing and Urban Development department to make it easier for people to buy homes, as it requires a smaller down payment than conventional loans.
Today, buyers securing an FHA loan only need a 580 credit score and 3.5% of the home's cost as a down payment. This is why FHA loans are ideal for first-time homebuyers, as they require less up-front cash and are better for people establishing their credit.
However, all FHA loans require mortgage insurance to protect your lender against losses. So make sure to consider this added cost when considering an FHA loan!
A lien is a legal right to possess another person's property until their debt has been paid. Usually established by a creditor or legal judgment, a lien is meant to satisfy your obligation to pay off a debt or loan by using the property as collateral.
There are many different types of liens, but general and specific are some of the more common types in real estate. In a general lien, all your property - including your house and additional personal property - can be seized to pay off a debt.
However, a specific lien is used only to seize one specific property applicable to the debt - like a house. This does not cover all the personal property or items a debtor may own.
Created by Thomas Jefferson in the early days of our nation, a mechanic's lien is a legal document that ensures a supplier's or worker's right to enact a lien to ensure payment.
A mechanic's lien can be used by subcontractors or builders who have done work on a property and are seeking the appropriate payment. A property with a mechanic's lien cannot be sold and must be settled before putting a house on the market.
An acceleration clause is a term in a mortgage agreement that permits the lender to accelerate repayments, usually only invoked when the borrower misses payments or is in violation of the loan agreement.
Otherwise known as a mortgage acceleration, these standard protections are implemented to prevent the mortgage lender from defaulting on a loan.
When enacted, the borrower is responsible for paying the amount owed, including any accumulated interest since your last payment. If not paid by a set date, your lender can begin foreclosure.
When you obtain a mortgage, your loan will go through a phase called underwriting. Once under contract on a property, a person called an underwriter will go through the process of assessing the risk of lending the borrower the loan.
During this process, the underwriter will not only evaluate the borrower applying for the loan — but will also assess the condition of the property being purchased.
The bank is looking to ensure that the borrower's and property's qualifications are up to standards and will consider the risk involved with loaning money for the purchase.
The borrower must submit documents verifying their financial statuses, like bank statements, proof of employment, and tax returns. Additionally, the underwriter will use the appraisal to evaluate the property to ensure it is in appropriate condition and worth the amount of money you're purchasing it for.
A hypothecation agreement is when a borrower agrees to offer an asset as collateral in exchange for a loan. Used frequently in mortgages, while a borrower technically owns the house, a lender can seize a home as collateral if debts are not paid or the terms of the loan agreement are not met.
While the bank owns the property, it cannot claim any income or cash flow generated from the home unless the borrower defaults on their loan.
Your debt-to-income ratio compares how much you earn every month versus how much you owe. This considers your wages pre-tax, then calculates expenses like rent, mortgage, car payments, student loans, or other types of debt.
When purchasing a home, your lender will look at your debt-to-income ratio when determining how much you can afford.
A fixed-rate loan is a mortgage loan where the interest rate stays the same throughout the loan's lifetime.
This can be beneficial because you'll always know how much you owe, as monthly payments won't change over the length of the loan. In addition, if interest rates are currently low, obtaining a fixed-rate loan can be an intelligent financial decision.
An appraisal is a third-party professional opinion on the value of the property. This is generally done to ensure that the value of the property is in line with how much it’s being purchased for and guarantees the bank that it’s being purchased for a fair price.
The appraisal helps the lender protect itself against overfunding and ensures that the price is reasonable for the seller.
Usually, the buyer will pay for the appraisal once under contract on the house. However, it’s generally not required for all cash offers unless the buyer specifically requests it.
A comparable, often referred to as a comp, is a valuation of a property according to a study of similar properties in the area that you’re looking to buy or sell in. A comp is used to determine the home’s value based on surrounding properties that have recently sold and can indicate the appropriate value of your property.
For buyers, comps are helpful to ensure you’re putting in a competitive offer on the house. For sellers, they provide clear pricing parameters for how much your home is worth.
Comps consider things like the size of the property, the year it was built, and the property’s features. Real estate agents use comparables to help sellers list their property at an appropriate price and help buyers make an appropriate offer.
A drive-by appraisal is sometimes used in real estate to determine the home’s value. While not as in-depth as a full appraisal, a drive-by appraisal mainly evaluates the house’s exterior.
An appraiser will visit the house, make notes and take photos of the home’s exterior, and make a valuation call based on its street value.
Depending on the current market and the property you’re purchasing, your lender may feel comfortable with just ordering a drive-by appraisal versus a full appraisal.
An appraisal report is the written overview of the appraiser’s findings. This generally includes detailed results of similar properties in the area that have sold, a valuation of the property, and how the neighborhood will impact the home’s future value.
This overview will outline precisely how the appraiser came to their conclusions and cite the corresponding evidence associated with the report, like photos and data.
Trade fixtures outline personal property items that a tenant would install or use to operate their business in commercial real estate. For example, restaurant booths inside a restaurant would fall under trade fixtures that the tenant installed to conduct their business.
Unlike a regular fixture, these fixtures do not become a landlord’s property when the lease expires. A regular fixture is an item that becomes the landlord’s property after the tenant's lease expires.
The Latin phrase ad valorem means “based on value.” In terms of real estate, an ad valorem tax is a tax based on a property’s value — often in the form of a personal property tax.
These taxes are generally instituted by local governments and are assessed annually by the jurisdiction. These are usually the primary source of income for municipal governments and are essential to consider when purchasing a home.
A sales comparison approach is a standard real estate appraisal practice that compares one property to other recently sold properties with similar characteristics.
