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Real Estate License Exams For Dummies®

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Table of Contents


So you want to become a real estate agent? Welcome to the book that’s going to help you become one. Being a real estate agent is an extremely attractive career for many people. If you like looking at houses and other kinds of property and enjoy meeting and working with people, this job may be for you. Add to that having a flexible work schedule, essentially running your own business, and being rewarded for working hard and smart, and you’ve pretty much described a career in real estate sales.

Somewhere along the line, however, you discovered that real estate sales is a licensed occupation. Don’t worry, though; I wrote this book specifically to help you get that license. Ready for the full scoop? Read on, you soon-to-be real estate agent.

About This Book

Every state requires real estate agents to have a license to practice their occupation. Every state, at a minimum, also requires that you take and pass a state examination to get that license. Most states require more than just an exam. After you’ve made up your mind to become a real estate salesperson or broker (brokers’ licenses usually are obtained after you’ve spent time as a salesperson), you need to find out what the procedure is for getting your license in your particular state. Because most states have an educational requirement, I assume that you have to take a course before obtaining your real estate license.

So how does this book fit in with your education? I wrote it specifically with the idea of:

As the title states, this book is designed to help you prepare for and pass the state exam. In it, I discuss a wide variety of topics, such as the basics of the job, different real estate laws, the details of owning and transferring property, and issues such as contracts, leasing, and environmental regulations. Think that’s a lot? Well, I also cover everything you ever wanted to know about numbers stuff, from appraising property to calculating mortgages, taxes, and investments. And to pull it all together, each chapter contains review questions, and I provide four full-length practice exams (complete with answers and explanations) to help you get ready for the real thing.

If you’re a regular For Dummies reader, you know that a For Dummies book takes a modular approach to giving you information. That means you can pretty much read a section or a chapter and get the information you need without necessarily reading the entire book. That’s true of this book, too. Although you certainly don’t have to read the entire book to get what you need from it, it’s okay if you do. I also provide you with plenty of cross-references so you don’t have to remember where related subjects are. And just like all For Dummies books, feel free to skip sidebars; they offer good reading material, but their content isn’t covered on the exam. A few things I’ve written about in this book are common to most chapters. Understanding them can help you get the most out of what you read and study and will prepare you for the exam because you’ll run into some of them there, too.

Before I go any further, I’d like to give you some general information about what this book is not about. Many real estate textbooks on the market are designed to teach you about real estate. Some of them are used as textbooks in prelicensing real estate courses. Without going into a long explanation about the different approaches that each of these books takes, I want to be clear that this is not a real estate textbook.

You shouldn’t base anything you do in your real estate practice only on what you read in this book. That doesn’t mean that this book does not contain accurate information about general real estate concepts. It does. But as I wrote this book, I had to leave out pieces of information or finer details simply because I don’t believe you’ll be tested on them. I think this book not only fulfills the purpose of preparing you to take the state exam, but it also provides a general overview of real estate issues. In all cases, whether in your real estate practice or sitting for the exam, you need to defer to information provided by your state licensing authority and any local prelicensing courses you may be required to take if it conflicts with the information in this book.

This book also doesn’t provide legal advice. I’m not an attorney. Real estate sales and related issues are full of topics that many people, including attorneys, believe are matters that require an attorney’s advice or that are best left up to an attorney. I unequivocally advise you that in any issue involving a legal matter, first and foremost, consult an attorney.

One last thing I want to mention concerns the subject of construction — not of the sentences in this book but rather of houses and other buildings. A significant inconsistency exists between and among states regarding whether they require you to know anything about construction for a state-licensing exam. It’s obviously a pretty detailed topic, and I do encourage you to learn something about construction techniques and materials as you start your real estate career. I even include some material about construction regulations in this book. (If you’re curious, check out Chapter 8.) In the interest of space, however, because of this inconsistency I decided to leave out a detailed chapter on construction. You do, however, need to find out whether knowledge of construction techniques, systems, and materials is a requirement for your state exam and then study the appropriate material.

