11.28.2022 PropStream
After working as an agent for several years, you may consider taking the next step: becoming a licensed real estate broker.
But where do you start? What does it take to get your license? Do different states have different requirements?
If these questions sound familiar, you’ve come to the right place. This guide will take you step by step through what you need to do to get your license and become a broker. But first, let’s explore why you might want to start your own brokerage in the first place.
Table of Contents
Why Become a Real Estate Broker?
7 Steps for Getting Your Real Estate Broker License
- Learn the Responsibilities of a Broker
- Research Broker Requirements for Your State
- Complete an Approved Real Estate Broker Course
- Find a Reliable Business Insurance
- Pass Your Broker Exam
- Apply for Your Broker License
- Renew Your License as Needed and Continue Your Education
Why Become a Real Estate Broker?
As an agent, there are several advantages to becoming a broker.
For starters, you may look forward to no longer paying a commission on every sale. Commission splits can range from 50/50 to 70/30 depending on the brokerage and, sometimes, an agent’s experience or sales volume.
As a result, brokers have the potential to earn more than the typical agent. The average annual salary for a real estate broker is $90,930 compared to $65,850 for agents.
Keep in mind, though, that earnings can vary widely among brokers. Salaries range from $36,360 (10th percentile) to $173,000 (90th percentile). Your earning potential as a broker may depend on whether you’re a solo agent-broker, employ other agents, or own a large brokerage with many agents and other employees.
Another advantage to being a broker is having a higher professional status among your clients. And since you don’t have to answer to another broker, you have more control over your business decisions and strategies.
Lastly, getting your broker license can open doors to more specialized niches and clientele if you want to expand your range of services.
7 Steps for Getting Your Real Estate Broker License
Now that you know the benefits of being a licensed broker, let’s explore how to get there.
1. Learn the Responsibilities of a Broker
As an agent, your broker may help you generate leads and market.
However, as a broker, you don’t have that luxury. Instead, you’re in charge of your own marketing plan, branding, materials, and lead generation.
Brokers also have additional responsibilities, such as supervising agents, negotiating deals, handling complex transactions, and ensuring all deals and documentation are legal. Brokers are also responsible for transferring money to and from escrow accounts (something agents are not legally allowed to do) and ensuring that all funds are properly recorded.
2. Research Broker Requirements for Your State
All states require you to:
- Be at least 18 years old
- Have at least a high school diploma or GED
- Complete an approved real estate broker course
- Pass a broker exam
Some states also require you to pass a background check or get fingerprinted. Most require several years of experience, which you may have already fulfilled as an agent. The required years of experience, as does the required number of coursework hours, vary by state.
A quick Google search is usually all it takes to find your state’s specific broker requirements.
Pro Tip: Ensure you get your information regarding local broker requirements from an official state government website.
3. Complete an Approved Real Estate Broker Course
You may be exempt from this requirement if you already have a four-year undergraduate degree in real estate.
But if not, you’ll need to find a coursework provider approved by your state. Try typing “Real estate broker courses approved by (insert your state)” into Google.
In many states, you have two years to get your license after completing your coursework. You may need to do the coursework again if you don’t get it within the specified timeframe.
4. Find a Reliable Business Insurance
Not all states require you to get professional liability insurance—but your clients might expect you to have it.
Either way, it may be a good idea to start shopping for insurance as soon as possible. You can contact a local business insurance agent or look into online providers.
5. Pass Your Broker Exam
Before getting your license, you’ll need to pass a final exam. To set yourself up for success, use study materials and practice tests. You can generally get these materials from your approved course provider.
Often, states charge a fee to schedule your licensing exam. If you fail the exam, you can usually retake it as many times as necessary. However, be prepared to pay a fee each time.
6. Apply for Your Broker License
Many states allow you to apply for the exam and license simultaneously, while others require an extra step.
Whichever method your state uses, you’ll likely need to pay application fees and provide documentation, such as:
- Proof that you completed the required coursework
- Certification of license history
- Proof of insurance (in states that require it)
7. Renew Your License as Needed and Continue Your Education
Depending on your state's requirements, you’ll typically need to renew your broker license every two to four years (in some states, the first renewal period is shorter). Most states also require additional approved coursework to maintain your broker license.
Beyond state requirements, continuing your real estate education can help you expand your business and real estate knowledge and build a lucrative niche. It’s worthwhile to explore additional courses and certifications in your area of specialty.
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Frequently Asked Questions (FAQs)
What are the requirements for becoming a real estate broker?
You need to be at least 18 years old, have completed high school, have a certain number of years of experience, take a state-approved real estate training course, pass a final exam, and, in some cases, complete a background check. You may also need to get professional liability insurance. Depending on your state, you must renew your broker license every two to four years.
How long does it take to get a broker license?
Required hours for broker education vary by state and can range from around 70 to 120 hours or more. You should also account for hours spent studying, scheduling and taking the exam, and preparing any required documentation. Depending on your state and your availability to do coursework, getting your broker license can take a few weeks to several months.
What’s the difference between a real estate agent and a broker?
Like agents, real estate brokers help people buy, sell, or rent properties—but they have more training and licensing than agents do. They oversee all their agents’ transactions and ensure they are performed legally and ethically, all money is properly transferred to and from escrow accounts, and all documentation is accurate. Agents who don’t have a broker license must work under a broker and generally pay them a commission on each transaction.
How much does it cost to get your real estate broker license?
There are several costs involved in getting your broker license. You’ll need to purchase a state-approved course and may need to pay a third-party vendor to run your background check or take your fingerprints. You’ll also pay state fees to schedule your exam and submit your broker license application. Altogether, these fees can amount to several hundred dollars or more.
How long does an agent need to work under a real estate broker?
Experience requirements vary for brokers by state. But generally, you’ll need to work as an agent for about two years before getting your broker license.
