Industry experience, coursework, and passing grades on the licensing exam are just a few real estate broker requirements. However, becoming a broker allows you to do more than connect buyers and sellers, making it a good option for those ready to take the next step in their career.
Here are the requirements to be a real estate broker:
1. Experience as a Real Estate Agent
The first step in becoming a real estate broker is to work in the industry as a real estate agent. Brokers are legally responsible for the actions of agents working under them so they not only need real-world experience, but they also need specific knowledge of real estate law. Additionally, brokers oversee every contract that goes through their agency and must ensure each agent is following the industry code of ethics and state and federal laws.
Due to these extensive responsibilities, most states require agents to work in the field for at least two of the last five years before becoming a broker. Keep in mind, however, that some states will also accept military training as an alternative to experience as an active licensed agent. Check with your state’s real estate licensing board to determine the most up-to-date experience requirements.
Some states also have reciprocity agreements with other state licensing boards, which enable brokers licensed in one state to practice in another. States with such agreements include Alabama, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Massachusetts, Mississippi, Nebraska, New York, Ohio, Oklahoma, and Rhode Island. Keep in mind, however, that official documentation is required to obtain a reciprocal license.
“The most difficult thing about the process of becoming a real estate broker is the amount of time it takes to become eligible and to complete the requisite broker courses once you qualify to become a broker. Many states have a waiting period of two to three years of being an agent before you are eligible to sit for the broker’s test. Other states mandate a minimum number of transactions that must be completed before becoming eligible.”
—Keith Lucas, Broker/Realtor, Charleston Real Estate Company
2. Clean Background Check
In addition to having relevant work experience, aspiring brokers are expected to undergo a background check as part of their application. This involves state, county, and federal criminal checks along with sex offender registry searches, driving history checks, and other reference checks. Some states also require fingerprinting.
These background checks are required because brokers—and any agents working under them—are often given access to client’s homes and may occasionally drive buyers around to look at houses. Background checks give state licensing entities reassurance that those who obtain their broker’s license will not present a danger to other citizens in the community. For these reasons, aspiring brokers should also be prepared to conduct regular background checks on any agents they hire.
“Being a broker comes with the burden of being legally responsible for the actions of your agents and emotionally responsible for their success. And if you open your own office, you have all of the duties of a business owner from managing employees to making sure the trash is taken out. Your role will change drastically from agent to manager when you become the broker. There is no reward without risk.”
—Janis Benstock, Broker/Owner, Settle Down Philadelphia
3. Pre-Licensing Course Certification
Specific pre-licensing requirements vary from state to state. For example, in Florida, potential brokers complete 72 hours of courses before taking the state broker exam. Once that process is completed, the newly-licensed brokers must be ready to enroll in 60 additional hours of post-licensure classes between 18 and 24 months after passing the broker exam. The state of North Carolina, on the other hand, requires 75 hours of pre-licensing instruction.
Although broker courses may sound similar to those required to become a real estate agent, the classes are more in-depth. For example, real estate agents learn about real estate law, while potential brokers learn about how the operation of a real estate brokerage is regulated. Aspiring brokers also learn more about investments, property management, and real estate development than required for agents.
Once an agent decides to take the first step to become a broker, he or she needs to find a state-approved real estate school that offers pre-licensing broker courses. Generally, there are three types of schools a real estate agent can choose from to fulfill the pre-licensing course requirements—online, live online, and in-person courses—each with its own pros and cons.
To better understand the specific education requirements to become a real estate broker in your area, search for the state’s real estate licensing board. These requirements change periodically, so it’s a good idea to obtain your information directly from official government websites.
4. Notice of Examination Eligibility
Once an agent completes their state’s pre-licensing course requirements, the real estate school will submit proof of course completion to the state licensing agency. Only then can the real estate agent apply or petition their state licensing board to become a broker. Aspiring brokers must then wait to receive confirmation of eligibility before they can sign up to take the licensing exam. Application forms can be found online and most states require some form of fee for processing, which can cost anywhere from $30 to $300.
Before becoming eligible to take the state broker licensing exam, some states impose additional eligibility requirements like specific hands-on experience that must be submitted as part of the application process, rather than simply accepting years of experience. Agents in New York, for example, must earn 3,500 points for real estate transactions or 5,250 points of general real estate practice. New York, like many other states, also requires agents to make an online reservation to take the state exam.
5. Passing Score on the State’s Broker Exam
After meeting education and experience requirements, aspiring brokers must register for and pass a state broker’s exam and should be prepared to show at least two forms of ID. Most exams are multiple-choice and the tests last, on average, between two and a half to five hours. The passing grade varies from state to state, but most states require that brokers pass with at least 70%.