Foolish Assumptions

I hope I’m not being too foolish, but the following are my assumptions about you, dear reader:

Icons Used in This Book

The following icons are designed to help you use this book quickly and easily. Be sure to keep an eye out for them.

example This icon points out sample questions within chapter discussions.

statespecific Items marked with this icon may vary from one state to the next. I usually give some general information about the subject, but when you see this icon, you need to check out the specifics in your own state. Where do you look for those specifics? In general, if you’re not required to take a course or use a textbook to take your state exam, all the material you need to read probably is available from your state licensing agency. (I give you information about how to find your state agency in Chapter 1.) In states where you have to take a course, make sure you look for and study those items that I mention as state-specific in your textbook or course handouts, or ask your instructor about them.

remember This icon points to information that’s especially important to remember for exam purposes.

tip This icon presents information like a memory acronym or some other aid to understanding or remembering material.

warning When you see this icon, pay special attention. The information that follows may be somewhat difficult, confusing, or harmful.

Where to Go from Here

First things first: Contact your state real estate licensing authority and get the information you need for the kind of license you’ll be applying for, such as a salesperson’s license or a broker’s license. (You can get information on how to find your licensing agency in Chapter 1.) If you’re still not sure or you’re a little confused about where you’re headed, you may want to start your reading in Chapter 3, which explains the different jobs real estate agents do.

The information you want from your state includes a copy of the license law, an application, information on the content of the exam (if available), and any other information available about obtaining your real estate license. You may be able to get this information online. (If you’re already a broker, you probably are familiar with most of this. If you’re new to the field, you want the package of information your state sends out for people who want to become a licensed salesperson.)

When you get it, read the information carefully and take the next step. That may be enrolling in a course. In a few cases, it may mean studying the license law and the other information the state sends you. You have to do this anyway, but in states with no education requirement, studying this information and the material in this book is your preparation for the state exam. In either case, check out the chapters in this book that correspond with the subjects required for the type of license you’re getting (see the Table of Contents for help) and start studying. Before you actually take the exam, be sure to check out the information about the basics of the exam in Chapter 1 and my best studying and test-taking strategies in Chapter 2. After studying the different subjects areas for the exams, take the four practice exams in this book. You can download a fill-in-the-bubble answer sheet at and use it as you take each practice exam. Download as many sheets as you need. (You also can use them for the ten sample questions at the end of chapters that discuss the subject areas.)

If I were your personal tutor as you embark on your real estate education, I’d instruct you to do the following:

You can also check out the free Cheat Sheet at for some helpful definitions of terms, explanation of ownership, and a reminder of the fiduciary responsibilities of an agent.

Part 1

Putting Real Estate License Exams into Perspective


Understand the different real estate licenses and exams and what each type of license requires and allows you to do.

Incorporate some test-taking tips and tricks in your arsenal to help you pass your exam with as little stress as possible, including some advice for preparing to take the exam as well as hints to help you while you’re in the middle of taking the exam.

Conquer your mathphobia with some solid advice and tips for getting through the math sections of the real estate license exam.

Figure out how the exams are scored, how the scores are determined, and how you can achieve a high score.

Chapter 1

Sold! Taking a Glance at Real Estate License Exams


check Uncovering the basics of license exams

check Recognizing registration rules

check Understanding what to take (and not to take) to the exam

check Finding out how exams are scored

check Figuring out what to do to retake the exam

Astate exam is one of the steps you need to take on your journey to becoming a licensed real estate agent. You may think that it’s the most intimidating step, but don’t worry; that’s where this book comes in. In this chapter, I provide you with information to make sure the exam process isn’t a total surprise and show you a few specific details to check out in your state.

remember Because individual states issue real estate licenses, the ultimate authority on the state exam is your own home state. You’ll probably get a copy of the state license law and the state-specific information you need about the exam from the instructor of the prelicensing course you may have to take. (See “Figuring out licensing procedures” later in this chapter for more details.) If you don’t get the information from your instructor or if you’re in one of the few states that doesn’t require a prelicensing course, you can write to your state-licensing agency or go online to find information. Different states have different agencies that handle real estate licensing, but using a search engine like Google can get you where you need to go. Just type in your state’s name followed by the words “real estate license law,” “real estate commission,” “real estate board,” or “real estate licensing agency,” and see what websites are listed. If you don’t have access to a computer, try calling information in your state capital and asking for the agency’s phone number, using any of the names I listed.

