So, you've decided to become a real estate agent? Congratulations! It's time to get to work. There were more than 1.46 million realtors 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.

The process, qualifications, cost, and timeline for becoming an agent differ from state to state, so it's important to understand exactly what it takes to begin this exciting career. In this article, we’ll walk you through everything you should expect along the way. Let’s get ready to start selling real estate.

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Real Estate License FAQ

1. How much do real estate agents make?

According to the U.S. Bureau of Labor Statistics, Real Estate Agents earned an average of $83,886.

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?

The cost of a real estate license can vary depending on where you take your required education course, which can cost anywhere from $300 to $1,000. Additionally, your real estate license application, fingerprinting, and background check, and state licensing exam fees will usually run you between $100-$200, so you should budget for $500-$1,200 total.

4. Can I get a real estate license online?

Yes, some states have online courses for completing your prerequisites. However, most states require the exam to be completed in person through a third-party exam provider.

5. Where do I take the real estate license exam?

Depending on your state, there will be designated cities and testing centers where you can take the real estate license exam. Once you apply to take the exam, your local real estate commission will provide you with those details.

6. What’s the difference between a real estate agent and a realtor?

A real estate agent is a licensed real estate sales professional who is recognized by the state in which they work. AREALTOR® is a trademarked term used to describe a licensed real estate agent who has been accepted into the National Association of Realtors. Only those who are members of the NAR can be considered realtors.

How To Get a Real Estate License

1. Research your state’s licensing and education requirements.

First, get your bearings. The requirements for pre-licensing courses and licensing applications are different in every state. Check with your real estate commission to understand what's required to obtain your license.

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

Classes are available in person and online, but your courses and school must be approved by your state's real estate licensing authority. Before you pay for a real estate school, make sure it's accredited and acknowledged by your state.

Real Estate License Reciprocity

If you're already a licensed real estate agent who’s moving across state lines, see if your 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. 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, Idaho has reciprocity agreements with Wyoming, Oregon, and Montana. 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. You are, however, required to take state-specific portions of the exam in Wyoming, Oregon, and Montana.

Other parts of the country have reciprocity agreements in place as well — read this guide to learn more about these agreements if you're interested in taking your real estate license across state lines.

Your pre-licensing requirements might also be less if you have a degree in real estate or if you’re a licensed attorney.

2. Complete the education requirements.

Becoming a real estate agent requires time and financial investment. That means you’ll want to understand what resources you'll need to budget before you begin.

For example, some pre-licensing schools meet for a set number of classes over several weeks, while others allow you to move through courses at your own pace. Know what your options are, and choose the one that's right for your lifestyle and schedule. Likewise, the cost of pre-licensing courses vary per school and state, but you can expect to pay between $200 and $1000 for your courses. Here’s a quick guide to the number of hours each state requires for prerequisite education for a real estate license:

State

hours

Alabama

60

Alaska

40

Arizona

90

Arkansas

60

California

135

Colorado

168

Connecticut

60

Delaware

99

District of Columbia

60

Florida

63

Georgia

75

Hawaii

60

Idaho

90

Illinois

15

Indiana

90

Iowa

60

Kansas

30

Kentucky

96

Louisiana

90

Maine

55

Maryland

60

Massachusetts

40

Michigan

90

Minnesota

90

Mississippi

60

Missouri

48

Montana

70

Nebraska

60

Nevada

64

New Hampshire

40

New Jersey

75

New Mexico

90

New York

75

North Carolina

75

North Dakota

45

Ohio

120

Oklahoma

90

Oregon

150

Pennsylvania

75

Rhode Island

45

South Carolina

60

South Dakota

116

Tennessee

60

Texas

180

Utah

120

Vermont

40

Virginia

60

Washington

90

West Virginia

90

Wisconsin

72

Wyoming

54

3. Apply for the real estate licensing exam in your state.

Once you feel comfortable with the information you’ve learned in your real estate courses, it’s time 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. This can speed up the time it takes you to earn your license because you can complete your credit hours while waiting for your exam application to be approved.

Note: Don’t confuse this step with applying for your license — you’ll do that after you pass the real estate licensing exam.

4. Pass your state licensing exam.

Sounds easy enough, right? There’s a reason each state requires education before you can sit for the real estate license exam. By ensuring that you’re adequately prepared for the exam, your chances of passing are much higher than if you guessed your way through the test.

