Washington, D.C. – Today the Consumer Federation of America (CFA) is releasing a report – “A Surfeit of Real Estate Agents 2: Is Entry Too Easy?” – that documents how easy it is to obtain a real estate license by taking a required course and passing a state license exam. More than 1.5 million Realtors (plus other agents) compete to sell 5-6 million homes a year, with Realtor sales agents receiving a median net annual income of only $25,000.
The report shows that it is much less demanding to earn a real estate sales license – which takes a state median of nine weeks at a state median cost of $600 – than earning a license to practice almost all other financial services occupations, which normally require a college degree as well as special training. It is even easier to earn a real estate sales license than to practice many manual occupations, from plumbing to hairdressing, which usually require an apprenticeship of more than 1,000 hours as well as coursework.
“There is widespread agreement that required state courses and exams do not adequately prepare licensees to sell real estate,” said Stephen Brobeck, a CFA Senior Fellow and author of the report. “I recently earned a real estate sales license and am neither qualified nor capable of facilitating home sales on my own.”
In some states, though, it is more difficult to obtain a license than in others. For example, four states require only 40 hours of coursework, taking as little as two weeks to complete, while three other states require at least 150 hours of coursework. Further, a dozen states require final course exams to be proctored, while the remaining states effectively allow open-book exams. The report cites some evidence that states with the least coursework also have the highest agent densities, though it notes that the relationship between median home sale prices and agent densities is even stronger.
The report discusses numerous ways that regulators could toughen entry requirements. Some, such as increasing hours of coursework or requiring proctored course exams, would often require legislative approval. Yet, other measures, including working with testing companies (PSI and Pearson VUE) to strengthen state license exams, could usually be implemented by the regulators themselves. Almost all states require only a passing score of 70 or 75 percent, and the exams often include questions that could be answered correctly without any course knowledge.
“Regulators could easily work with the testing companies to include more relevant and challenging questions on the state exams,” noted CFA’s Brobeck.
The report supplements a report issued in July 2023 that documents the surfeit of agents and related costs both to the industry and to consumers. The new report drew most information from the websites of state regulators, from related state laws, and from the personal experience of the author, who recently earned a D.C. real estate sales license.