Real Estate Career Paths
Real estate professionals must be able to research, analyze, negotiate, plan and market. They often work long days. Before discussing skills and career paths, first think about this question: 'What am I good at?' An honest self-assessment is a good place to begin before thinking about any career. Imagine a straight line axis with two extreme personality attributes at opposite ends: "analytical" versus "people-oriented." Few of us are both highly analytical and highly people-oriented. Instead, we fall somewhere in between. Analytical types are comfortable with research and analysis, enjoy learning new technical skills, and problem modeling and solving. People-oriented types are extroverts by nature and prefer working with people rather than sitting behind a desk.
Certain real estate specializations tend to require more of the analytical attribute, while others require more of the people-oriented attribute. For example, appraisers, mortgage lenders, corporate real estate managers and property managers must be strong on the analytical side, with strong writing skills. Brokers and leasing agents require strong interpersonal, negotiation and verbal skills. Developers, commercial mortgage brokers, and real estate consultants need a heavy dose of both. Which are you?
Real estate people can never know too much. They must constantly strive to stay abreast of business trends, and think about issues - tax laws, new highway routes, technology or existing and proposed zoning regulations - affecting their clients, business and investments. Above all, successful real estate professionals are entrepreneurial by nature and process-oriented. They generally look for opportunities and ways to improve business. Real estate entrepreneurs are successful in most business fields and often diversify into other non-real estate businesses.
Beyond a general knowledge of business, economics and a global market perspective, employers expect neophyte real estate professionals to be computer literate, using spreadsheets, database analysis, word processing, graphical analysis and geographic information systems. They also expect new employees to communicate well and to make oral presentations. Negotiation skills are also an important aspect of the real estate industry, and students should practice these while in school.
The specializations detailed below generally require a business background. However, there are many other professions related to the real estate industry such as construction, environmental consulting, real estate tax and regulatory counseling, design review, economic and market feasibility analysis, planning, education and research. Overall, real estate provides many promising career paths.
Appraisers are paid to estimate the value of property after a systematic analysis of the prices of similar properties, or based on an analysis of discounted future returns. This valuation estimate requires market analysis and the subject property being appraised. Some appraisers work for a variety of clients on a fee basis; others are internal staff appraisers, producing value opinions for their employer. Most appraisers specialize in residential property, or specific types of commercial property. Federal laws require that any appraisal required when the government is involved directly or indirectly must be done by a state certified appraiser. Certification is at two levels, residential and general, and is based on a combination of tests and experience. Trade association designations which require more experience and education than the state certification process also are required by many clients, the highest of which is the MAI for Member of the Appraisal Institute.
The outlook for appraisers involved in specialized commercial appraisal and consulting, such as site analysis, buy versus lease decisions, property tax appeals, portfolio revaluation, and investment analysis, is quite promising. Many commercial and consulting oriented appraisers work within larger consulting firms including accounting and market research firms. Technology is having a major impact on the commercial and residential sectors of the real estate industry. The outlook for residential appraisal is being greatly influenced by the introduction of new technology. Opportunities abound for real estate professionals to revolutionize the residential sector, and residential appraisal firms that do not embrace new technology may become extinct.
Real estate agents that represent buyers, sellers, owners or tenants must be licensed by the states in which they work. Most states require a test before issuing a sales license, or for more advanced brokers, a license is based on experience and educational requirements.
Public perception of the real estate industry is often based on images of residential sales agents because it is a highly advertised segment of the real estate industry. Residential agents represent buyers or sellers in exchange for a fee, payable when a sale is completed. This productivity-based segment requires long and uncertain hours, often resulting in a high agent dropout rate. Those that succeed can make an attractive living. People skills dominate this field. A lack of a college education has not hindered many successful residential agents. The outlook for residential brokers and agents is positive, thanks to use of internet and intranet technology in marketing to buyers and sellers. Residential brokerage firms that do not embrace technology will find themselves losing market share. Continuing education is generally required by licensing authorities in each state. Many real estate agents take advantage of programs offered by the National Association of Realtors.
