Real Estate License Exams For Dummies
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The Real Estate License Exam will expect you to have a basic grasp on real estate professions. You’d think that simply knowing what the main players do in a real estate business is pretty obvious, but because of the terminology they share, the distinctions between the players gets a little muddled.

Here are quick descriptions of players in the real estate game.

  • Real estate agent: This generic term pretty much refers to anyone who has a real estate license.

  • Real estate broker: This person is the key player. Most states require you to have a broker’s license to perform certain activities like sell houses for other people.

  • Real estate salesperson: Salespeople are allowed to perform all the activities that the state requires a real estate license for. However, a salesperson cannot work independently; he must work under a licensed broker.

  • Associate broker: This person has a broker’s license but chooses to work under another broker rather than opening his own business.

Regardless of whether you take the exam for a broker’s or salesperson’s license, your state’s exam writers expect you to know the basics of who a broker is and what a broker does. So regardless of the exam, you should know the material that follows.


A real estate broker is the person in the real estate business who’s primarily responsible for various activities on behalf of the public.

Every state has a state real estate license law, usually just called the state license law. The state license law governs these two primary factors in the real estate business:

  • A general list of activities that can be performed only by someone holding a real estate license

  • The requirements for obtaining a real estate license

The state license law may specifically address what real estate agents must do during the course of their activities, which includes things like presenting all offers to a seller as soon as possible.

A real estate broker is someone who is authorized by the state to perform a certain list of activities on behalf of someone else and collect a fee for doing so. A broker is often called a real estate agent, which is correct in the sense that the broker acts on behalf of someone else (a client).

The license law provides a list of activities that can be performed only by someone having a broker’s license. Although specific activities may vary from one state to another, the list of activities requiring a broker’s license generally includes negotiating real estate transactions, including sales, leases, and exchanges. A licensed salesperson or associate broker may perform these activities but only under the supervision of a broker.

You usually can do any of the previously mentioned activities on your own behalf without having a real estate broker’s license. In other words, you can sell your own house by yourself without being licensed.

The implication is that you also can help someone else like a family member sell a house themselves without a license as long as you don’t collect a fee, but remember the gift of a fancy restaurant meal can be considered a fee. You definitely need a real estate license if you want to collect fees for your work.


A real estate salesperson is someone who either works as an employee for a real estate broker or more typically as an independent contractor paid by commission. Generally speaking a real estate salesperson is someone who can do all of the activities that a broker can do on behalf of a client, but must do so under the authority and supervision of a broker.

Referring to a real estate salesperson as a real estate agent is somewhat accurate. The salesperson sometimes is viewed as a subagent of the broker but, in fact, has the same obligations as the broker with respect to a client. In general you become a salesperson first, spend a number of years learning the business, and then become a broker.

Of course, you can remain a salesperson for your entire career. Though unusual at this time, in at least one state, broker is the only type of license available.

Associate brokers

Some states have an intermediate level of licensing that is called an associate broker. An associate broker has all the qualifications of a broker but doesn’t want to operate his own real estate business. Associate brokers choose to work under the licenses of other brokers just like salespeople. Be sure to find out how your state refers to this level of licensing and what the qualifications are.

License law

You need to go over your state’s real estate licensing law in detail. Some questions about the law undoubtedly will be on your state exam. Although you need to become familiar with your state’s law in its entirety, pay special attention to the following:
  • Qualifications for real estate licensees-broker and salesperson and associate brokers

  • Requirements for getting the various licenses

  • License fees and other fees associated with licensing

  • Continuing education requirements

  • Special requirements after you get your license, such as requiring a broker to maintain a place of business

  • Exemptions from licensing, such as for attorneys

  • Activities that require a real estate license include

    • Standards of conduct and acceptable practice either with respect to the law and/or a code of ethics

    • Enforcement and disciplinary actions for license law and standards violations

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