Real estate license questions

This blog has become a kind of “go to” place for people who are considering getting a real estate license on Minnesota. Interest is the strongest in December and January.

Some people want to get a license so they can buy and sell their own properties. A license isn’t needed to buy or sell property in Minnesota. A license is needed for those who are assisting others in buying or selling real estate and charging a fee. I occasionally run into persons without licenses acting as though they are licensed.

There is a myth out there that buying a home without the help of a real estate agent saves money. It could save the home seller who is usually paying a commission some money but it might not. Working with an outstanding agent such as myself or Teri Eckholm will save money and time too.

Getting a real estate licenses for the purpose of helping others buy and sell real estate makes sense. The one thing people fail to consider is that here in the metro area there are more real estate agents than there are real estate transactions each year. The job is about finding real estate buyers and sellers to work with more than it is about helping people buy or sell real estate.

The other thing that people sometimes don’t understand is that all real estate agents work under a real estate broker. Commissions go to the real estate broker who passes the commission along to the agent after taking a cut.

To get a brokers license a person has to have had a real estate salespersons license for three years and then take 30 hours of classes and pass a test and pay a fee. Visit the Minnesota Department of Commerce website for more details.

Real estate agents only get paid by their broker and they only get paid after the sale has successfully closed. Agents to do not get paid to have an open house or to answer the phone in the office. Agents do not get paid to show houses to buyers.

Real estate agents are usually 1099 independent contractors working on a 100% commission basis which means there are no paid vacations and there is no group health insurance plan.

Health insurance is crazy expensive and it gets more expensive as we age. Many of the successful agents I know have spouses who have full-time jobs with health insurance. Having a spouse with a steady income also helps agents through the ups and downs in income. Real estate sales can be impacted by the economy and the seasons.

As a rule, people planning on becoming real estate agents should have enough money in the bank to pay all the bills for six months and some extra for business expenses and emergencies. The people I have seen fail simply ran out of money and choose to move on. The dropout rate among new agents is high during the first year. I have heard 80 to 90% but can not find any actual data to back that up.

Real estate licensing is regulated by the Minnesota Department of Commerce. Minnesota licensees are required to take 90 hours of training and to pass a test an pay a fee to get a license and are required to complete 30 hours (15 hours a year) of continuing education every two-year renewal period and pay a fee to keep that license. Visit the Minnesota Department of Commerce website for more details.

To become a REALTOR a person needs to join the National Association of Realtors. REALTOR is not an occupation, it is a membership.

If you are interested in getting a license in another state find the department of commerce website for that state. You do not need to consult with a real estate company to get a license. You will need to interview real estate companies to decide which one you want to work with.

Also see Getting a Real Estate License

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