Requirements for Real Estate Licenses
Every state in the union, the District of Columbia, and United States territories require their real estate professionals to acquire and maintain licenses as long as they practice in their localities. Some states allow reciprocity with neighboring states while others require licensure within their state. Some places have a department of real estate while others have a real estate commission, but the specific requirements are easy to find. Although they vary from locale to locale, many of their basic requirements are similar. Governments license salespeople, brokers, and appraisers separately, and requirements vary for each kind of license.
- First, licensees must be at least 18 years of age. This is a common sense requirement, as most states have prohibitions of full-time employment for minors. There are also minimum education requirements for licensees. At minimum, applicants for real estate licenses must have completed high school or attained graduation equivalency through GED tests. This can be accomplished by students 18 and over who for some reason are unable to graduate from a traditional high school. In addition, applicants must have completed pre-licensing classroom hours in a state-accredited real estate school. Brokers have separate but similar requirements.
- One of the universal requirements of licensure is an exam. There are separate exams for salespeople, brokers, loan originators, and appraisers. Many of the tests have questions about regulations and rules specific to the locality. Others test a candidate’s knowledge of specific real estate terminology. There are a good many mathematical questions about loans and interest using hypothetical scenarios, along these lines: “If a buyer acquires a 30-year fixed-rate loan of $200,000 with an interest rate of 5%, how much will the buyer pay over the life of the loan?” Most tests use a multiple-choice format. Real estate degree holders have a definite advantage during this part of the licensure process, as they will have studied just these kinds of topics during their courses. There are practice tests and test preparation classes available to help applicants achieve the minimum required score of 70 for salespeople and 75 for brokers. The exams for appraisers and loan originators are similar, but have specific questions geared towards their job descriptions.
- In addition to these prerequisites, applicants must complete the licensing application and submit any required licensing fees. The application is several pages in length, depending on the state. Fees vary as well, but usually include the following: a fee for the exam, which is usually between $50 and $100; a reexamination fee if you fail; a license fee that is often coupled with administrative costs (such as the cost of fingerprinting), which can be upwards of $300.
Once real estate professionals acquire a license they must keep up to date with changes in the industry.
Many states require licensees to complete post-licensing classroom hours within a specified period of time. This can be shortly after their license is granted. Coursework can also be required to renew a license, which must be done on a regular basis. Many states ask applicants to complete a certain amount of work hours in the industry, working with licensed individuals. Many states waive some of these requirements for graduates of real estate degree programs. Strict licensing guidelines protect buyers and sellers and ensure that real estate professionals continue to understand the regulatory framework they must work within.