Commercial brokerage requires people skills and a higher level of technical business knowledge. Most successful commercial agents need at least an undergraduate education and many have graduate degrees in business, enabling them to work with corporations, tenants, institutional buyers and sellers, domestic and foreign business entities and a host of sophisticated investment and business clientele. Most commercial agents specialize in specific property types such as industrial, office, retail, hotels, apartments, recreational or parking. Continued education is available through a variety of trade associations. Successful commercial agents can earn executive-level compensation. They must closely watch markets to anticipate economic trends affecting the real estate industry.
All major corporations must deal with real estate needs. Corporate real estate management involves maximizing the firm's value of resources devoted to space needs. Once simply viewed as a cost center, corporate real estate managers are now attempting to improve the efficiency of real estate usage by considering "just-in-time" office sharing and enhancing the productivity of the work environment. In addition, corporate real estate heads often deal with site analysis, buy versus lease decisions, acquisition and disposition, portfolio refinancing and sale leaseback arrangements, property tax appeals and a host of facility management decisions.
Developers are among the most entrepreneurial of the real estate career paths. They acquire land and prepare it for development, or acquire the site, as well as oversee the construction process. Developers specialize in residential or commercial development, and within these they specialize by property size and type. Today's home builders are getting larger, working on a regional and national basis. Larger home builders have a number of specialists within a firm. Outside the firm, they are affiliated as subcontracting consultants, specializing in land acquisition and market analysts, financing developments, project managers and marketing sales staff, to name a few. Developers who went through a period of over building in the late 1980's and early 1990's are now actively engaged in a burgeoning suburban office and industrial markets.
For more information about residential development, see the National Association of Home Builders, NAHB, as well as the Multi-Housing Council.
For more information about commercial development opportunities and trends see the Urban Land Institute, ULI, the National Association of Industrial and Office Properties, NAIOP, the Corporate Real Estate Network, CoreNet, and the International Council of Shopping Centers, ICSC.
Most of today's large scale real estate transactions ($10 million and up) involve institutional investors. Among these are the Real Estate Investment Trusts (REITs), the larger life insurance companies and pension funds. These institutions may utilize commercial brokers in the local markets, but they rely on internal staff to review and analyze proposed investments. Often these institutions look for a real estate background, with an MBA degree, when staffing such positions. Institutional investors pay attention to industry niche market trends, tax law trends, regulatory trends, geographically-based economic trends, demographic trends and global economic trends, in addition to micro-level real estate analysis.
The slogan 'think globally act locally' can be applied to today's institutional investment firms because many of them also 'act globally.' Whether working with domestic or international trusts, strong analytical skills, the ability to manage portfolios and excellent communication skills are required.
For more information, see the National Institution of Real Estate Investment Trusts, NAREIT, and the National Association of Real Estate Investment Fiduciaries, NCREIF.
Mortgage lenders specialize by size of loan and property types, like developers or commercial brokers. Primary lenders for residential single family include mortgage companies that resale loans in the secondary mortgage market, as well as commercial banks, savings institutions and credit unions. Banks and savings institutions usually pay employees on a salary basis, sometimes with a bonus. Mortgage companies rely more on productivity-based compensation. Loan officers must know about credit analysis, as well as appraisal, title, environmental concerns and a host of other government regulations. Multifamily mortgage lenders act much like commercial mortgage lenders with more emphasis on property analysis including market trends, tenant review, income and expense review as well as the value of the subject property being used as collateral. Commercial banks and savings institutions provide most of the smaller multifamily loans while life insurance companies, pension funds, Real Estate Investment Trusts (REIT) and Securitized Mortgage Loans and pension funds provide larger scaled financing.
