The real estate market in the US is growing. The market was priced at $16 trillion in 2018 and is expected to grow by 7% each year in the 2016 to 2025 forecast period. With numbers like this, it’s no surprise that more people are becoming realtors each year. However, not everyone should expect to earn a lot during their first few years in the business. It’s important to ground yourself and know the ins-and-outs before becoming an agent and what you need to do when starting. Here are some things you should know before becoming a real estate agent in the US.
Kinds of Estates
Before getting into the market, you should know the different estates you can and cannot sell. There are two kinds of estates: freehold estates and nonfreehold estates.
Freehold estates are considered to be the “ownership” category of an estate. There are two kinds of freehold estate, the first is fee simple, and the second is a life estate. Fee simple is the best kind of ownership in a property because it means that you own everything within its location. It also means that your heir can inherit the land when you pass away. Life estate means that you only own the property until the day you pass away, which means the government or the bank (depending on the agreement you’ve signed) claims it when you’re gone.
Non-freehold estates are considered to be estates with leases. These properties are meant for rentals. There are multiple forms of non-freehold estates, all-determining the lease’s length and what owners can do with the property. At its core, those who rent a non-freehold estate can stay within it for a year or only for a certain period. Some non-freehold estates can also determine when you can stay or leave at any time. This is also called ‘estate at will.’
As a real estate agent, you should know the kind of estate you will be selling. By law, you cannot sell a freehold life estate if it’s an heir who tells you to do so. Because by law, the heir does not own the property. Knowing the kinds of estates is essential to real estate planning. This will help you and your company plot properties that can be sold or properties for lease. Not knowing this can lead to disastrous consequences in the future. Such as a bank reclaiming a property you have just sold to a buyer. This can drag you to pay for legal fees and can be fraudulent in some states.
Real Estate Laws
Although real estate law may differ depending on which state you might be practicing, it’s essential to know how ownership of real estate works. If you already know the kind of estate you will be selling or renting, you already know the laws governing it. Additionally, if you already know the constitutional right to own a property, you already know the general principles of owning and selling a property.
However, there are some intricate things you should know when selling or renting a property. One example is the necessary inspections you need to do before selling a property. If you work for a real estate agency, then most likely than not, your agency does this for you. However, if you’re an independent contractor, you’ll have to help the house owner with these inspections. These inspections include radon testing, pest inspection, and septic inspection. These intricate things can make or break your deal with a client so make sure to keep yourself updated with any changes to real estate laws.
Real Estate Market
The last thing you should know before becoming a real estate agent is the market. Right now, the market is seeing a shortage of properties that can be sold. Inventory is down by 22% compared to last year, and there aren’t enough homes for future homeowners to buy. This means that you can either tell your clients to opt for renting a property or buy one at an inflated price.
Knowing the market is already half the battle in real estate. The market determines the interest rates, the prices of properties, and how much all of these things change in a given year. Sure, it can be volatile and unpredictable, but you can keep an eye on it. By knowing the market, you can have a competitive advantage against other real estate agents in the market.
Being a real estate agent is not an easy job. It requires a lot of time and determination. You should also be ready to not earn as much during the first few months you’ve started. But once you’ve mastered the art of real estate, you should be able to get ahead of the competition and begin selling properties left and right.