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Real Estate Agents, Brokers, and Appraisers

(D.O.T.  191.267-010 and 250.157-010, .357-010, -014, and -018)

Nature of the Work

The purchase or sale of a home, or an investment property, is not
only one of the most important financial events in peoples' lives,
but one of the most complex transactions as well.  As a result,
people generally seek the help of real estate agents, brokers, and
appraisers when buying or selling real estate.

   Real estate agents and brokers have a thorough knowledge of the
housing market in their community.  They know which neighborhoods
will best fit their clients' needs and budgets.  They are familiar
with local zoning and tax laws, and know where to obtain financing.
Agents and brokers also act as a medium for price negotiations
between buyer and seller.

   Brokers are independent business people who, for a fee, sell real
estate owned by others and rent and manage properties.  In closing
sales, brokers often provide buyers with information on loans to
finance their purchase.  They also arrange for title searches and
for meetings between buyers and sellers when details of the
transactions are agreed upon and the new owners take possession.  A
broker's knowledge, resourcefulness, and creativity in arranging
financing that is most favorable to the prospective buyer often mean
the difference between success and failure in closing a sale.  In
some cases, agents assume the responsibilities in closing sales,
but, in many areas, this is done by lawyers or lenders.  Brokers
also manage their own offices, advertise properties, and handle
other business matters.  Some combine other types of work, such as
the sale of insurance or the practice of law, with their real estate
business.

   Real estate agents generally are independent sales workers who
provide their services to a licensed broker on a contract basis.  In
return, the broker pays the agent a portion of the commission earned
from property sold through the firm by the agent.  Today, relatively
few agents receive salaries as employees of a broker or realty firm.
Instead, most derive their income solely from commissions.

   Before showing properties to potential buyers, the broker or agent
has an initial meeting with them to get a feeling for the type of
home they would like and can afford.  Then, they take them to see a
number of homes that are likely to meet their needs and income.
Because buying real estate is such an important part of the average
person's life, agents may have to meet several times with a
prospective buyer to discuss properties.  In answering questions,
agents emphasize those selling points that are likely to be most
important to the buyer.  To a young family looking at a house, for
example, they may point out the convenient floor plan and the fact
that quality schools and shopping centers are close by.  To a
potential investor seeking the tax advantages of owning a rental
property, they may point out the proximity to the city and the ease
of finding a renter.  If bargaining over price becomes necessary,
agents must carefully follow the seller's instructions and may have
to present counteroffers in order to get the best possible price.

   Once the contract has been signed by both parties, the real estate
broker or agent must see to it that all special terms of the
contract are met before the closing date.  For example, if the
seller has agreed to a home inspection or a termite and radon
inspection, the agent must make sure that this is done.  Also, if
the seller has agreed to any repairs, the broker or agent must see
to it that they have been made, otherwise the sale cannot be
completed.  Increasingly, brokers and agents must handle
environmental problems or make sure the property they are selling
meets environmental regulations.  For example, they may be
responsible for dealing with problems such as lead paint on the
walls.  While many other details are handled by loan officers,
attorneys, or other persons, the agent must check to make sure that
they are completed.

   There is more to agents' and brokers' jobs, however, than just
making a sale.  Because they must have properties to sell, they
spend a significant amount of time obtaining listings (owner
agreements to place properties for sale with the firm).  They
spend much time on the telephone exploring leads gathered from
various sources, including personal contacts.  When listing
property for sale, agents and brokers make comparisons with
similar properties that have been sold recently to determine its
fair market value.

   Most real estate agents and brokers sell residential property.  A
few, usually in large firms or specialized small firms, sell
commercial, industrial, agricultural, or other types of real estate.
Each specialty requires knowledge of that particular type of
property and clientele.  Selling or leasing business property, for
example, requires an understanding of leasing practices, business
trends, and location needs.  Agents who sell or lease industrial
properties must know about transportation, utilities, and labor
supply.  To sell residential properties, the agent must know the
location of schools, religious institutions, shopping facilities,
and public transportation, and be familiar with tax rates and
insurance coverage.  Agents and brokers increasingly use computers
to generate lists of properties for sale, their location and
description, and to identify available sources of financing.