Many in the industry use this method to determine how individual features on the house make up the home’s overall value. The sales comparison approach considers factors like the size of the house, location, other sold listings, price per square foot, condition, and age of the house.
In the income approach, an appraiser determines the property’s value based on the income the property generates.
This is frequently used in multi-family housing or investment properties and considers factors like occupancy rates, operating efficiency, and condition of the property. This is also called income capitalization.
Depreciation is the decrease of the home’s value. A few factors are considered when calculating depreciation — physical depreciation, functional obsolescence, and economic obsolescence.
Physical depreciation refers to the decline of the property’s value over time due to time, elements, and usage. For example, natural weathering and decay would be considered physical depreciation.
Functional obsolescence is when deficiencies or undesirable aspects of the building decrease its value, such as historic architecture or outdated facilities.
Lastly, economic obsolescence is a decrease in property value due to a change in surrounding or local economics and often has nothing to do with the property itself.
Zoning is the division of land by the local government. These laws are local regulations that dictate how the land can be used.
These decisions are based on a master plan for the district and consider a variety of factors like economic development, traffic concerns, noise or light levels, and protecting local resources.
There are multiple zoning classifications, but some of the most common include commercial, residential, agricultural, hospitality, or industrial. Zoning laws can impact property value and what type of building or structure can be built on a property.
In real estate, a bilateral contract is a contract that involves two people, each with a contractual promise they must perform. As a result, each party is obligated to complete their tasks according to the contract.
For example, a seller will give a deed to the property in exchange for money from the buyer. Both parties are held responsible for their side of the contract.
In a unilateral contract, only one person or party is obligated to perform their contractual duty. For example, if you lose your wallet and offer a reward for finding the wallet, they’ll only get the reward if they find and return the wallet. Only one person is contractually required to perform a duty.
What does Caveat Emptor Mean?
In Latin, the phrase caveat emptor translates literally to “buyer beware.” For real estate, this means that when a buyer is purchasing a house, it is up to them to be familiar with the condition and inadequacies of the house.
While the seller will provide their own disclosures about the condition, it is up to the buyer to also get their own data to inform their decision about the property. Usually, this means that a buyer will hire an inspector to provide a first-party report about the status of the house where they can have a full picture of the property, separate from that provided by the seller.
From there, the buyer will be able to make their own decision with the knowledge they have.
A dual agency agreement is when a real estate agent represents two people or parties on the same deal. Usually, this will mean an agent is helping both the buyer and seller, and they’ll receive the full commission.
While this is not always legal, it is in California. When you represent both the buyer and the seller on the same deal, you’ll have two principles. That means you earn the whole commission. This is different than a single agency, where the agent will only represent one party.
If a property owner dies and there are no identified heirs or successors, a property can be reverted to the state upon an owner’s death.
The state will be required to take ownership of the property, since the property can’t be sitting abandoned or in limbo without any owners.
If a person dies without a will, their estate is then categorized as intestate. Similar to escheat, this could mean that the individual’s property is turned over to the state to manage.
While these laws vary from state to state, the lack of a will can turn a person’s estate over to the government.
A holdover tenant is a lessee who stays in the property longer than they are supposed to. Once their lease is up, they’re supposed to be vacated from the property.
But a holdover tenant stays in the property past their intended time. Even if the tenant is paying rent but they’re past their lease, they can be sued for being a holdover tenant.
A real estate transfer disclosure statement, also called a TDS, is a document containing what items are included in the purchase of a home.
This is the seller's opportunity to put in writing what is included in the purchase, including all the deficiencies listed and a checklist of items that come with the house like a microwave, furniture, or any other belongings. This is often the biggest disclosure a real estate agent will utilize when working with a buyer.
A voluntary lien is placed on property with the consent of the individual receiving the lien. For example, a mortgage is a voluntary lien because the buyer consents to the lien through the bank. Or, if you wanted to get a secondary loan or a car loan, these are all voluntary liens because the buyer asked for the responsibility that comes with the loan.
This differs from an involuntary lien, which someone else imposes, like a tax lien or a mechanics lien.
TRID stands for TILA (Truth in Lending Act) RESPA (Real Estate Settlement Procedures Act) Integrated Disclosures. This disclosure was specifically developed so that the lender has to be transparent in the purchase and provide two things.
The first is a loan estimate that outlines fees and costs associated with a mortgage. Additionally, they must provide a closing disclosure listing exactly how they will charge and where each fee is allocated in the closing process.
The Truth in Lending Act was developed in 1968 to protect the consumer and provide transparency throughout the lending process. Shortly after, the Real Estate Settlement Procedures Act was developed to prevent unnecessary settlement costs and promote transparency into each fee’s purpose.
TRID wasn’t put in place until 2015, but now ensures all parties are providing the appropriate information and disclosures for both buying and selling.
A voluntary lien is placed on property with the consent of the individual receiving the lien. For example, a mortgage is a voluntary lien because the buyer consents to the lien through the bank. Or, if you wanted to get a secondary loan or a car loan, these are all voluntary liens because the buyer asked for the responsibility that comes with the loan.
This differs from an involuntary lien, which someone else imposes, like a tax lien or a mechanics lien.
A subordination clause in real estate is a provision found in a mortgage or lease agreement that establishes the priority of that mortgage or lease in relation to other potential claims or liens on the property. Essentially, it determines the order in which creditors will be paid in the event of a default or foreclosure. If a subordination clause is included, it means that the current agreement (e.g., a second mortgage) will be subordinated to any future loans taken against the property, such as a refinancing or construction loan.
