One of the questions that online real estate schools hear most often is related to what happens before applicants take a real estate pre-licensing exam.
These questions are about pre-licensing courses and programs. They’re about what pre-licensing education consists of, and how students prepare for a particular state exam in order to get their initial license.
Pre-Licensing Versus License Renewal
Pre-licensing education and license renewal education in real estate are essentially different.
In building their pre-licensing curriculum, state departments target specific areas of knowledge that will be useful to the beginner.
There are all sorts of instruction that are targeted toward preparing someone to first acquire their license.
In license renewal education or continuing education, there are different kinds of courses and programs aimed at supporting state mentoring relationships, broadening someone’s existing career, and helping them attain the next level.
Pre-licensing course education covers a variety of key topics. It’s important to note that this kind of instruction is different in every U.S. state – so, in a way, there are 50 different pre-licensing real estate programs across the country.
Elements of Pre-Licensing Real Estate Courses
One of the basic elements of a pre-licensing real estate course involves business ethics and business law.
In a very general sense, real estate is a ‘people process’ – so real estate schools target that, and real estate exams focus on that as well.
There are all sorts of technical aspects to real estate deals, but in the end, many deals come down to trust and good communication.
Experienced professionals know this – but beginners often need a reminder.
So to that end, many states include a specific focus on business ethics in their exams.
What might this look like?
A pre-licensing course may go over various scenarios.
Suppose a buyer feels unfairly represented for whatever reason.
This is something that a real estate pre-licensing test can anticipate and help the student work through so that they are prepared if this happens to them after they acquire their license.
A state exam may also focus on specific board oversight for real estate professionals.
The best online real estate schools and classroom learning programs will help students to understand the redlines and what is out-of-bounds in the real estate ethics world.
Fair Housing and Anti-Discrimination
Fair housing and related issues can also be a strong component of a state pre-licensing exam.
This component has to do with ethics, too, but it’s a little more specialized.
That’s because there are laws on the books related to fair housing, making this a little more technical than just reviewing ethical guidelines.
In addition to federal laws, a state may have its own laws for fair housing.
Industry standards may also apply.
So it’s important for real estate schools in any particular state to teach about fair housing and anti-discrimination.
Again, the pre-licensing course may run through scenarios, and ask real estate students to imagine something they may run into in their careers.
They may be asked to make decisions based on actual case law.
Another component that’s often on real estate exams relates to handling money.
Throughout the real estate process, various sums of money will be either handled or represented in the deal.
For example, there’s earnest money at the beginning of a deal – what happens to those checks? Where do they go? What’s the timeline?
A real estate exam might go over aspects of an earnest money deposit, as well as amounts of money:
- Related to contingencies or amounts of money that buyers and sellers talk about
- Related to specifically requested fixes
- Related to what items convey with the property
- Related to waiving any seller disclosure items
Those are just some of many situations where the ability to handle money and represent amounts of money makes a big difference.
So this is another thing that is often built into a real estate exam in a particular state for pre-licensing purposes.
The Pre-Licensing Process
It’s great for real estate schools to go over pre-licensing course content, but they should also address the nuts and bolts of the process.
Schools often hear students asking nervously about what’s on the exam and how they can prepare.
They hear students asking about how hard the exam is.
There’s a lack of orientation and that creates fear and anxiety.
Some students may worry they won’t pass the test on the first time.
Schools can combat this with various resources, including:
- Practice exams that are realistic and targeted to what is actually on the test
- Searchable forms and resources such as glossaries that allow students to study on the go
- Scenario-based guidelines that show students how to make decisions about exam answers
- In-depth, hands-on learning about practical issues in the field
The more investment schools put into these resources, the better students are served in their pre-licensing study.
They have to target the technical aspects of the state exam, but they also have to understand more of the practical elements of being a real estate agent or salesperson.
Each state has its own technical criteria for pre-licensing education.
That starts with a particular number of hours of coursework that a student has to complete.
There may be guidelines on the length that a program can cover – in other words, how many courses are packed into a day, or week, or month.
Along with hours requirements, states insert anything specific that they feel is essential to real estate pre-licensing education.
Again, going back to ethics and fair housing, you often see titled courses in pre-licensing requirements.