Non-residential mortgage loans involve commercial banks as well as life insurance companies and pension funds as typical suppliers of capital. Commercial mortgage lenders require more business education and analytical skills than do the residential lenders, often requiring graduate education. Mortgage brokers are often used to represent smaller life insurance companies and pension funds that cannot efficiently process their own loans. Mortgage brokers work on a commission basis paid after successfully placing mortgage loans that meet the needs of the borrower and lender.
Construction lending is the most complicated end of the financing spectrum involving all of the concerns of the permanent mortgage lender (credit, income, expenses, property value and environmental) as well as absorption risk, construction cost risks and delays, and other concerns. Thus, construction lenders are often hired from among the ranks of experienced mortgage lenders. Most construction lending is provided by commercial banks.
In the future we expect more mortgage money to come from securitized capital market instruments via mortgage brokers and capital market investment bankers. For more information about mortgage banking, see the Mortgage Bankers Association, MBA.
Property management involves maximizing net revenues or productivity of property based on managing rental flows, tenant retention, managing and contracting property operation. Property operation includes cleaning, maintenance and repairs, paying utilities, property insurance, property taxes and so on), reporting to owners and overseeing resident or on-site managers. Property managers are usually involved in leasing and facility management decisions. Those that manage several properties and are involved in acquisition, disposition, financing and portfolio management decisions are known as 'asset managers.' Most property managers start as on-site managers, working closely with tenants.
Consolidation is the general trend in the industry. Many property management firms are national or international in scope and are able to take over an entire institutional portfolio of various properties from different cities. Property managers' fees are often based on property rental flows, as well as the complexity of the property management work. For example, shopping center property managers may be involved in tenant merchant associations, joint promotions and advertising. It involves more time than a single tenant industrial property, where the primary management function is accounting-based control, reporting and monitoring.
Congratulations! You've landed an interview, a tough hurdle in finding a job. It means your resume stood out among countless others. Now comes the nerve-wracking part - the actual interview. Sure you're jittery. It's natural. But there are steps you can take to minimize those feelings by being prepared.
Preparation means anticipating interview questions. Here are some frequently asked questions. Remember, each question presents an opportunity to sell yourself.
Tell me about yourself.
- Before going in to any interview, prepare a two-minute bio and rehearse it until you're comfortable.
What are your strengths and weaknesses?
- The interviewer wants to hear how your strengths match the needs of their firm. Have two or three strengths in mind before an interview. It's best to speak of one or two and offer examples of how you used them, and how you learned them. Tread lightly on conceit. Turn weaknesses into strengths and tell the interviewer how you are working to improve this weakness. For example: 'I've gotten a bit rusty in my hands-on production skills since becoming manager. Now I spend my time....'
Where do you see yourself in five years?
- Employers are looking for ambition. You don't want to come off as a threat. Instead, say how you'd like to gain a solid foundation of skills for the position you are being considered, so that you are better prepared for other career paths the company will offer in the future.
Why should I hire you?
- Employers are looking for you to understand the company's needs. State how you think you can help company growth, solve a problem or add to its strengths.
Why do you want to work here?
- The interviewer is looking for enthusiasm. Convey your interests to key components of the job, or being part of an important project. Tell the interviewer you like the company's size, aggressive market stance or creative business.
- Now that the interviewer has concluded with his/her questions, you can breathe again. Don't exhale yet. It's your turn to ask the questions. What, no questions? If you don't have any questions, the interviewer will likely be left with these impressions of you:
- You're not really interested in the position or the organization.
- You're so lazy you couldn't be bothered to put any thought into it.
- You're so desperate you'll go anywhere.
- This is another opportunity to 'sell' yourself. Prepare a few questions ahead of time. Always be positive. Questions asked should focus on gaining more information about the job, such as who held the position prior, or how many people report to the boss?
- What projects will I be involved with in the first few months?
- How does your company stand apart from its competition?
- How do you see the future of this industry?
- I noticed in your annual report that your firm has made several acquisitions. Will this aggressive business stance continue?
And last but certainly not least: Good luck and don't forget to send a thank you note.