This clause is commonly used to protect the interests of lenders by ensuring that newer loans have a higher repayment priority over older ones, which can make it easier for property owners to secure additional financing.
A home equity loan allows homeowners to borrow against the equity they have built up in their property. It provides a lump sum of money with a fixed interest rate and is repaid over a set term. Home equity loans are commonly used for large expenses such as home renovations, debt consolidation, or medical bills, and they are secured by the borrower’s property, which means the home can be foreclosed upon if the loan is not repaid.
A HELOC, or Home Equity Line of Credit, is a type of revolving credit that homeowners can take out against the equity in their property. The loan is secured by the home and typically has a draw period during which the borrower can withdraw funds as needed, similar to a credit card. The draw period is followed by a repayment period where monthly payments must be made. HELOCs are often used for home improvements, debt consolidation, or other large expenses because they usually offer lower interest rates than unsecured loans.
Amortization refers to the process of gradually paying off a loan over time through regular, scheduled payments. Each payment covers both principal (the loan amount) and interest (the cost of borrowing), with the proportion going toward principal increasing and the proportion going toward interest decreasing over time. The goal of amortization is to completely pay off the loan by the end of the term. Mortgages, car loans, and personal loans are commonly amortized.
Pre-approval is a process where a lender evaluates a borrower’s financial situation—including credit score, income, debts, and assets—and commits to providing a loan up to a certain amount. Receiving pre-approval gives the borrower a clear understanding of their budget and makes their offer more attractive to sellers, as it indicates that the buyer is financially capable of purchasing the property.
Pre-qualification is an initial assessment by a lender to estimate how much a borrower might be eligible to borrow. It’s a less rigorous process than pre-approval, usually based on self-reported financial information. Pre-qualification gives potential homebuyers an idea of their borrowing capacity but does not involve a credit check or verification of the information provided, making it less reliable than pre-approval.
Fiduciary duties are the ethical and legal obligations that real estate agents and brokers have toward their clients. These duties include loyalty, confidentiality, full disclosure, obedience, reasonable care, and accounting. A fiduciary is required to act in the best interest of their client, putting the client’s needs above their own and being transparent and honest throughout the transaction.
Foreclosure is the legal process through which a lender takes ownership of a property after the borrower fails to meet the terms of their mortgage loan, typically by missing several payments. The lender will seek to recover the remaining balance by selling the property, often at auction. Foreclosure can have serious consequences for the borrower, including loss of their home and a significant negative impact on their credit score.
A short sale occurs when a homeowner sells their property for less than the outstanding balance owed on the mortgage. The lender must approve the sale, as they are agreeing to accept a reduced payoff amount. Short sales are typically considered as an alternative to foreclosure and can help homeowners avoid the more severe financial repercussions associated with foreclosure proceedings.
Clouds on title are any unresolved issues or disputes that cast doubt on the ownership of a property. These issues can include errors in public records, undisclosed liens, unpaid taxes, or legal claims. Clouds on title can prevent the transfer of property until they are cleared, as they create uncertainty about who legally owns the property.
An inspection is a thorough examination of a property’s condition conducted by a professional inspector. It typically includes a review of the structure, electrical systems, plumbing, and other critical components. Inspections are an important part of the home-buying process, as they can uncover potential problems that may not be immediately visible, helping buyers make an informed decision.
The Multiple Listing Service (MLS) is a database used by real estate professionals to list and access property information for sale or rent. It provides detailed descriptions, images, and pricing information about properties, helping agents and brokers collaborate and share information efficiently. The MLS is one of the primary tools used to market properties and facilitate real estate transactions.
The Buyer’s Inspection Advisory is a document provided to prospective homebuyers, outlining the importance of conducting thorough inspections and investigations of a property before finalizing the purchase. It informs buyers about their right to inspect the property for any defects or concerns that could affect their decision to move forward with the transaction.
Kickbacks refer to illegal payments or incentives offered in exchange for steering business or influencing a real estate transaction. In real estate, kickbacks typically occur when a party, such as a real estate agent, receives undisclosed compensation from a service provider (e.g., a lender or contractor) for referring clients. These payments are illegal under the Real Estate Settlement Procedures Act (RESPA), as they can create conflicts of interest and unfairly increase costs for consumers.
Condos, or condominiums, are individually owned units within a larger residential complex. Unlike traditional single-family homes, condo owners share ownership of common areas and amenities, such as hallways, gyms, and pools, with other residents. Condos offer a low-maintenance lifestyle, as the condominium association typically handles exterior maintenance and repairs. Owners pay monthly dues to the association for upkeep and management of shared spaces.
Encumbrances are legal claims or restrictions placed on a property that can affect its value or restrict the owner's ability to transfer it. Common examples include liens, easements, and deed restrictions. Encumbrances do not prevent property ownership but can complicate the sale or financing of the property if not resolved or understood properly.
Encroachments occur when a structure or improvement, such as a fence, driveway, or building, extends onto a neighboring property without permission. This can create disputes between property owners and may need to be resolved before a property can be sold or transferred. Encroachments can affect property values and lead to legal issues if not addressed.
Deed restrictions are limitations or conditions imposed on the use of a property, often by the developer or homeowner’s association (HOA). These restrictions are written into the deed and can govern everything from the type of structures that can be built to the color of paint used on the home’s exterior. Deed restrictions remain in effect even after the property is sold and are legally binding on future owners.
Mello-Roos is a special tax imposed on properties within a community facilities district (CFD) in California to finance infrastructure projects and public services, such as schools, roads, and parks. Homeowners in these districts pay Mello-Roos taxes in addition to regular property taxes, and the amount can vary depending on the development and services funded.