   Real estate transactions involve substantial financial commitments,
so parties to the transactions usually seek the advice of real
estate appraisers, objective experts who do not have a vested
interest in the property.  An appraisal is an unbiased estimate of
the quality, value, and best use of a specific property.  Appraisals
may be used by prospective sellers to set a competitive price, by a
lending institution to estimate the market value of a property as a
condition for a mortgage loan, or by local governments to determine
the assessed value of a property for tax purposes.  Many real estate
appraisers are independent fee appraisers or work for real estate
appraisal firms while others are employees of banks, savings and
loan associations, mortgage companies, and multiservice real estate
companies.

   During an inspection, real estate appraisers evaluate the quality of
the construction, the overall condition of the property, and its
functional design.  They gather information on properties by taking
measurements, interviewing persons familiar with the properties'
history, and searching public records of sales, leases, assessments,
and other transactions.  They then estimate the present cost of
reproducing any structures on the properties and how much the value
of structures may have depreciated over time.  Taking into
consideration the location of the properties, current market
conditions, and real estate trends or impending changes that could
influence the future value of the properties, appraisers arrive at
estimates of their value.  Depending on the purpose of the
appraisal, they may estimate the market value of the property, the
insurable value, the investment value, or other kinds of value.
Appraisers must prepare formal written reports of their findings
that meet the standards of the Appraisal Foundation.

   Real estate appraisers often specialize in certain types of
properties.  Most appraise only homes, but others specialize in
appraising apartment or office buildings, shopping centers, or a
variety of other types of commercial, industrial, or agricultural
properties.

   Most real estate agents sell residential property.

Working Conditions

Although real estate agents, brokers, and appraisers generally work
in offices, much of their time is spent outside the office showing
properties to customers, analyzing properties for sale, meeting with
prospective clients, researching the state of the market, inspecting
properties for appraisal, and performing a wide range of other
duties.  Brokers provide office space, but agents generally furnish
their own automobiles.

   Agents, brokers, and appraisers often work more than a standard
40-hour week; 4 of every 10 worked 50 hours or more a week in 1992.
They often work evenings and weekends to suit the convenience of
their clients.

Employment

Real estate agents, brokers, and appraisers held about 397,000 jobs
in 1992.  Many worked part time, combining their real estate
activities with other careers.  Most were self-employed, working on
a commission basis.

   Most real estate and appraisal firms are relatively small; indeed,
some are a one-person business.  Some large real estate firms have
several hundred real estate agents operating out of many branch
offices.  Many brokers have franchise agreements with national or
regional real estate organizations.  Under this type of arrangement,
similar to many fast-food restaurant operations, the broker pays a
fee in exchange for the privilege of using the more widely known
name of the parent organization.  Although franchised brokers often
receive help in training salespeople and in running their offices,
they bear the ultimate responsibility for the success or failure of
the firm.

   Real estate is sold and appraised in all areas, but employment is
concentrated in large urban areas and in smaller but rapidly growing
communities.

Training, Other Qualifications, and Advancement

Real estate agents and brokers must be licensed in every State and
in the District of Columbia.  All States require prospective agents
to be a high school graduate, be at least 18 years old, and pass a
written test.  The examination more comprehensive for brokers than
for agents includes questions on basic real estate transactions and
on laws affecting the sale of property.  Most States require
candidates for the general sales license to complete at least 30
hours of classroom instruction and those seeking the broker's
license to complete 90 hours of formal training in addition to a
specified amount of experience in selling real estate (generally 1
to 3 years).  Some States waive the experience requirements for the
broker's license for applicants who have a bachelor's degree in real
estate.  A small but increasing number of States require that agents
have 60 hours of college credit roughly the equivalent of an
associate degree.  State licenses generally must be renewed every
year or two, usually without reexamination.  Many States, however,
require continuing education for license renewal.

