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How to Get a Real Estate License

You need a license to sell real estate. Is it also worth it to get one as an investor?

[Updated: Feb 04, 2021 ] Jun 28, 2020 by Barbara Zito
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Buying or selling a home can be a complicated process. That's why the National Association of Realtors reports that 89% of real estate transactions are done with the help of one of the more than two million real estate agents in the country. Many entrepreneurial-minded people become real estate professionals because they can set their own schedule and -- with enough hard work -- make a lot of money helping people purchase their dream homes.

If you've ever thought of becoming a real estate agent, whether as a primary career or as a way to arm yourself with industry knowledge as a property investor, here's how to get a real estate license.

What does it take to become a real estate agent?

To become a real estate agent, you are required to take classes and pass an exam. Each state has its own rules and regulations, so the exact path to licensure will differ depending on where you live. Be sure to check in with your home state's board of real estate agents as well as the board of any state in which you plan to sell properties.

The good news is that many states do offer some sort of reciprocity, meaning that if you are licensed in one state, you might not have to do too much extra work to become licensed in another. This is very helpful for agents who live near the border of their state and are looking at opportunities in an adjacent state.

While some agents prefer to concentrate on listings in their own community, others may wish to expand their horizons -- and their annual salary potential -- by reaching out to homebuyers and sellers in other areas.

Get schooled in real estate

The first step toward licensure is to enroll in a course. Each state requires that a certain number of hours of classroom education be completed, either online or onsite at a local college or real estate school. The tuition will likely vary depending on where you enroll.

While there are associate's- and bachelor's-level degree programs you can enroll in, you only need a license to sell real estate. Unlike degrees that take years to complete, you can likely finish your real estate pre-licensure education within about six months, or even fewer if you opt to learn online.

The number of classroom hours that you must complete will vary greatly depending on the state. Some states require around 40 hours while others require more than 150. Keep in mind that this is just the pre-licensure part -- once you have your license, you will need to take continuing education classes in the future to stay active as a licensed agent.

What do you learn in real estate school?

This is a pre-licensure course, so it will start with the very basics. This includes how to determine a property's value, how to list properties, and how to manage multiple listings once you start building your clientele. You will also learn about real estate transactions from start to finish, including escrow and property taxes.

Additionally, you will come to understand the laws and ethics in real estate, including the Fair Housing Act, which protects buyers and renters from discrimination. In some states, if you have graduated from law school, you may be able to skip some of the pre-licensing education. However, you will still need to pass the state exam in order to earn your license.

The exam and application process

After you complete all of the required classroom hours for your real estate education, you can sit for the multiple-choice exam. The exam tests your knowledge in two areas: national real estate laws and those that affect your home state. You must pass both parts of the real estate exam to earn your license. If you don't pass on the first try, you can take it again -- just check the state's rules on how long you must wait before you can retake it.

Once you pass, you must submit a license application fee and any other required documentation to your state's real estate agency. Upon approval, you will be mailed your real estate license. Only when you have your salesperson license will you be able to work as an agent.

Launch your career as a real estate professional

To begin your real estate career, you must work under a real estate broker at a firm. The National Association of Realtors reports that there are more than 105,000 brokerage firms in the United States. Brokers are experienced real estate agents with an additional license allowing them to sell property on their own. This means that they can work as an independent agent or build a firm with a team of agents below them. Sponsoring brokers often serve as mentors to many real estate agents early on in their careers. If you have aspirations of getting a broker license, you must get a few years of selling under your belt first.

While your sponsoring broker will in essence be your boss, it's not the same situation as other employment opportunities. First of all, instead of a salary, you earn commission based on your sold listings (the brokerage takes a percentage of your commission). And secondly, in some instances, the agent might be required to pay a share of the desk fees (you're basically renting desk space at the brokerage) and other business expenses, like business cards.

Real estate agent vs. Realtor

There's a difference between a real estate agent and a Realtor -- and it's not just the capital letter. Many people think the words are synonymous with each other. In a way, that's true -- both a real estate agent and a Realtor are licensed to sell real estate. But a Realtor is a member of the National Association of Realtors (NAR).

The NAR is a professional organization that holds its dues-paying real estate agents to even higher ethical and professional standards. The NAR is also an advocate of homeownership and offers resources and data to assist real estate agents in providing knowledgeable support to their clients during every part of a real estate transaction.

While it is not necessary for a real estate professional to become a Realtor, it is a credential that shows a level of expertise and professionalism that buyers and sellers will appreciate. To become a member, a real estate agent should first connect with a local Realtor association or board -- there are more than 1,400 boards at the local and state level.

Should real estate investors also get their real estate license?

Do you need a real estate license to invest in real estate? No. Could it help your bottom line if you had one? Quite possibly.

Earning a license will give you the skills to conduct your own real estate transactions. On the buying side, you'll be able to spot good deals and avoid the bad ones. And when you sell, you'll be able to save the commission because you'll be acting as your own agent. This will be especially helpful if you're in the flipping business -- you'll get to keep more of the profit.

The bottom line

The real estate industry is a dynamic business ruled by stringent laws that vary by state. That's why buying and selling properties is such a complicated business. As a licensed real estate agent, your expertise will be valued by clients looking to buy or sell homes. As an investor, you'll better understand your own real estate transactions -- not to mention save on commission fees when you do the work yourself.

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