"As is" is a term used in real estate to indicate that a property is being sold in its current condition, with no guarantees or warranties provided by the seller regarding its quality or condition. When a property is sold "as is," the seller is not obligated to make any repairs or improvements before closing, even if issues are discovered during the inspection process.
In real estate, GRM stands for Gross Rent Multiplier. It is a metric used to evaluate the potential profitability of an income-producing property. GRM is calculated by dividing the property’s price by its annual gross rental income. For example, if a property is priced at $300,000 and generates $30,000 in annual gross rent, the GRM would be 10 ($300,000 ÷ $30,000). A lower GRM indicates a better investment opportunity because it suggests that the property’s price is low relative to its rental income.
Closing costs are additional expenses incurred by buyers and sellers to finalize a real estate transaction. These include fees for loan origination, title insurance, appraisals, and other administrative services.
A GFE is a document provided by lenders that outlines the estimated costs of a mortgage loan. It includes details on interest rates, fees, and closing costs to help borrowers understand the total expense.
A home inspection is a thorough examination of a property's condition, typically conducted by a professional inspector. It identifies any potential issues or defects before the sale is finalized.
An origination fee is a charge by lenders for processing a loan application. It’s usually expressed as a percentage of the total loan amount.
The principal is the original amount of money borrowed in a loan, excluding interest. It represents the balance that the borrower must repay to the lender.
A quitclaim deed is a legal document used to transfer property ownership without guaranteeing the property is free of liens or claims. It’s often used between family members or to clear up title issues.
A survey is a detailed map or description of a property’s boundaries and features, often used to confirm legal property lines. It helps prevent disputes and ensures accurate legal descriptions.
Title insurance protects property buyers and lenders from financial loss due to defects in the title, such as liens or ownership disputes. It provides peace of mind during real estate transactions.
A CMA is a professional evaluation of a property’s value based on the sale prices of similar properties in the area. Real estate agents use CMAs to help sellers set a competitive listing price.
A contingency is a condition included in a real estate contract that must be met for the transaction to proceed. Common contingencies include financing approval and satisfactory home inspections.
A deed of trust is a legal agreement where a third party (the trustee) holds the title to a property until the borrower repays the loan. It’s commonly used in states that do not utilize traditional mortgages.
Fair market value is the estimated price a property would sell for in an open, competitive market. It reflects what a willing buyer and seller agree upon under normal conditions.
A fixed-rate mortgage is a loan with an interest rate that remains constant throughout the loan's term. This predictability makes it a popular choice for borrowers.
NOI is the total income generated by a property after deducting operating expenses. It’s a key metric for evaluating the profitability of real estate investments.
An open house is an event where a property for sale is available for prospective buyers to view without scheduling appointments. It’s often hosted by the seller’s real estate agent.
Pre-approval is a lender’s conditional agreement to lend a borrower a specified amount for a home purchase. It shows sellers that the buyer is financially qualified.
A REIT is a company that owns, operates, or finances income-generating real estate. Investors can buy shares in REITs to earn returns without directly owning property.
Refinancing replaces an existing mortgage with a new one, often to secure a lower interest rate or better loan terms. It can help borrowers save money or access equity.
A settlement statement is a detailed summary of all costs and fees associated with a real estate transaction. It lists amounts owed by both buyer and seller at closing.
A title search is a review of public records to verify the legal ownership of a property. It ensures there are no outstanding claims or liens on the property.
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs. It offers favorable terms for eligible veterans, active-duty service members, and their families.
A walkthrough is the final inspection of a property by the buyer before closing. It ensures the property is in the agreed-upon condition and any requested repairs have been completed.
A 1031 exchange allows property investors to defer paying capital gains taxes by reinvesting the proceeds from a sold property into a similar investment property. It’s a popular strategy for growing wealth through real estate.
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A seller objection is a concern that a prospective seller raises, which could affect whether or not they work with you.
It is a question, excuse, or another form of hesitancy that they make out of not having enough information or fear that you cannot satisfy their needs.
Seller objections are perhaps the most significant challenge you might face while trying to convert a potential client. They could be very discouraging, especially for new agents.
However, suppose you ever hope to build a successful career in the real estate industry. In that case, you must know what to say and do to make a seller feel welcome and willing to work with you.
Seller objections can range from a concern about your pricing or timing of the sales to the value you can offer them and your experience in the field.
This article will teach you how to provide proper reassurance to the seven most common seller objections. The first on our list is - high commissions.
Many sellers will complain about your commission rates being too high or that they know someone willing to do it for less.
Do not be deceived. The only answer to this question is a big and decisive "NO." While this response might seem a bit aggressive, you shouldn't worry about it because you are simply establishing yourself as a professional capable of doing the job.
Your main aim is to provide value, and you cannot do this with lower pricing. So, unless you do not deem your services worthy of the rate you are offering, your only answer to the objection should be "No. Do you have any other questions?"
There are times when the above statement is true, and the market for sellers is bad. However, if the market is right for them, what you should do to convince the seller is to draw on their motivation. There must have been a reason they called you to sell their property first, and you must remind them of it.
For instance, if they want to sell so they can move closer to a relative in another part of the country, you should ask them how they plan on moving without selling.
If they reply by saying they would buy another house, you should ask them if it is realistic or wise to bear the financial burden of two mortgages.
If they reply by saying they would rent instead, you should ask if their move is temporary or permanent. If it is permanent, why would the seller be willing to build another person's equity over their own?
'For Sale By Owner' is a common phrase every real estate agent will hear. One way to go about this objection is to ask the seller for their absolute bottom line. For example, you could say, "By selling FSBO, you run the risk of not achieving maximum price. Are you aware of that?"
