Licensure Exams

Unlike some careers, real estate jobs are regulated by the states. All 50 states and the District of Columbia license real estate professionals. As a part of the licensing process, salespeople, brokers, and appraisers must take licensure exams. These exams guarantee that an individual has the necessary knowledge to help buyers and sellers move legally through the process of buying and selling real estate. Each exam is unique. Some states allow reciprocity with other states, meaning that they will accept a passing grade on a licensure exam from another state. Information about the exam can usually be found through a given state’s department of real estate. Some states also license other real estate professionals such as property managers and mortgage loan originators.

The exams are administered in either paper and pencil or electronic format. Real estate sales license exams tends to be a little shorter than other real estate license exams. People usually work as real estate salespeople before they become brokers, so brokers must have more knowledge than salespeople. States have different cutoff marks for failure. Some, for example, require salespeople to get a 70 percent while requiring brokers to get 75 percent. Applicants who wish to take an exam must meet all other criteria before they apply. These might include work experience, specific coursework in real estate, and state residency. Most states allow students multiple efforts at passing the exams.

Real Estate Sales License Exam

All 50 states require real estate salespeople to take a licensing exam. Each state differs in its requirements for the exam and the exam itself. Becoming a real estate professional means overcoming this hurdle. Holders of real estate degrees will find their education helps them pass the exam.

Some states offer reciprocity to licensees of neighboring states, meaning they will allow salespeople to work in their state with the license of another state. Most require that other licensure requirements have already been met. These may include specific coursework, work experience, and proof of residency. A fee is also mandatory, but is usually less than $100. Exams are offered often in large cities, but candidates from smaller towns and cities might need to travel to an exam center.

The real estate sales license exam in almost every state requires students to answer 70 percent of the questions on the test correctly to pass. Score reports are usually in the form of pass or fail instead of a numerical score. The exam can be taken multiple times. It typically lasts more than three hours.

The questions come in multiple-choice format. The exam covers the technical vocabulary that real estate salespeople use in their work. Terms such as escrow, emblements, and fiduciary are tested. In addition, questions about the business side of real estate sales appear on the tests. Test takers will be asked to calculate the commission on a particular property or the lifetime liability of a 30-year loan with a fixed interest rate of five percent. Questions test knowledge of mandated disclosures, valuation of property, and the rules of transfer of property. Finally, the rights and obligations of a salesperson in the state are covered.

Many states publish their pre- licensing curriculum online. This is often published in the form of a reference book that can be printed out or borrowed from a library. Practice tests are also available from private companies that are approved by the state’s department of real estate. Courses are available at community colleges and online. The average real estate license exam course lasts around two weeks. Students should begin preparing for the exam at least a month in advance, especially if they hope to take a course to improve their chances of success. Knowledge of the exam material is highly correlated with passing. Take the time to familiarize yourself with the materials your department of real estate provides.

Real Estate Brokerage License Exam

States feel it necessary to license brokers who handle real property. Although every state has a slightly different licensing process, many of the components are the same or similar. Some states recognize this by giving neighboring states reciprocity in licensure, allowing license holders from one state to practice in another. One component that is consistent is the real estate brokerage license exam. Every state has a multiple-choice test that brokers must pass to get their license. Each state’s test is unique because the tests include state-specific questions, but in each state the format is very consistent.

The first place to look for information about a state’s brokerage license exam is on the website of the state’s department of real estate or real estate commission. These departments have reference publications and outlines of test content, and some have sample questions and tests. Becoming familiar with the material on the test is the quickest road to success on the exam. Many states offer links to courses and practice tests, mostly provided by for-profit companies approved by the state.

The broker’s exam is just one in a list of criteria that must be met to obtain a license. It is usually the last hurdle candidates must pass to get their license and start practicing in the state. These obligations can include work experience, college-level coursework in real estate, and residency requirements. The exam itself must be signed up for in advance and requires a modest fee.

The broker’s exam is longer and more comprehensive than the real estate sales license exam. This makes sense because the job description of a broker is more detailed than that of a salesperson. Exams usually follow a state-approved curriculum available from the department of real estate. Topics include property regulations, financing, valuation of property and markets, mandated disclosures, and contracts. This is a multiple-choice exam that takes upwards of five hours. Questions cover important vocabulary that appears on contracts. The exam also asks mathematical questions about financing a home. For example, a question might ask you to figure out the cost of an interest-only payment of a certain loan of a certain interest rate.

Candidates must answer more than 75 percent of the brokerage exam questions correctly (in some localities, only a 70 percent is required). Failure is not the end of the process, however, as candidates may retake the exam multiple times. Failing once can just mean a delay in earning a license. Test takers should allow several weeks or months for study, depending on their competence and level of test anxiety. Holders of real estate degrees will have an added advantage, as much of the material on the test will have been covered and tested during the course of their education.

Real Estate Appraisal License Exam

Like brokers and salespeople, real estate appraisers are licensed by state governments. This ensures that they provide clients with quality work and that other stakeholders in the process can trust and rely upon the work they do. Appraisers must meet a number of criteria before they become licensed. They must work in the industry for a number of years under the tutelage of an experienced professional. They must complete a certain amount of coursework in their field. Finally, they must pass a real estate appraisal license exam.

Appraiser licensing exams tend to be standardized from state to state.

States have adopted a National Uniform Licensing and Certification Examination. This means that the state outsources the administration of the exam to a private foundation authorized by Congress, called the Appraisal Foundation. The good news is that test takers can take a single test and it will be accepted in most states as an official score.

The new exam is designed to test an appraiser’s ability to apply knowledge to real world situations. Whereas the previous exam asked questions that required only rote memorization, the new exam gives examinees a hypothetical apartment building and includes many details concerning the number of units, age, rental income, size, vacancy rates, maintenance costs, and the like. Many questions follow requiring the candidate to break down the different costs and income the apartment generates. One question might ask for the net monthly income of the whole building, for example. Many of the questions are mathematical in nature, although some still test candidates’ knowledge of jargon and terminology appropriate to their job. All of the questions are multiple-choice.

Materials that outline the curriculum followed on the exam are available at the Appraisal Foundation’s website. There are 14 broad categories of knowledge covered, ranging from influences on real estate value and site value to legal considerations and market analysis. Some questions concern the ethics of appraisal and an appraiser’s legal and disclosure responsibilities. Real estate courses help candidates understand these issues. Obtaining a real estate degree would be a great help for prospective appraisers wishing to pass the license exam. Specific appraisal approaches are tested, such as the cost approach and the income approach. A score of 75 is required to pass the exam. Failure does not mean the candidate will be unable ever to obtain a license. The exam may be taken multiple times and merely requires an application fee be paid for each attempt.