There are a few things you should know before becoming a realtor. You’ve decided to become a real estate agent! Congratulations! It’s time to get to work. More than 1.46 million realtors were in the U.S. as of 2020, and that number is only increasing with the housing market frenzy in 2021. Selling real estate is an attractive career for many people because of the flexibility, autonomy, and of course — pay. Realtors, on average, earn a salary close to the US average of a little more than $80k. However, there is virtually no limit to the amount of money a realtor can make. Once a real estate agent completes the licensing requirements in their state, the sky is truly the limit. There are a few things you should know before becoming a realtor.
In order to become a real estate agent, you must first understand the process, qualifications, cost, and timeline specific to your state. This article will provide you with all the information you need to get started on this exciting career path.
What is a real estate license?
A real estate license gives individuals the legal right to sell, lease, or rent real estate on behalf of a brokerage. The requirements for obtaining a real estate license vary by state.
Real Estate License FAQ
1. How much do real estate agents make?
In 2019 According to the U.S. Bureau of Labor Statistics, the average real estate agent earned $83,886 in 2019.
2. How long does it take to become a licensed real estate agent?
Depending on your state’s real estate licensing requirements, which typically include 40 – 150+ hours of formal education and studying and sitting for a licensing exam, it can take anywhere from three to six months to earn a real estate license.
3. How much does a real estate license cost?
You should budget for $500-$1,200 for a real estate license. The cost of the license depends on the education course, which can cost $300-$1,000. The license application, fingerprinting, and background check, and state licensing exam fees will usually cost $100-$200.
4. Can I get a real estate license online?
Some states allow you to complete your prerequisites online, but most states require you to take the exam in person at a third-party exam provider.
5. Where do I take the real estate license exam?
The location of the real estate license exam varies depending on the state. The exam can be taken at a designated city or testing center. The local real estate commission will provide the applicant with the details of the exam location once the application to take the exam is submitted.
6. What’s the difference between a real estate agent and a realtor?
A real estate agent is a licensed professional who is recognized by the state in which they work. A realtor is a licensed real estate agent who has been accepted into the National Association of Realtors. Only members of the NAR can be considered realtors.
How To Get a Real Estate License
1. Research your state’s licensing and education requirements.
To start, find out the specific requirements for pre-licensing courses and licensing applications in your state from your real estate commission.
Most states require:
- College-level education on real estate basics including titles, deeds, contracts, and property ownership
- Permanent residency in the state of the license application
- Minimum age of 18 years or older
- Criminal background check
You can take courses in person or online to become a real estate agent, but your school and courses must be approved by your state’s licensing authority. Make sure to do your research and only pay for an accredited school that is acknowledged by your state.
Real Estate License Reciprocity
If you have a real estate license in one state and are moving to another, check to see if the new state has a reciprocity agreement with the state where your license was issued. If a reciprocity agreement exists, you may already meet the pre-licensing requirements for the new state. This doesn’t mean you don’t need a license in your new state — but you might be able to skip a step or two in the licensing process.
For example, if you have an Idaho real estate license, you’re not required to take real estate pre-licensing courses if you’re applying for a license in one of the other three states of Wyoming, Oregon, and Montana. You are, however, required to take state-specific portions of the exam in each of those three states.
There are other areas in the country that have agreements set up so that licenses are recognized in multiple states. If you’re interested in getting your real estate license in a different state, read this guide to learn more about these agreements.
If you have a degree in real estate or are a licensed attorney, you may have fewer pre-licensing requirements.
2. Complete the education requirements.
Before becoming a real estate agent, you’ll want to understand what resources you’ll need to budget.
There are various types of pre-licensing schools available, so research your options to see which one would best fit your schedule and lifestyle. Here’s a quick guide to the number of hours each state requires for prerequisite education for a real estate license:
3. Apply for the real estate licensing exam in your state.
The next step after taking your real estate courses is to apply to take the exam. This step usually requires the payment of an application fee and registering for the test through a third party, like PSI Exams.
Many states do not require you to have completed all your required education hours before applying for the exam, which can speed up the time it takes you to earn your license.
This step is not the same as applying for your license. You will do that after you pass the real estate licensing exam.
4. Pass your state licensing exam.
It shouldn’t be too difficult, right? Each state has a law that you need to be educated before you’re allowed to take the test to get your real estate license. By making sure you’re prepared for the test, you’re more likely to pass than if you just guessed the answers.