Suppose they say it is a risk they are willing to take. In that case, you should let the seller see that they will not only take a price reduction but also have to offer a buyer's commission.
Ask - "Is it really worth it? Let's crunch up the numbers and see how much you are really saving here."
Additionally, many sellers willing to do FSBO believe that it is a pretty straightforward process, which it is not. So, suppose the option above doesn't work.
In that case, you could ask if they know all the processes they need to take, how to draft up documents, handle all contingencies and protect themselves. Unfortunately, most times, they do not.
You could then show them how much of the behind-the-scenes work you can help them with to ensure they are safer and sell for more.
When a seller says this to you, the last thing you want to be is pushy or overtly persuasive. But, on the other hand, houses are usually the biggest assets many sellers own, so it's understandable if they are trying to be careful when picking an agent.
You could ask them, "What is the one thing that will make you hire me on the spot today without a doubt?"
Usually, they would say something that indicates they need some more time.
At this point, you should understand their need for time, let them know that you will be here, and are willing to show them you can provide value.
If you are a new agent, this is an objection you will go up against many times.
Your reply could be, "Well, I passed the state's requirements to get my requirements. I've done the education, and I'm aligned with professionals in the industry. I'm constantly learning every day, and I've got a team of supportive people around me. So what experience exactly are you looking for?"
They'd usually reply that they want someone who has sold many properties or has been in the industry for at least five years.
You could say, "Well, someone who has been in it at least five years isn't here in front of you. But, I am here in front of you, ready, willing, and able to provide you with the best service, an excellent experience, and to accomplish your goals."
After saying this, you shouldn't try to be pushy or to fill the void. You have played your part, and now, you should sit down and let the silence do the heavy lifting. More often than not, this will produce desired results.
When you hear a seller say this, you should try to educate them about every possible thing that can affect the sale. You should let them see that the market determines the sale, and you do not control the market.
You merely interpret it for clients and do what you think works best, such as staging the property, highlighting upgrades, and showing it well.
These are all things you do to get them the top asking price, but you cannot guarantee they will get the total asking price.
When presenting a CMA, many clients say, "I'm not going to do anything to my house."
To convince them to make renovations, you should point out to them the price differences between the current features in the house and their upgraded versions.
Let them see that a newly renovated house with all the latest models will fetch a higher price tag, and there is nothing you can do about it.
So if they want to sell at a particular price, they must be willing to put in the upgrades that will attract that price.
There will always be one objection or the other when dealing with sellers, and your job is to be adequately prepared for it.
You should know how to handle objections and match their energy, but most importantly, you should communicate with them. Do your best to earn their business, trust, and referrals.
Meeting a home buyer for the first time can make you feel like you're on a first date — What should you say? Where should we meet? How can I impress them?
When you're trying to win business, the stakes can feel high. But there are some tried and true ways to impress potential new buyers, showing them they should trust you with their business.
As you advance through your real estate career, these tactics will become like second nature. Here's how we recommend impression potential home buyers in a first meeting:
The location of your meeting is key to making a great first impression with new buyers, as it will set the tone of the relationship moving forward.
First and foremost, the location should be convenient for your potential client. You don't want your potential buyer going out of their way to meet with you, and you want to ensure the location is comfortable for everyone.
While some realtors might be inclined to meet at a nearby coffee shop or restaurant, the ideal place to meet a potential client is at your brokerage's office.
You'll have the resources you need, like WiFi, printers, coffee, and a desk.
By inviting them to your brokerage's office, you're showcasing your professionalism and showing from the initial meeting that you are a credible and established agent.
When you meet at a restaurant or coffee shop, you risk a loud, unfavorable environment to conduct business.
When you meet with a new buyer for the first time, you want to know those clients for the individuals they are — not just as another deal or transaction.
Buying a home is an emotional process for many clients, and they want to feel that they can trust and count on their realtor. It is one of the most significant purchases they'll ever make!
When building a connection with someone you've just met — and especially someone you might be in business with — you want it to be a natural conversation about shared interests or backgrounds.
Ask about their family, sports, where they went to school — things that indicate you're interested in their life outside this real estate transaction.
Clients can determine when an agent forces or fakes a connection to get their business. So instead, be genuine in your approach and slowly build the relationship authentically.
It will benefit you and your reputation in the long run, plus make the client feel at ease!
Real estate agents should be empathetic and understand that the home buyers they're working with likely have a million questions about the process and what it takes to buy a home.
Being ready and able to answer their questions will help boost your credibility and build trust with new clients.
When you meet with a client for the first time, walking them through the process and what they can expect from start to finish can help alleviate anxieties around what comes next.
They will likely have questions like "How do I make an offer?" or "How can I get connected with a lender?" As their agent, guiding them through the process is your top priority, so coming prepared and doing your homework ahead of time is crucial.
The longer you're in the business, the more you will notice the same questions come up over and over. So practice how you respond to common questions and hone in on how to communicate clearly with your client.
It can seem like a simple and obvious question to ask your clients —"Have you spoken with a lender to get pre-approved to buy a home?"
While rooted in common sense thinking, asking that question to potential clients can be insulting and should be approached with the utmost sensitivity.
It implies they don't have enough money to buy that house or can't get approved with a mortgage.
If you're concerned that a potential client wasn't appropriately approved or has the financial means to buy a home, you should pause before asking any potentially insulting questions.
Instead, you can rephrase the question of the lender's preapproval to ask, "Will you be buying this home in cash? Or will you be taking advantage of the historically low-interest rates?"
