Top 8 Misconceptions Around Real Estate Reciprocity
Answers to the top questions about real estate reciprocity
Answers to the top questions about real estate reciprocity
Jacqueline Kyo Thomas
If you're reading this article, you've probably already heard about real estate reciprocity. This agreement allows licensed real estate agents to work in different states without having to get a new license in each state. And if you're a real estate agent, this might sound exciting because it can help you expand your career and work in different states.
While we wholeheartedly recommend that you take advantage of this amazing agreement, we also want you to go in with a clear understanding of what real estate reciprocity is and is not. That’s the purpose of this article: we'll tackle the common misconceptions around real estate reciprocity and give you the simple truth so you can make an informed decision on whether or not to take advantage of this opportunity. (And we think you should.)
In case you’re still fuzzy about the term, what the heck is real estate reciprocity? Here's an abbreviated answer:
Real estate reciprocity is an agreement between two or more states. In this legal agreement, real estate agents can work in different states without having to go through the entire process of getting licensed, which could include taking a required real estate course and sitting for a licensing exam. Bear in mind that the stipulations for real estate reciprocity vary by state.
Why should you take advantage of this agreement? You can extend your reach and increase your profits.
For example, if you're licensed to practice real estate in one state, but you have a client in another state, your hands are tied because you can only legally work in the state where you first received your license. In this case, you’ll have to refer your client to another agent who works in their state.
You can lose out on a ton of potential income if you’re limited to working within only one state. This is especially true if you live close to a major city that’s located in another state. Here in Boston, we’re less than an hour away from Manchester, NH. Think of all of the clients you are missing out on if you only have a Massachusetts real estate license. But if you utilize Massachusetts’ real estate reciprocity agreement with New Hampshire, you can successfully sell real estate in both states. And you won’t have to sit for another license exam to do it.
Reciprocity agreements make it easier for real estate agents to work in multiple states. But not all states have reciprocity agreements, and the rules vary depending on which state you're targeting.
For more generalized information, we've written two separate guides on real estate reciprocity that you can check out below.
In this guide, we hope to answer and demystify some common misconceptions about real estate reciprocity that you may still have after reading through those guides. Let’s get started.
Here are the top misconceptions about real estate reciprocity:
Truth: In one of the most common types of real estate reciprocity agreements, a second state will recognize the license you've received from the first, or original state of your licensing. This agreement says that if you qualified to receive a real estate license from the first state, you do not have to re-prove your competency with another examination.
But, keep in mind that reciprocity agreements vary from state to state. Some states will have additional requirements. For example, you may need to take a supplemental course before receiving your license in the second state. Or, you may need to take the State portion (but not the National portion) of the licensing exam.
Here, we have a list of Massachusetts’ real estate reciprocity agreements with other states. This list indicates if an additional exam is required.
Truth: Reciprocity agreements vary from state to state. While some states enjoy full reciprocity, others are partial, and some states don't have a license reciprocity agreement at all.
A state that offers full real estate reciprocity means that you can transfer your license to that state from any state, as long as you complete the target state's requirements.
A state that offers partial real estate reciprocity has licensing agreements with some states but not other states. For example, at the time of this writing, Rhode Island has reciprocity agreements with Connecticut and Massachusetts, but not New York. These agreements are subject to change at any time.
Truth: Yes and no. While real estate reciprocity can put you on the fast track to receiving a real estate license in another state, it's not an automatic process. You will still need to meet certain requirements, and you'll need to complete paperwork and wait before you can obtain your license in a new state.
Truth: You will absolutely save money by taking advantage of the real estate reciprocity agreement if your target state offers/accepts it. Also, there’s no fee for leveraging this agreement directly. However, that doesn't mean that taking advantage of the reciprocity agreement is completely free. You'll still need to pay certain fees, which can vary by state. Most notably, you'll need to pay a licensing fee to the new state.
Truth: Not every state requires that you take the state exam before applying for a real estate license under the reciprocal agreement. However, for those states that do require you to pass their state exam first, you won't be granted any shortcuts. You'll need to study for that state exam just as seriously as you studied for your first. You may have a slight advantage since you've already proven that you can pass one state exam.
Truth: While requirements do vary by state, most real estate reciprocity agreements are available to all currently licensed real estate professionals, regardless of your career length. In many states, an agent who has just received their license can immediately take advantage of this agreement with another state.
Truth: In most states, real estate reciprocity is applicable to both salespersons and brokers. However, requirements do vary.
Truth: Real estate license portability and real estate license reciprocity are similar, but ultimately different.
Real estate license portability means that if a real estate agent or broker wants to work in a different state, they don't necessarily have to get a new license. This is helpful if the agent only wants to work in the other state for a one-off job, and doesn't want to do a lot of business there. Many states have portability laws that allow agents to do this. Of course, as you've come to expect, laws vary by state.
In comparison, real estate reciprocity allows an agent to receive permanent licenses to work in multiple states.
Knowledge is power. We hope this article dispelled any confusion or misconceptions you may have had about real estate reciprocity. We also hope that you take advantage of this amazing opportunity to level up your career as a real estate agent.
If you haven't already, check out this guide on how to apply for Massachusetts real estate reciprocity and skip both the course and the exam.