The test will include 100 multiple choice questions on national and state principles and laws, and will take 1.5 to 3.5 hours to complete. The minimum score for passing the exam differs per state, but many require a minimum of a 70% score. The exam fee is between $15 and $100.
Before you begin the application process for your real estate license, you need to obtain an official real estate transcript or certification of completion from your school, as well as a copy of your exam score.
5. Apply for your real estate license.
After you have passed the exam, you will need to send your test results, a completed license application, and the application fee to the appropriate authority. License application fees range from $50 to $250, and you may also need to pay for a background check, which can cost between $40 and $100.
E&O insurance is insurance that protects real estate agents from financial losses and lawsuits that result from their real estate work. You might need to get this insurance from your state’s real estate commission before you apply, depending on your state’s requirements. Sometimes your brokerage will sell you E&O insurance, but if not, you may need to get it on your own.
To apply for a real estate license in any state, you must be at least 18 years old and have either a GED or high school diploma. You should also be authorized to work in the United States, and many states require you to be an in-state resident.
After you have submitted your application, your license will be processed within one to two months.
6. Find a real estate brokerage.
Although you may have received your license, this does not mean that you are able to start selling houses immediately. In most cases, states require you to work with a real estate broker who will sponsor your first two to three years as an agent.
A real estate brokerage is where real estate agents have an agency or office. Here are a few things to consider when choosing a brokerage:
The Three Types of Brokerages
The brokerage you work for determines the type and volume of work you do, the training and mentorship you receive, and the company culture you’re a part of every day. Here are three common types of brokerages:
1. National Franchises
National franchises like Keller Williams Realty, RE/MAX LLC, and Coldwell Banker offer opportunities for structured training, instant name recognition, and increased resources for new agents.
2. Boutique-Style Brokerages
Starting your career at a smaller or local brokerage has its perks. You’re more likely to receive personalized training and have more room to grow and advance within the company.
3. Virtual Brokerages
SaaS, or Software as a Service, has created a new type of real estate brokerage that is entirely online. Some of the benefits of working with a virtual brokerage include higher commission splits, lower desk fees, and better technology.
You need to like where and with whom you work, so here are a few questions to ask:
- Does the brokerage require additional courses or training?
- Do they offer a mentorship program for new agents?
- Do they require hours of “floor time” or work for other agents?
- How are leads distributed?
- Will you be required to do all your own marketing?
Three Common Types of Commission Structures
Before accepting an offer from a brokerage, make sure you understand their commission structure. Here are three common structures:
1. Traditional Split Plans
In a 50-50 split plan, you receive half of the commission while your brokerage company gets the other half. These types of plans are often associated with low or no desk fees.
2. High-Split Plans
A higher percentage of the commission is received with these plans, typically ranging from 70-100%. However, these types of commission plans usually come with high monthly desk fees.
3. Hybrid Plans
The plans listed below offer agents a 70% split at the beginning of the year with an increase to 100% when agents meet certain monetary goals.
Additionally, some larger franchises charge extra fees, which can be a percentage of your commission. Ask potential employers about any extra fees that may be taken out of your commission, so you understand exactly what you’re signing up for.
7. Join the National Association of Realtors (NAR).
In order to be called a REALTOR®, you must join the National Association of Realtors (NAR). Although it is not legally required, it is necessary in order to use the title.
If you want to be able to see other realtor’s listings, you need to have this designation.
If you want to earn money as a real estate agent, you need to join the National Association of Realtors. Without access to the MLS, your earning potential is limited.
8. Renew your license regularly.
Don’t forget to renew your real estate license every two or four years, depending on your state’s requirements.
Many states require agents to complete a set number of course hours to be eligible for renewal. The required number of hours ranges from 8 to 90 course hours every few years. The purpose of these additional courses is to make sure agents are up to date on the evolving national and state markets and regulations.
It is important to check with your state’s licensing office to learn about their renewal requirements so that you have enough time to complete the required coursework.
Your Real Estate License Is At Your Fingertips
If you are considering becoming a real estate agent, know that it is a big decision that will require time and dedication. However, the potential earnings are almost unlimited and you could someday be your own boss– two appealing factors for many salespeople. Alicia Turner, a successful realtor, advises new agents to remain committed and consistent, stressing that success does not happen overnight. Is this something you are interested in? Get started today.