You may also see specific focus on items like appraisal, inspection, seller disclosure reports, sales agreement handling, earnest money handling, and more, although they don’t usually show up in course titles.
States will typically provide a list of approved educators that students can look at to determine where to go for instruction.
The Process – Real Estate Principles
Some other common components of state exams for real estate salespersons focus on various aspects of the process that are involved in serving clients.
These are sometimes called ‘real estate principles.’
Students will learn about the listing and selling processes, and go through step-by-step guidance.
They will learn about property valuation – what a particular property is worth in a given neighborhood.
They can also learn about other factors in valuation, such as:
- Condition of the property
- Seller’s scenario
- Predictive assessment
- Tax appraisal
Another part of the real estate principles is the escrow component.
Because a typical real estate deal for first-time homebuyers folds in insurance and property taxes into the mortgage payment, real estate professionals need to understand escrow.
The lender holds money in escrow to pay these costs.
That means the money isn’t technically in the borrower’s hands.
This creates complexities related to paying municipal and school taxes, changing insurance policies or figuring out particular mortgage valuations.
A real estate principles course can help students learn about how to direct clients through these sometimes complicated questions.
Then there are the parts of the process related to the technical lending itself.
Real estate principles courses can help educate students on:
- Fixed versus changing interest rates
- Historic interest rate activity
- The use of ‘points’ in mortgage financing
- A mortgage origination process
- How individuals and families qualify
In addition, there is a whole other category of process concepts related to real estate parcels and property definitions.
Real estate assets come with particular geographic boundaries.
But that geography is not always clear-cut – triggering requirements for surveys, title research, and more.
In business principles, real estate learners can go over things like liens and encumbrances on a property, or the title research process in general and how to provide a thorough survey.
Real Estate Practice
Real estate practice can also be a focus in real estate pre-licensing courses.
Think of this as building the student’s ‘operating manual’ of how to assist clients in buying and selling real estate.
Here again, this type of pre-licensing education is going to touch on points that we went over earlier: fidelity to the client, fiduciary duty, responsibility to report well, and other elements of representing a party financially and practically.
Trust helps with this process, but technicalities do, too.
Finally, some other aspects of pre-licensing education deal with the legal technicals, as we mentioned above.
Many of these items involve troubleshooting scenarios.
For instance, a buyer or seller might want to back out of the deal at an inopportune time.
Buyers or sellers may have unrealistic demands.
Changes in finance, building condition, or some other real-world change may impact the deal.
Some of the legal technicals help real estate professionals to be prepared.
Students learn about the occasionally complex process of real estate transactions in a rather hands-on environment, with practice resources such as scenario role-playing or case studies.
The Real Estate Commission’s Role
Real estate commissions in various U.S. states think about these issues quite a bit as they craft curriculum and set guidelines and requirements for pre-licensing programs.
That’s the role of the board – to manage how individuals apply for a real estate license, how they get prepared for an exam, and what the exam contains to prepare them for the real world.
That makes the real estate commission website a one-stop shop for many of the actual resources that a license seeker needs.
Many of these websites have been updated with approved educator lists, instructions on exam taking, and much more.
However, individual real estate schools can help students to get a firmer background in pre-licensing, so that they can more easily decipher what the state real estate commission is telling them on the web.
Making Sure Pre-Licensing Education Works
As previously mentioned, state boards control the pre-licensing education process to a great extent.
However, they don’t really assess schools on a very detailed basis, at least in some ways.
There’s no real guarantee that the state real estate commission has thought about what’s most convenient for a busy student who needs to be well prepared for the exam.
It’s on the schools to bring this kind of organization and structure, and the right resources, to the student. That’s the service they provide.
For instance, are classes interactive? Sometimes it’s not enough to sit with a document and read over the dry, dense text to try to figure out key real estate concepts.
Interactive classes give students hands-on opportunities to internalize the information they’re getting so that they remember it on test day.
There’s also another major opportunity that real estate schools can offer in pre-licensing coursework.
Having versatile study materials helps a great deal.
If a student has accessible formats on their smartphone, they can be learning while waiting in line, taking care of children, relaxing at home in the evening, etc.
On the other hand, when study materials are only in a fixed format, the student won’t have as many hours to really internalize the material.
Students who are worried about the test want to study continually.
They want to reinforce these concepts in their minds.
These resources help them to do that.