The test will include approximately 100 multiple choice questions and cover national and state principles and laws. While the minimum score for passing differs per state, many require a minimum of a 70% score to earn your license. The licensing exam will take between 1.5 and 3.5 hours to complete. Be prepared to pay an exam fee between $15 and $100.

Make sure you obtain an official real estate transcript or certification of completion from your school and a copy of your exam score to include in your real estate license application — which brings us to our next step...

5. Apply for your real estate license.

Once you've successfully passed the exam, you’ll need to submit your test results, license application, and application fees. License application fees will cost between $50 and $250, and you might be required to undergo a background check which will cost between $40 and $100.

Check your state's real estate commission to find out whether you need to have Errors and Omissions (E&O) insurance before you apply. E&O insurance protects real estate agents from financial losses and lawsuits filed as a result of their real estate work. Sometimes, your brokerage will sell you E&O insurance. If not, you might be required to obtain it before you submit your application.

In every state, you must be at least 18 years old and have either a GED or high school diploma to apply for a real estate license. Also, you should be authorized to work in the United States, and many states require you to be an in-state resident.

Once you've submitted your application, your license will take between one week and two months to process.

6. Find a real estate brokerage.

You have your license. Great! But that might not mean you can start selling houses right away. Most states require you to work with a real estate broker who sponsors your first two to three years as an agent.

A real estate brokerage is simply an agency or office where real estate agents work. Because you'll likely need a brokerage to generate income, it's a good idea to find a broker before graduating from your training course. 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 provide structured training, instant name recognition, and more resources for new agents.

2. Boutique-Style Brokerages

Smaller or local brokerages may provide personalized training and more room for growth and advancement.

3. Virtual Brokerages

SaaS — or Software as a Service — has ushered in a new type of real estate brokerage that's entirely online. Benefits of working with a virtual brokerage include higher commission splits (more on that below), lower desk fees (desk rent you pay to your brokerage), and better technology.

Company Culture

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

You get 50% of the commission and your brokerage gets the other half. These plans are usually accompanied by low or no desk fees.

2. High-Split Plans

You get a higher percentage of the commission — anywhere from 70% to 100% — but these commission plans are usually accompanied by high monthly desk fees.

3. Hybrid Plans

These plans combine attributes of the two plans listed above. Hybrid plans usually offer agents a 70% split at the beginning of the year and increase that rate to 100% when agents meet certain monetary goals.

Additionally, some larger franchises charge "franchise fees" ranging from 5% to 8%. Ask potential employers whether additional fees are taken out of your commission, so you understand exactly what you're signing up for.

7. Join the National Association of Realtors (NAR).

You've earned your license and found a sponsoring brokerage, so you're a realtor, right? Still (kind of) wrong. While not legally necessary, you must join the National Association of Realtors (NAR) to call yourself a REALTOR®.

This designation is also required if you wish to participate in most Multiple Listing Services — also known as MLS — which allow you to see other realtor's listings.

If you aren't a member of NAR, you claim the title of real estate agent and are legally able to work in the field, but your earning potential is limited without access to the MLS.

8. Renew your license regularly.

Getting your real estate license is a lot of work, so don't forget to renew it. Check your state's requirements to see when your license will expire. This is usually every two or four years.

Many states require agents to complete a set number of course hours to be eligible for renewal — between 8 and 90 course hours every few years. These additional courses ensure you're up to date on the evolving national and state markets and regulations.

Check with your state's licensing office to learn their renewal requirements so you're not scrambling to fit 90 hours of coursework into the four days before your license expires.

Your Real Estate License Is At Your Fingertips

Becoming a real estate agent is a big decision requiring time, attention, and dedication. But the result is almost unlimited earning potential and the possibility of someday being your own boss — two things that make many salespeople tick. Realtor Alicia Turner offers this advice to new agents, "Success doesn't happen overnight, so stay committed and consistent — it'll definitely pay off!" Sound like something you're interested in? Get started today.

This article does not constitute legal advice. The steps required to obtain a real estate license may differ from state to state, so you should seek your own legal advice to ensure you follow the correct process.

Editor's note: This post was originally published in December 2018 and has been updated for comprehensiveness.

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Originally published Sep 13, 2021 4:45:00 PM, updated September 13 2021

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