Step 1: Take a pre-licensing course
Cost: $200 to $300
States require people to take pre-licensing training from a certified institution before they can sit for the real estate licensing exam. The required number of training hours can vary significantly by jurisdiction: In Virginia, for example, real estate agents must take 60 hours of pre-licensing training, but in California, they need to take 135 hours.
The course will teach you real estate principles (terms like “lien,” “escrow,” and “encumbrance”), real estate practices (like how to determine a property’s value), and the legal aspects of the business. Go to your state real estate commission’s website to find information on licensing requirements and a list of accredited pre-licensing institutions.
Pre-licensing courses can be taken in person or online, so consider your learning habits before deciding where to enroll. (Some people focus better in a classroom setting, Wayne points out.)
Step 2: Take the licensing exam
Cost: $100 to $300
Revisit your state real estate commission’s website for instructions on how to sign up to take the licensing exam. (Most states outsource the administration of the exams to third-party testing centers.) Exams are typically divided into two portions: one on federal real estate laws and general real estate principles, the second on state-specific laws. Both typically consist of 60 to 100 multiple-choice questions, including math questions that require you to use a calculator (e.g., prorating taxes for a specific property). Most pre-licensing courses provide students with sample tests, and many real estate commissions publish sample questions online.
So what are the odds you’ll pass? In some states like Florida, 50% fail the first time. The bright side is you can usually take the exam as often as you want over a two-year period. But once two years elapse, applicants are required to retake the pre-licensing course.
Step 3: Get your real estate ducks in a row
Pass the test? Congratulations! Here’s what you need to do next to start engaging with clients:
- Activate your license through your state real estate commission’s website. Activation fees vary but typically cost around $200 to $400.
- Pay for membership to the local multiple listing service. Membership in your local MLS is essential, since you must use the system to list properties, which are then dispersed to websites like realtor.com®. The service also enables you to easily pull a property’s tax information, analyze market trends, and see listings before they go on the market. Costs vary greatly: Membership for Maryland, Virginia, and Washington, DC, agents to the Metropolitan Regional Information Systems, for example, costs $1,136 per year; while on the low end are areas like California’s Southwest Riverside County, which charges MLS dues of $220 per year.
Step 4: Consider becoming a Realtor®
In order to become a full-fledged Realtor®—a licensed agent with the ability to use that widely respected title—you need to be a member of the National Association of Realtors®. No exceptions. So what’s the advantage?
Membership in the NAR offers a number of benefits, including access to real estate market data, discounts on education courses, and transaction management services. And being able to use Realtor on your business card and your marketing materials also adds credibility.
Step 5: Join a brokerage
In order to become a real estate agent and legally practice real estate, you must work under a supervising broker. Brokers are licensed by the state to oversee real estate transactions and ensure that real estate salespeople (that’s you!) are adhering to the required legal and ethical standards.Think of it as a similar safeguard to how stockbrokers must work at a licensed firm to trade stocks, rather than just winging it on their own. Eventually, you could also apply for a license to become a real estate broker as well, but you will first want to get a few years as an agent under your belt.
Don’t expect to waltz in and collect an hourly salary: Most brokerages pay their agents only by commission. In other words, you get paid only when you complete a transaction, and you typically won’t receive benefits. Due to this pay structure, brokerages are typically eager to welcome new agents, since it comes at no cost to the company. So be sure to find a brokerage you like, one that is open to taking you on so you can receive some on-the-job training.