Checking Out Licensing and Exam Basics

Most states have at least two license levels for their real estate agents: salesperson and broker. (Briefly, a real estate broker is someone authorized by the state to perform certain activities such as sales on behalf of another person for a fee. A salesperson is someone licensed to do those activities but only under a broker’s supervision. See Chapter 3 for more.)

Some states may have other levels or types of licensing, such as a time-share agent, associate broker, or salesperson apprentice or trainee. In at least one case, a state is moving toward only one level of real estate licensing. In any case, a state agency administers real estate license exams in each state (different states may have different names for their licensing agencies). In the following sections, I give you the lowdown on licensing procedures, the differences between the licensing and exams for salespeople and brokers, and the format of the exams themselves.

Figuring out licensing procedures

statespecific After you decide to pursue a career in real estate, the next thing you need to do is get as much information as you can about the procedure for obtaining your license. Every state has specific requirements regarding age, citizenship, criminal background, education, and so on. For specifics about all of these necessities, you need to consult your state’s license law directly. Each state’s real estate license law typically has provisions about how to become a real estate agent in that state. In addition, it often has specific requirements regarding procedures to follow in your actual real estate business. And by the way, state exams often contain a few questions about the requirements to get your license, such as how old you have to be or the citizenship requirements. You need to get a copy of your state’s license law either from the state website or from your instructor.

statespecific Your state licensing system may treat real estate licensing educational requirements and testing in a wide range of ways. Very few states have no educational requirements whatsoever and require only that you pass the state exam. Other states require that you take (and pass) a minimum number of classroom (or online) hours of education before you sit for the exam. And still other states require you to take not only a minimum number of classroom hours, an apprenticeship, and more educational courses, but also a state exam after one or both classroom experiences. You likely have to take more coursework and pass another exam to become a broker, so expect to become a salesperson first, and get some experience before you can move up to the broker level.

Assume that where education is required — and it is in most if not all states — you have to pass a course exam in addition to the state exam. Your state may have only an attendance requirement, but be prepared for a course exam nonetheless. Where there is a course exam, it’s usually similar to the state exam. This book helps you do well on both exams.

warning As for the state exam, some states allow you to walk in and take the state salesperson exam before you complete the required education. Not much point in doing so in my opinion, because the education always helps prepare you for the state exam. And the course exam is good practice for the state exam.

Knowing the difference between salesperson and broker licensing and exams

In most cases, you’re probably pursuing the first or basic real estate license level — in some states it’s a salesperson’s license; in others it’s some form of salesperson trainee. How you move up the real estate ladder varies among the different states. The following illustrates two of the many possibilities.

In one case, you complete all of the necessary requirements, including taking and passing a state exam, to become a licensed real estate salesperson. And that’s it. You can stay a salesperson for the rest of your career. To become a broker in this situation, you probably have to gain some experience, take additional coursework, and pass yet another state exam.

In the second case, you begin your real estate career by getting a license at whatever level your state provides as an apprentice or trainee, which can involve taking a course and/or a state exam. After a prescribed period of experience, you’re required to move up to the level of a full-fledged, licensed salesperson, which can mean more coursework and another licensing exam. You can remain a salesperson for your entire career in this case, too. Moving up the next rung on the ladder to the broker’s level usually involves additional coursework, an exam, and additional experience.

I need to add here that some states may have a way for you to skip part of the salesperson licensing procedure. Although it rarely occurs, doing so usually requires previous real estate experience. The experience may not exempt you from taking all of the required courses, but it may enable you to skip the salesperson exam. You can find out whether your state allows this exemption by checking the license law and speaking with your state-licensing agency. The state has final say over what constitutes a qualifying equivalent but, for example, someone who has bought, sold, and leased a significant number of his own investment properties might have the necessary experience.

remember Your job as it relates to this book is to identify the particular exam you have to pass at this stage of your real estate career. If you’re taking your first-ever exam, you’re at the salesperson level or the salesperson trainee level. If you’re already a licensed salesperson, you’re shooting for the broker level. Then you need to find out the subject matter on the exam. In the vast majority of states, you’re required to take coursework to get your license. Figuring out what you’re tested on and using this book to help you is relatively easy. Just match up the material in the course with the various subjects in this book. If you’re not required to take coursework to get your license, you can find out your particular exam’s subject matter by checking with your state licensing agency and still use this book to provide information and further explanation of the required material.