However, passing the test is not easy. This is, in part, because agents can’t immediately take the exam following completion of their pre-licensing coursework. Instead, it can take several days to weeks before an agent is declared eligible to schedule the exam depending on the state licensing board. This, combined with the time required to earn relevant work experience can make it difficult to retain information needed to pass the exam.
For this reason, when picking a real estate school, consider choosing one that offers test prep materials such as flashcards or practice tests to help you refresh your memory ahead of exam day. In-person real estate schools sometimes host study sessions as well.
6. Completion of Continuing Education Courses
Once licensed, real estate agents and brokers are required to take continuing education courses on a set, state-specific renewal schedule. In general, broker renewal courses differ from agent courses and cover subjects like management, supervision, fiduciary responsibilities in running a brokerage, consumer service and protection issues, and risk management.
In some states, such as California and Florida, the number of course hours for a first-time renewal is higher than the number of hours for subsequent renewals. For subsequent renewals, the required number of courses varies among the states. Texas brokers, for example, must take 18 hours of continuing education courses within two years of receipt of their license.
7. A Comprehensive Business Plan
Real estate industry experience and a passing exam score can help you achieve your broker’s license, but aspiring brokers need business acumen and a goal-driven attitude to truly succeed in the real estate profession. Establishing a business plan and determining whether you want to run a multi-agent firm or act as a solopreneur are good first steps toward operating a successful broker business.
Formalizing a business plan while you work on obtaining your broker’s license will help you identify your objectives, cash flow requirements, and overall operating structure. Depending on your goals and what you want to get out of your business, creating a business plan may help you decide whether it makes more sense to remain a solo owner, rather than the head of a team.
“The No. 1 challenge for any real estate broker is making sure you’re delivering value for your agents. If you are simply a place for an agent to hang their license, your agents are eventually going to leave and/or they will demand higher splits. A broker can deliver value in a lot of different ways. Whatever the broker is focusing on, they should make sure they advertise it to agents as they sign on.”
—James McGrath, Licensed Real Estate Broker, Yoreveo
Brokers take on more risk than agents, but that can mean additional reward. For example, according to ZipRecruiter, real estate agents in the US make an average of $81,237 per year while a real estate broker makes $94,898. However, those that do decide to take on additional agents should make sure they aren’t the only one benefiting from the relationship.
“The biggest negative of being the owner broker is the hassle. You are on the hook for paying commissions, solving the errors of other agents who are not as effective at managing transactions and clients, and have liability for the actions of others—your agents. It’s better to work for 95% split on your own as an agent somewhere or sole owner unless you really relish the manager role of building a brokerage!”
—Jay Seville, Owner, Just New Listings Realty
Example Requirements to Be a Real Estate Broker by State
Pre-Licensing Course Hours
Passing Exam Grade
70% of 200 questions
75% of 100 questions
Scaled score of 75
70% of 75 questions
70% of 145 questions
Frequently Asked Questions (FAQs)
What is the difference between a broker and a managing broker?
Brokers are typically individuals who have passed a state’s broker exam and allowed to oversee real estate transactions. Managing brokers do this work while also overseeing the day-to-day operations of an office and its sponsored agents. However, states have their own naming conventions for real estate professionals so check with your state’s licensing board.
Should I take my pre-licensing class online or in-person?
Online courses offer great flexibility and enable busy real estate agents to complete modules while waiting for their next appointment or during downtime. Online courses are also usually more affordable than in-person options. The drawback of taking online courses is that they require a lot of self-discipline to complete. Not all states allow agents to take online courses so contact your state licensing board to determine up-to-date course requirements.
In-person classes are great for agents who learn best in a more social environment. However, unlike online courses, in-person courses require the agent to be available at a specific time each week. In-person classes also tend to be more expensive than online options.
How much does it cost to become a broker?
The cost to become a broker varies by state but typically includes the cost of pre-licensing and post-licensing courses, licensing application fees, and registration fees. In general, pre-licensing education can cost anywhere from $300 to $2,000 or more, depending on your state, while state application and exam fees may range from approximately $150 to $200, depending on your state. Brokers may also incur costs associated with opening their own brokerages.
Bottom Line – Real Estate Broker Requirements
Just like many other professionals, real estate brokers are subject to licensing and continuing education requirements. In addition to meeting basic requirements like being at least 18 years of age with a valid Social Security number, aspiring brokers must complete pre-licensing coursework, meet minimum experience requirements, and pass a broker licensing exam.
Online real estate schools are a great option for aspiring brokers who want their education to flex around their working schedule rather than the other way around. This is why we recommend Real Estate Express and its sister school McKissock Learning. The platform’s online real estate school is highly rated and, with courses ranging from $200 to $500, it’s also highly affordable. Learn more today.