Asking it this way flips the question and flatters the buyer by implying they could pay cash for the home. A win-win all around!
In real estate, a buyer-broker agreement can protect the real estate agent from losing out on commission or having a client decide to use another agent during their home search.
It's a contractually binding agreement that states the buyer will work only with you, their agent, to buy a home with a specific commission amount.
While some brokerages strongly encourage all agents to have a buyer-broker agreement signed before working with buyers, it can also add pressure and stress for the home buyer.
A potential client who initially was interested in working with you might be spooked off once the legal jargon and signing on the dotted line are brought into play.
As an agent, determine if and when is the right time to have a client sign one of these agreements. When executed appropriately, an agreement protects all parties down the line.
Meeting new home buyers can be intimidating, no matter how long you've been in the real estate industry.
But if you see every new meeting as a chance to show your value, win new business and build great relationships, you'll excel at wooing all your new clients.
Whether you’re just starting out in your real estate career or are looking to grow your business to the next stage, you’ll need advice and guidance from those more experienced to get you there.
From mentors to team leaders and everything in between, the more people you have in your corner encouraging you, the more you’ll grow your business and feel confident in the process.
But what is the difference between a broker, team leader, mentor, and coach? The terms are often used interchangeably, and while they will all encourage you, each person has a slightly different role in your career.
When you join a brokerage, the head honcho at your office will be your broker. A real estate broker is someone who has completed more training and licensing requirements than a traditional agent, can work independently, and hire individual real estate agents to work for them.
While they might still help clients buy or sell a home, they will also have added responsibility to manage the office or provide support to the other agents. As you get your license, you will likely have to interview with a broker to get hired and hang your license at that particular office.
You should find a broker that you respect and trust — they’ll be an advocate and resource for you as you go through your career.
A broker is not only the boss of the office, they will also encourage you and ensure you’re growing in your career. They want you to succeed and advance in your career, just like a boss or manager in any other industry.
There are technically three types of brokers: associate, managing, principal, or designated brokers. An associate broker will have a license but often will not supervise agents. A managing broker will oversee an office, train and hire new agents, and help manage agents' transactions.
Lastly, a principal broker is one that ensures all national and local laws are obeyed and complied with. Each real estate office is required to have a principal broker.
As you begin your real estate career, you’ll have the choice to work independently or join a real estate team. If you decide to join a team, you’ll work under a team leader who oversees the group.
This leader manages the team’s operations, guiding a group of agents working together under a shared brand. In most cases, the team leader will take a percentage of your commission. In return, you’ll gain access to valuable benefits like lead generation, mentorship, and career advice.
The team leader will provide direction to help you grow, ensure you represent the team’s brand effectively, and offer motivation as you launch your career.
With their experience and leadership, a strong team leader will sharpen your skills and give you the support you need. And who knows? Before long, you might feel ready to spread your wings and start a team of your own!
Do you want to learn from someone who is experienced and respected in the real estate world? A mentor might be an excellent fit for you. A real estate mentor is someone you look up to and who provides guidance in the real estate transaction process.
Many brokerages will offer mentorship programs, so check to see if your brokerage has a similar program. If your brokerage doesn’t have a formal mentorship program, you can still find mentorship opportunities within your own network or through online groups or forums.
Also, check with your local realtor association to see if there are mentorships opportunities there.
Since mentors are often successful agents busy running their own business, they usually will have a cost associated with them in the form of a percentage of your commission. But in exchange, you’ll get invaluable guidance as you navigate transactions and deals.
Their role is to help you build confidence and pass on valuable lessons you can use as you start your real estate career.
While a real estate coach and mentor are often used interchangeably, they are slightly different. A mentor will walk you through various transactions and situations, but a coach will work to improve your specific skillset and give actionable advice.
This specific skillset advice will be based on where you have weaknesses and will help hold you accountable as you build your career. They’re someone that is also experienced in the industry but also can guide you on a formula and process to help you improve your real estate skills.
Whether that’s knocking on doors or improving your social media presence, your coach will work with you to develop a specific, actionable plan to achieve your goals.
Some brokerages will offer specific coaching programs, but a variety of national schools and programs can also pair you with a real estate coach.
Hiring a real estate coach can often be expensive, but if done correctly, you’ll notice an increase in your business and become a better real estate agent.
If your brokerage doesn’t offer a formal coaching program, ask respected leaders in your market what they recommend. A lot of the top agents have also likely been through coaching programs before!
Brokers, team leaders, mentors, and coaches all have one thing in common — their main goal is to encourage you and help you grow as an agent. Depending on your needs and the stage you’re at in your career, having extra support and guidance will benefit you today and as you advance in the real estate industry.
As the great Andrew Carnegie said, "Never be so foolish as not to surround yourself with people who are smarter than you.” Surrounding yourself with more experienced agents will encourage you to be your best self.
The concept of government survey systems is based on a structure of lines that divide the United States into rectangles and squares.
Survey systems are the government's way of dividing the land for easy location and purchasing.
To better understand this concept, think of the United States as a giant square with several intersecting lines forming smaller squares, like a checkerboard.
In this article, you will learn everything you need to understand how survey systems work and how to locate properties using this system.
A government survey system, also known as the rectangular survey system, is a federal land survey system created by the Land Ordinance in 1785.
Due to the continuous growth in the United States territory, the need arose for a system through which property owners could identify their real property.
The rectangular survey system was one of the ways developed to achieve this.
It is a system based on the principle of meridian lines – running from north to south – and baselines – running from east to west – across most of the United States.
It is used to identify the specific location of land, divide, measure, and create boundary lines to aid the sale of these lands and settle disputes among property owners.