This book covers as many of the subject areas as are typical on a variety of state exams. In general, fewer topics are covered on the salesperson’s exam than on the broker’s exam. Broker’s exams cover more subjects because more topics have been added to the list of subjects you learned at the salesperson’s level. For example, a state might test you on property management, which I cover in Chapter 3, on the broker’s exam but not on the salesperson’s exam. So if you’re taking the salesperson’s exam in that state, you don’t need to worry about property management; however, if you’re taking the broker’s exam, it’s time to brush up on your property management knowledge.

warning If you’re using this book to prepare for a broker’s exam, be aware that many brokers’ exams presume that you learned and remembered everything you covered in your salesperson’s course. Although the emphasis may be on broker subject matter, topics typically on a salesperson’s exam are fair game on the broker’s exam. So it’s a good idea to review all the material from the salesperson’s exam as well as the new broker’s material you learned if you’re taking the broker’s exam.

The topics at the salesperson’s level are usually covered at a more basic level than on the broker’s exam. Definitions and terminology are most important on the salesperson’s exam. The broker’s exam doesn’t cover just additional topics; it may require you to apply your knowledge to specific examples and questions.

Two other subjects that should be mentioned for special consideration and preparation are math and ethics. Where appropriate, math formulas and problems are covered in the individual chapters in this book. In addition, Chapter 18 covers a variety of typical real estate math problems. The amount of math on the state exam varies by state. You need to know real estate math to be an effective real estate agent, but especially for you math-phobics you need to find out how much math is on your state exam.

Ethics is another subject that varies by state. You need to find out if your state has its own code of ethics for real estate agents or if it expects adherence to the code of ethics and standards of the National Association of Realtors. Most importantly for passing the exam, you need to find out how much emphasis there is on ethics questions on the state exam.

Looking at the format and other exam details

At any point in time (for example, a week after this book comes out), a state may decide to change its exam content or structure; therefore, talking with any certainty about exam formats is pretty much impossible. Ultimately the format of the exam really shouldn’t matter when compared with a mastery of the material you have to know. Different structures have different approaches to the same material. If you know the material, the structure won’t matter.

Most (if not all) states currently use a multiple-choice question format. Most people feel more comfortable with this format, and students believe these exams are easier to pass because the choices already have been narrowed down for you. Because most states use this format, I’ve chosen to write all the practice questions in this book, including the four full-length practice exams, in a multiple-choice format. How’s that for service?

Exams are either a single, undivided exam or broken into two parts: a general part that covers key concepts, such as forms of real estate ownership, fiduciary responsibilities, and fair housing law, and a state-specific part. In this book you see many state-specific icons directing you to information that may vary from state to state. This type of information may end up on the state-specific part of these exams. In addition, any questions about state license law are covered in the state-specific part of the exam. (For more about license law, see Chapter 3.)

statespecific You should check with your course instructor or the state-licensing agency about the following exam details:

  • Number of questions on the exam you’re taking. The salesperson’s and broker’s exams may have a different number of questions.
  • Whether the exam is a single exam or whether it’s broken into general and state-specific parts. If the exam is divided into parts, find out how many questions are in each part. If the exam is given in two parts, must you pass both parts at the same time; if you don’t pass one part but pass the other, can you retake the part you didn’t pass or must you retake the entire exam.
  • Whether the questions are multiple-choice or whether any other question format is used.
  • The form of the exam (paper and pencil or computer).
  • The time available to complete the exam.

There are a few other questions you should ask about exam procedures, such as what to bring to the exam. I give you this information in the following sections, as well as offer some hints about successful test-taking strategies in Chapter 2.