   Federal law requires appraisers of most types of real estate (all
property being financed by a Federally regulated lender) to be State
certified.  In some States, appraisers who are not involved with
Federally regulated institutions do not have to be certified.  State
certification requirements for appraisers must meet Federal
standards, but States are free to set more stringent requirements.
Formal courses, appraisal experience, and a satisfactory score on an
examination are needed to be certified, but college education may be
substituted for a portion of the experience requirement.
Requirements for licensure vary by State but are somewhat less
stringent than for certification.

   Individuals enter real estate appraisal from a variety of
backgrounds.  Traditionally, persons enter from real estate sales,
management, and finance positions.  However, a growing number of
people are entering appraiser jobs directly from college.  College
courses in real estate, finance and business administration,
economics, and English are helpful.  Many junior and community
colleges offer 2-year degrees in real estate or appraisal.  Trainee
appraisers usually assist experienced appraisers until they become
licensed.

   Persons who take real estate agent, broker, and appraiser positions
are older, on average, than entrants to most other occupations.
Many homemakers and retired persons are attracted to real estate
sales by the flexible and part-time work schedules characteristic
of this field and may enter, leave, and later reenter the
occupation, depending on the strength of the real estate market,
family responsibilities, or other personal circumstances.  In
addition to those who are entering or reentering the labor force,
some transfer into real estate jobs from a wide range of
occupations, including clerical and other sales jobs.

   As real estate transactions have become more complex, involving
complicated legal requirements, many firms have turned to college
graduates to fill positions.  A large number of agents, brokers, and
appraisers have some college training, and the number of college
graduates selling real estate has risen substantially in recent
years.  However, personality traits are fully as important as
academic background.  Brokers look for applicants who possess a
pleasant personality, honesty, and a neat appearance.  Maturity,
tact, and enthusiasm for the job are required in order to motivate
prospective customers in this keenly competitive field.  Agents also
should be well organized and detail oriented as well as have a good
memory for names and faces and business details, such as taxes,
zoning regulations, and local land-use laws.

   Persons interested in beginning jobs as real estate agents often
apply in their own communities, where their knowledge of local
neighborhoods is an advantage.  The beginner usually learns the
practical aspects of the job, including the use of computers to
locate or list available properties or identify sources of
financing, under the direction of an experienced agent.

   Many firms offer formal training programs for both beginners and
experienced agents.  Larger firms generally offer more extensive
programs than smaller firms.  Over 1,000 universities, colleges, and
junior colleges offer courses in real estate.  At some, a student
can earn an associate or bachelor's degree with a major in real
estate; several offer advanced degrees.  Many local real estate
boards that are members of the National Association of Realtors
sponsor courses covering the fundamentals and legal aspects of the
field.  Advanced courses in appraisal, mortgage financing, property
development and management, and other subjects also are available
through various National Association of Realtor affiliates.

   Many real estate appraisers voluntarily earn professional
designations that represent formal recognition of their professional
competence and achievements.  A number of appraiser organizations
have programs that, through a combination of experience,
professional education, and examinations, lead to the award of such
designations.  These professional designations are desirable because
requirements for them are more stringent than State standards.
Among the more common are various designations awarded by the
Appraisal Institute and the American Society of Appraisers.

   Advancement opportunities for agents often take the form of higher
commission rates and more and bigger sales, both of which increase
compensation.  This occurs as agents gain knowledge and expertise
and become more efficient in closing a greater number of
transactions.  Experienced agents can advance in many large firms to
sales or general manager.  Persons who have received their broker's
license may open their own offices.  Others with experience and
training in estimating property value may become real estate
appraisers, and people familiar with operating and maintaining
rental properties may become property or real estate managers.  (For
detailed information on property and real estate managers, see the
statement elsewhere in the Handbook).  Agents, brokers, and
appraisers who gain general experience in real estate and a thorough
knowledge of business conditions and property values in their
localities may enter mortgage financing or real estate investment
counseling.