This system has also been used to prevent survey fraud and simplify land allocation for different purposes, such as schools and urban development.
The government survey system describes real property using the following structure:
Having highlighted the lines, their names, and their positions, let’s break things down by taking a quick example, using the coordinates “NW1/4 of NE1/4 of Section 8, T.2N., R.1E”.
These coordinates translate to the “Northwest quarter of the Northeast quarter of Section 8 in Township 2 North and Range 1 East.”
A township is established by the intersection of tiers and range lines that measure 6 miles by 6 miles on each side. It comprises 36 sections, with a total area of 36 square miles.
These sections are numbered beginning from the North East, with the first section designated as 1, all through to 36.
For a clearer understanding, draw a large square and divide it into 36 smaller units. Start numbering each box, beginning from the top right corner to the top left corner, then downward in a snake formation until you have gotten to the last box at the lowest right corner.
Many people take townships to be the same as cities, but this is incorrect. While a township is merely a subdivision of a county or a town, a city is a much larger territory that is even bigger than a town.
A section is one of the basic units in a government survey system. It is a measure of land in a township with a one-mile square of 640 acres.
The land is referred to as half and quarter sections in each section. The one-sixteenth division of a section is called a quarter of a quarter, as in the NW1/4 of the NW1/4.
An acre is a unit of area used to describe a precise amount of land. It typically measures approximately 43,560 square feet, which translates to 4,046.86 square meters, 0.404686 hectares, or 1/640 of a square mile. An average single-family house sits on only about ⅕ of a total acre.
Therefore, to clearly understand how big an acre is, picture the American football field but without the end zones. If you use an NBA basketball court, which measures approximately 0.11, one acre will equal approximately 9 basketball courts.
It is important not to confuse an acre with a commercial acre, as these terms describe different things. A commercial acre is a term typically used when describing industrial or commercial properties in big cities.
It measures about 4,000 square yards instead of 4,840 square yards for a typical acre. This means a commercial acre is roughly 83% of a standard acre.
A hectare is a unit of area that measures about 10,000 square meters or approximately 2.471 acres. Hence, it is roughly two times larger than an acre.
To visualize how big a hectare is, picture an international rugby union field measuring approximately 1.008 hectares or a baseball field measuring roughly 0.83 to 1.12 hectares.
If you are not a die-hard sports fan, try picturing London's Trafalgar Square, which is approximately 1 hectare.
The government survey system is one of the systems of land description used in most states in the U.S.
It is a system based on the principles of lines drawn to divide the land into smaller sections for easy identification, purchase, and allocation. It also helps to prevent and settle boundary disputes among property owners.
As you acquire a mortgage or other types of loan, you might receive an amortization schedule that outlines your loan repayments.
Many consumers don’t realize that even though their monthly payments stay the same throughout their loan, how much they’re actually paying towards their principal loan amount will change month by month.
Otherwise known as amortization, this financial system is the foundation of mortgage payments and is crucial to understanding when working in the real estate industry.
Use our amortization calculator to find out your timeline. This is not accredited financial and legal advice but just a rough reference.
There are two primary meanings to amortization. In real estate, amortization is the gradual repayment of a loan. This includes a schedule of interest and principal payments of a loan until the entire amount is repaid with interest.
Originating from the old English language meaning “to kill”, amortization is a standard loan type often seen in mortgages. The slowly paying down of the loan amount “kills” the loan by the end of the term, usually around 30 years.
The other meaning of amortization is the spreading out of capital expenses relating to intangible assets over a duration. This is useful for accounting and tax purposes and is similar to the depreciation rate.
Amortization is the process of spreading out the cost of a loan over a specified term amount, with fixed payments each month. A portion of each payment will go towards the interest charges, with the amount of interest paid each month decreasing over time.
A lot of financial loans are amortized, like credit card payments. But things like personal loans, auto loans, and mortgages are usually amortized and allow you to pay down the balance over time. There are pros and cons to an amortized loan, with the biggest benefit being a fixed monthly payment.
This often allows for a more reasonable repayment schedule with full transparency into how much each payment will be. However, a drawback of amortized loans is that the borrower doesn’t accumulate equity in the property on the front end. The longer the loan term goes on, the more principal paid and the more equity earned.
For a 30-year mortgage, this can mean that very little equity is established in the loan's first several years.
Borrowers and lenders use specific formulas and calculators to determine the amortization schedule for a mortgage.
As long as you know the interest rate and the principal amount of the loan, you can calculate the amortization yourself using the formula: Total Monthly Payment – [Outstanding Loan Balance x (Interest Rate / 12 Months)] = Principal Payment.
There are also countless online tools and resources if you’re not interested in calculating this rate manually. Additionally, you should receive an amortization table at your closing which outlines all the upcoming payments over the loan length and how much is designated to the interest versus the principal.
When you receive a mortgage, your monthly payment goes towards the principal amount and the interest charged to the loan, otherwise known as your PI payment. When you obtain an amortized loan, the monthly amount doesn’t change over the length of your loan.
However, the amount paid toward principal or interest differs over the length of the loan. When you reach the closing table, your lender will provide you with an amortization schedule or table. This will provide full transparency into each monthly payment you make over your loan.
In the first half of your mortgage, most of your monthly payments will go towards paying down the interest on the loan. However, as you reach year 15 or so, you will begin to pay more towards your principal than your interest. By the end of the loan, the majority of payments will be principal, and you will have “killed” the loan.
When you reach the closing table, your lender will provide you with a payment schedule that fully explains how much of your payments will be allocated to both principal and interest. If you opt for a shorter loan term, like a 15-year mortgage, the less interest you’ll pay. You’ll see that your monthly payments will pay more towards principal payments than a longer, 30-year mortgage.
