Learn about the different types of career paths in real estate and how to become a real estate agent.
There are trillions of dollars of real estate in the United States - everything from undeveloped lots to five-star resorts to millions of homes and offices for ordinary Americans. As might be expected, there are literally hundreds of career niches within this vast market. Think of real estate careers in terms of two critical variables: type of real estate, and role within the real estate process.
The largest types of real estate are office properties, industrial properties (such as factories & warehouses), single family and multifamily homes, and retail malls and stores. There are also many subcategories and specialties within these divisions. For example, hospitals are a special type of real estate that require different amenities and management. Similarly, hotels, prisons, and trailer parks typically have their own specifications and management policies.
The second variable is role within the real estate process. Here, we have the deal people, like brokers and underwriters, and the management people. Let's take a look at each of these different career paths in turn. Remember that regardless of role, real estate professionals usually specialize in one type of real estate in one geographic area.
There are a lot of "deal people" in real estate. Two factors contribute to this. First, real estate changes hands relatively infrequently compared to some kinds of assets, like stocks, bonds, and cash. Second, each house is unique to some extent. It takes a lot of dedicated professionals to keep track of what's on the market and lead their clients to the right places. Because the market is both illiquid and highly differentiated, transaction costs are high and the costs of selling or buying a piece of real estate typically run about 6% of the total cost of the property. The people who split that money are the real estate brokers, mortgage brokers, underwriters, and appraisers.
The most familiar type of real estate career to most people is the residential real estate agent. This person's job is to connect home buyers with those who are selling their homes. A key advantage to the job is that real estate agents are "people people" who spend a lot of time talking and visiting with members of their community. However, real estate brokers are sales agents, and are paid on a commission basis. A large part of the job is sourcing clients through marketing and referrals, and it may take time for an agent to build a business within his or her community. Real estate brokers are responsible for finding their clients the right house, and then ensuring that the closing process proceeds smoothly.
Mortgage brokers have a similar job to real estate brokers, but instead of finding their clients the right house, they find their clients the right loan. The customer service and sales aspects of the two jobs are similar, but loan brokers must also have a solid understanding of different types of loan programs.
Mortgage brokers interface closely with another type of real estate professional: the underwriter. Underwriters evaluate the credit risk associated with potential borrowers. Underwriting is primarily an analytical job: it involves collecting & carefully evaluating such information as appraisals, pay stubs, tax returns and credit reports. Underwriters are usually associated with large banks that are capable of providing cash at closing on short notice.
Serving the underwriter are real estate professionals including appraisers and engineers. These are the people who actually go out to the property and "kick the tires," checking for leaking roofs, damaged gutters, and moisture in the basement. Appraisers also check out sales prices for similar homes in order to arrive at a fair value for the property. This fair value is used by the underwriter in his credit analysis.
Those are the primary types of deal people. They all go into action whenever a property changes hands. But what about the people that take care of the property on a day-to-day basis?
Those are the property managers. Keep in mind that one of the most interesting things about real estate is that it simply doesn't need a lot of management. Think about owning a Kinko's versus owning an apartment building. At a Kinko's, you'll have to deal with hundreds of customers a day and staff turnover to boot. As the owner of an apartment building, you need to find tenants, sign up some leases and then cash your checks. Property maintenance and tenant complaints take up a much smaller amount of time than the demands of a typical building. Even a large apartment building is usually managed by just a few people. This makes the job very diverse.
There is room for a career in real estate for all types: from transaction-oriented types to the more laid-back, and from relationship people to analytical folks. The key is finding a niche that suits you.
Good luck!