Job Outlook

Employment of real estate agents, brokers, and appraisers is
expected to grow about as fast as the average for all occupations
through the year 2005 as a result of the growing volume of sales of
residential and commercial properties.  Despite this rising demand,
however, the large majority of job openings will be due to
replacement needs.  Each year, tens of thousands of jobs will become
available as workers tranfer to other occupations or leave the labor
force.  Because turnover is high, real estate sales positions should
continue to be relatively easy to obtain.  Not everyone is
successful in this highly competitive field; many beginners become
discouraged by their inability to get listings and to close a
sufficient number of sales.  Lacking financial sustenance and
motivation, they subsequently leave the occupation.  Well-trained,
ambitious people who enjoy selling should have the best chance for
success.

   Employment growth in this field will stem primarily from increased
demand for home purchases and rental units.  Shifts in the age
distribution of the population over the next decade or so will
result in a large number of persons in the prime working ages (25-54
years old) with careers and family responsibilities.  This is the
most geographically mobile group in our society and the one that
traditionally makes most of the home purchases.  As their incomes
rise, they also may be expected to invest in additional real estate.

   Increasing use of technology and electronic information may increase
the productivity of realtors and brokers.  More and more real estate
companies are equipped with computers, faxes, modems, and databases.
Some real estate companies are even using computer generated images
to show houses to customers without even leaving the office.  These
devices enable one realtor to serve a greater number of customers.
Use of this technology may eliminate some of the more marginal
realtors such as those practicing real estate part time or between
jobs.  These workers will not be able to compete as easily with
full-time realtors who have invested in this technology.

   Employment of real estate agents, brokers, and appraisers is
sensitive to swings in the economy.  During periods of declining
economic activity and tight credit, the volume of sales and the
resulting demand for sales workers may decline.  During these
periods, the earnings of agents, brokers, and appraisers decline,
and many work fewer hours or leave the occupation.

Earnings

Commissions on sales are the main source of earnings of real estate
agents and brokers few receive a salary.  The rate of commission
varies according to the type of property and its value; the
percentage paid on the sale of farm and commercial properties or
unimproved land usually is higher than that paid for selling a home.

   Commissions may be divided among several agents and brokers.  The
broker and the agent in the firm that obtained the listing generally
share their part of the commission when the property is sold; the
broker and the agent in the firm that made the sale also generally
share their part of the commission.  Although an agent's share
varies greatly from one firm to another, often it is about half of
the total amount received by the firm.  The agent who both lists and
sells the property maximizes his or her commission.

   Real estate agents, brokers, and appraisers who usually worked full
time had median weekly earnings of $507 in 1992.  The middle 50
percent earned between $323 and $802.  The top 10 percent earned
more than $1,247 and the lowest 10 percent earned less than $223.

   Income usually increases as an agent gains experience, but
individual ability, economic conditions, and the type and location
of the property also affect earnings.  Sales workers who are active
in community organizations and local real estate boards can broaden
their contacts and increase their earnings.  A beginner's earnings
often are irregular because a few weeks or even months may go by
without a sale.  Although some brokers allow an agent a drawing
account against future earnings, this practice is not usual with new
employees.  The beginner, therefore, should have enough money to
live on for about 6 months or until commissions increase.

Related Occupations

Selling expensive items such as homes requires maturity, tact, and a
sense of responsibility.  Other sales workers who find these
character traits important in their work include automotive sales
workers, securities and financial services sales workers, insurance
agents and brokers, yacht brokers, travel agents, and manufacturers'
representatives.  Other appraisers specialize in performing many
types of appraisals besides real estate, including aircraft,
antiques and fine arts, business valuations, and yachts.

Sources of Additional Information

   Details on licensing requirements for real estate agents, brokers,
and appraisers are available from most local real estate and
appraiser organizations or from the State real estate commission or
board.

   For more information about opportunities in real estate work,
contact:

   National Association of Realtors, 777 14th St.  NW, Washington, DC
20005.

   Information on careers and licensing and certification requirements
in real estate appraising is available from:

   Appraisal Institute, 875 North Michigan Ave., Suite 2400, Chicago,
IL 60611-1980.

   American Society of Appraisers, P.O.  Box 17265, Washington, DC
20041.  (This organization may be called toll free at
1-800-ASA-VALU.)