Sign Me Up: Registering for the Exam

You’ve fulfilled all your state’s requirements. You’ve taken a course, read the license laws, and so on. These procedures definitely vary by state. In general, though, you have to send an application to the state at some point so you can take the exam. You may have to send the state a completion certificate as evidence that you passed the required prelicensing coursework, and you probably have to submit a fee. Your state’s exam regulations detail whether the fee needs to be paid with cash, check, credit card, or another method. In the case of the salesperson’s exam, some states require you to have your application form signed by a sponsoring broker. (You can find out more about the relationship between a salesperson to a broker in Chapter 3.)

It’s likely that you have to register online to get a date to take the exam. After completing and sending the appropriate materials to the state licensing agency, you receive an entry permit in the mail or a printable one online allowing you to take the exam. You also receive information on where and when to arrive for the exam, as well as a list of anything else you might need to bring with you (see the next section). Read all of the information carefully and follow the instructions exactly. If you have any questions, contact the state-licensing agency well before the exam.

Keep in mind that in some states they may allow you to take the test by simply showing up at the exam site with identification and the fee in hand. This is usually referred to as a walk-in exam.

statespecific Whatever the procedure may be, find out what it is from your course instructor or the state-licensing agency, and follow it carefully. It’s silly and completely unnecessary to have your application returned because you forgot to sign it or sent in the wrong amount for the fee.

Knowing What to Take to the Exam … and What to Leave at Home

The big day is almost here. You passed with flying colors whatever prelicensing course you had to take. You also filled out and sent in your application for the exam and got something back in the mail telling you where and when to show up. You reviewed everything in this book that applies to the test you’re taking, and you’re ready to go. Now start packing.

remember In some places, the question of what to bring to the exam has produced an art unto itself. General security issues are in effect in many public buildings, and you also need to deal with security issues that are specifically pertinent to exam-taking. The key here is simple. Read all of the literature you can find from the state licensing agency or the testing company your state uses to find out about what you can and cannot bring to the exam. (Some states have contracted with private companies to administer exams; if this is the case in your state, you can get contact information about this from your state licensing agency.) If you have a specific question that isn’t covered in the material, you can call or email the state agency or testing company and get an answer to your question. In general, the items you need to bring are:

warning You probably won’t be allowed to bring scrap paper, food, books, notes, and so on to the exam. In a worst case, you may be turned away from the exam site if you have any of these items with you. In a situation almost as bad, you may be asked to leave the unauthorized item(s) in the hallway outside the exam room. If you need to bring food or water because of a medical condition, make sure you get permission first before the day of the exam. In addition, if you need to make accommodations for a handicap, like the use of a wheelchair, make sure those arrangements are made before the day of the exam.

Scoring High: Figuring Out How Scores Are Determined

statespecific Information about scores is available from your state licensing agency or the testing agency (if any) used by your state. Here are a few points you may want to consider:

Having more than one testing center, a state may vary its procedures from one place to another. One center might be equipped to give you your score and even a temporary license right away; another testing center in the same state may not be able to do that. If getting your license right away is important to you, especially if you have a hot deal ready to go as soon as you have your license, it may be worthwhile to travel a little farther to get instant results.

Take Two: Retaking the Exam

statespecific You need to know how many times you can retake the state license exam. Your state may allow unlimited retakes of the exam, or it may limit you to a certain number of retakes before requiring you to take the prelicensing course again. Whichever the case, if you do fail the exam and plan to retake it, don’t wait too long. Try to retake it the next time it’s offered. If you have to reapply to take the exam, do that right away. (But I know that you’ll pass on the first try with the help of this book!)

The same applies if you have to take an exam to complete your real estate course. Find out how many times you can retake it and when and if you would have to retake the course itself.

remember The exam itself is actually pretty good practice for a second try. Remember the areas with which you had difficulty, and concentrate on those areas first as you study for retaking the exam. If you’re lucky and live in a state where you receive some idea of the areas in which you were weak, use the information to study that specific material. You also can use the review questions and practice exams in this book to diagnose your weak areas. Checking out the studying and test-taking tips in Chapter 2 for even more help won’t hurt, either. Above all, don’t grow discouraged. Anyone can fail an exam, but only you can have the stick-to-itiveness to go back and try it again.

Chapter 2

Using Successful Study and Test-Taking Techniques