If you’re interested in shortening your loan amount, making additional payments at the beginning of your loan is recommended to pay down your principal amount more quicker. This will help you save money on interest payments and allow you to “kill” the loan quicker. Make sure though there are no penalties for repaying your loan earlier.
When amortization is applied to an asset like rental property, it is similar to the asset's depreciation. Rental property, unlike most other types of property, does depreciate. This is because there are costs associated with using the property as a rental like maintaining its condition and ensuring it’s a safe rental.
By spreading out these expenses throughout the loan, real estate investors can take tax deductions for their rental property. The Internal Revenue Service will allow taxpayers to deduct things like advertising, maintenance, property taxes, and utilities. Make sure you speak with a tax professional to fully understand the pros and cons of rental property depreciation.
However, if you’re currently a renter paying a similar amount as a mortgage payment, you should consider purchasing a home. Here’s why: every monthly payment you make as a renter is helping to build someone else’s equity in their property.
As a renter, you’re building no equity in your own home, and If you own your property, you’d be gaining wealth through property appreciation.
Amortization schedules can be a new concept for buyers to understand as they go through the mortgage process.
As their agent, ensure they know how this amortization schedule could affect the equity they have in their home and how the repayment of their loan will work. Knowledge is power when it comes to real estate, and amortization is something all real estate agents should be prepared to walk their clients through.
Hiring an agent to handle the sale of a home undoubtedly comes with a bunch of benefits for both the agent and the homeowner.
However, many home sellers would need some convincing to determine if hiring you would be beneficial to them.
As an agent, the ability to portray your knowledge and experience by providing answers to your clients’ questions would earn you the reputation and opportunity to succeed in the industry.
In this article, we will be responding to five questions home sellers ask agents, why they ask them, as well as some good follow-up questions to ask them.
Home sellers are concerned about how much their house would be worth when placed on the housing market.
This is because the information provides better insights into what buyers are willing to pay for the property, how it compares to other homes in the neighborhood, and what actions will increase the property’s worth.
Also, the listing price of a house gives the first impression to buyers and determines whether or not they’d be interested in the home on the spot. Before hiring an agent, sellers want to be sure of these two things:
As a savvy agent, your best response to this question would be to offer a data-backed Comparative Market Analysis (CMA) to the seller. This shows how the seller’s property compares to each of the best recently sold homes in the area.
Your analysis should include value adjustments for differences that may affect the property, such as:
Homeowners want to sell their homes for many reasons, ranging from a need to relocate to a high maintenance cost. Whatever their reasons may be, knowing why the owner is selling can help in determining how to list the property and to what extent you should go when negotiating.
Considering that the standard real estate agent’s commission is 5% to 6%, For-sale-by-owner is usually the first option for many home sellers.
Although it may seem like a great way to save money, the risks involved in selling without an agent causes sellers to reconsider.
They often want to have an understanding of how much agents will charge to sell their homes before going ahead with any transaction.
To respond appropriately to this question, you should provide an explanation that justifies the cost of the commission.
You can include the services you would be offering and that the commission would be split between you and the buyer’s agent.
Also, you can be open to negotiations but be sure to put up a fight to emphasize your worth.
After you have satisfied the seller’s curiosity about how much they will be charged for the house sale and why they will understand that they stand to make good money when working with you.
Following up with this question would create an avenue to walk them through your property services and find out which of these services interests them.
Home sellers always want to know the amount of time it will take for a house to sell. This is especially true when the seller needs to get out of an uncomfortable financial situation quickly.
Houses that stay on the market for too long don’t always do well.
Buyers tend to think there is a problem with the property, and as a result of desperation, the seller is willing to sell way below the asking price.
It is important to be realistic when responding to this question to avoid giving the seller false hope. You should inform the home seller that the rate at which their house would sell depends on the average market time for the area.
A more personalized estimate can also be provided based on the type of house or what part of the area it is situated in.
This question gives you better insights into what the seller wants. Although most sellers want to sell quickly and for as much as possible, you may come in contact with someone who needs to sell fast, not minding if it is for less than they should.
Or a seller who doesn't mind if the property has to stay a while on the market to make as much money as possible. As an agent, you should be able to align your services to what your client needs.
An agent who takes a holistic approach to property advertising is what home sellers seek when trying to sell their property. Advertisement is what creates awareness for the property and increases demand.
Because home sellers want to sell their property in the best way possible, they want to ensure that the agent they hire can handle the advertising of their home.
There is no better way to respond to this question than by highlighting the tools that are available to you as a real estate agent for advertising property.
But it wouldn’t be enough to stop there; you should go further to discuss what advertising strategies you would be utilizing, why they would be utilized, and their recorded success rates.
Home sellers are always looking for the best agents to handle their home sales. Therefore, when this question is asked, it is to examine the agent’s confidence and overall level of competence.
This is the perfect time to pitch yourself to your potential client. At this point, you are expected to inform the home seller about your qualifications and certifications, how long you have been an agent, your professional contacts, your team -if any- and how many listings you have converted into sales.
A homeowner who is looking to sell their property would most likely have done some research on what the duties of an agent are.
Therefore, asking this follow-up question will give more insights on how to satisfy the seller and reassure them that your services will cater to their every need.
When it comes to selling property, home sellers want to be able to trust the agents they would be hiring to handle the sale. This includes getting realistic and detailed answers to the questions they ask.
As an agent, you must make use of your expertise to respond in the best way possible. Once you can do this, you stand a chance of converting every interview into a job.
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