The best schools look at blended learning from an informed perspective and design pre-licensing course work accordingly.
Qualifying, Eligibility and the Importance of ‘Cans and Can’ts’
Among all of those types of topics that will be on state real estate exams, there’s also another factor that many real estate schools build into their curriculum.
It’s a general principle, but one well illustrated by the process of qualification.
Loan qualification is one of the most important aspects for buyers.
This is because they can’t buy something unless they’re qualified to purchase it.
Many complex and detailed rules apply regarding financing qualification.
Because most buyers don’t have cash in hand to purchase a property, they have to go through these processes and procedures in order to obtain qualification.
Here again, the new real estate salesperson will be the buyer’s guide.
That’s why real estate schools work according to particular state principles and laws to create resources for pre-licensing course-takers on qualification.
Qualification will involve documenting income and assets, as well as credit score evaluation and much more.
By giving the pre-licensing course student a good grounding in these principles, the school prepares them to help buyers.
Beyond the process of qualification, there are also many other ‘cans and can’ts’ where eligibility rules apply.
For example, for buyers who are working in an FHA loan environment, the property also must qualify for FHA with various checklists and instructions from the Federal housing agency.
All of this can be covered in pre-licensing real estate coursework, as well as:
- Knowledge of federal housing lenders Freddie Mac and Fannie Mae
- Knowledge of FHA versus conventional loans
- Understanding of loan protocol
- Translating these concepts to buyers
- That just scratches the surface of what state pre-licensing coursework should include in order to prepare students for the exam and beyond.
Real Estate Pre-Licensing Courses on Home Systems
In addition to all of the above, which mainly deals with process and practice, real estate students in a pre-licensing process may also elect courses that deal with home systems.
Home systems have a lot to do with the value of a property.
HVAC systems, plumbing systems, and other infrastructure impact the value of a building in a real estate deal.
It makes sense that some real estate pre-licensing courses include a focus on these systems, or the ‘bones’ of a property.
As mentioned in the seller disclosure discussion, real estate license seekers will also want to read up on environmental hazards and other liabilities.
Dealing with radon, lead, and asbestos is another major area of home inspections that can determine value.
Along with these kinds of considerations, there are also home system efficiency factors to consider.
Some real estate pre-licensing courses go into how to help buyers or sellers to assess energy values in home systems.
For example, a furnace operating at peak efficiency will cut down on heating costs.
A state-of-the-art water heater will decrease energy costs related to showering and using hot water in a home.
All sorts of home appliances come with new Energy Star ratings from the federal government showing energy values and what sorts of energy savings consumers can expect.
Some real estate pre-licensing courses then help the real estate agent offer energy consulting when they have passed the exam and achieved licensure.
Typically, these courses look at areas of the home where weatherization can improve energy outcomes.
That includes attics and basements, and a focus on insulation and sealing parts of the building from energy loss.
Weatherization can be a component in these types of courses.
In general, these types of real estate pre-licensing course offerings prepare real estate salespeople to deal with another professional – the home inspector.
State real estate commissions offer an entirely different process for professional home inspectors.
Home inspectors get their own pre-licensing course requirements and other prerequisites to getting their own professional license.
Many states also maintain specific standards for real estate appraisers.
In addition to the salesperson or broker, inspector and appraiser, attorneys and title companies will be involved in the typical real estate deal.
All of this adds cost and complexity, but it also adds demand for professional talent.
From the perspective of someone studying to become a real estate agent in a particular state, the exam will prepare them to communicate and collaborate with these other professionals.
How schools handle this goes back to the issue of exam prep and practical real-world advice.
Schools that have the best classroom instructors can deliver that passion and knowledge to students in a face-to-face environment.
Schools that innovate in online learning can help students to study from wherever they happen to be prior to a state exam.
Schools that have the data on how the exam is conducted and scored will pass these on to students to give them a competitive edge.
Tailoring a process to a particular state of residence helps to ensure that the students’ work is targeted to what they will face on the exam.
Think about choosing a real estate school according to these criteria. Look for blended learning opportunities and a good combination of classroom and online training. Look for the right formats for your busy lifestyle.
Supporting students throughout the process allows them to be more confident about getting their license on a specific timeline and wading into the world of real estate in their particular U.S. state of practice.