New agents often realize quickly that the ability to use their real estate license in different states would be incredibly beneficial. Even though the majority of your clients will need assistance locally, as your business grows and your network expands, you will encounter clients who need representation in other states.
In these instances, a real estate license reciprocity agreement is a vital tool that can help you work alongside your clients to accomplish purchases and sales in states other than where you live and work.
The real estate experts at Harris Real Estate University understand the value a reciprocity agreement can bring to your business. We’ll discuss what they are, why they’re important, and how they compare to real estate license portability.
Your Real Estate License
After months of preparing, you finally took your exam and passed with flying colors. Even though you’re exploring all the options your license affords you, it’s likely your main focus will be helping clients buy and sell real estate in the same area in which you live.
Becoming a local real estate agent is a solid foundation for a career that will last your lifetime, but exploring portability and reciprocity options can help facilitate a more expansive network and help you increase your earning potential.
What is License Reciprocity
Real estate license reciprocity refers to agreements held between states that allow you to obtain licensure in these states through reduced requirements. This allows you to practice in another state without taking the full real estate exam or completing the pre-licensing and/or post-licensing coursework for those states.
Reciprocity agreements don’t eliminate the requirement for licensure; they simply reduce the requirements. Put simply, if you work in one state and need to handle a transaction in another, a reciprocity agreement would make it easier for you to do.
Types of Reciprocity
Different levels of reciprocity exist between different states. Your state’s real estate regulation department will have information on its own reciprocity agreements.
Full Reciprocity
If a state has full reciprocity with another state, it means you may transfer your real estate license to that state. You can obtain licensure there by simply passing the state-specific portion of the new state’s real estate licensing exam.
There are a limited number of states that offer full reciprocity.
Example: Alabama is a full reciprocity state. This means that no matter where you are licensed, if you’d like to become licensed in Alabama, you only need to pass the state-specific portion of the Alabama real estate licensing exam.
Partial Reciprocity
If a state has partial reciprocity, it means it has agreements with a limited number of other states. For example, a state may have reciprocity agreements with neighboring states (states with which it shares a border) but no other states.
There are two different kinds of partial reciprocity.
- Mutual reciprocity. If two states share mutual reciprocity, it means that you can live in one state and obtain licensure in another (by passing the state-specific portion of the exam) and vice versa.
Example: Florida and Georgia have mutual reciprocity. A real estate agent licensed in Florida can become licensed in Georgia by taking the Georgia-specific portion of the real estate exam. Likewise, a real estate agent licensed in Georgia may obtain licensure in Florida by taking the Florida-specific portion of the real estate exam.
- Limited Reciprocity. If one state establishes reciprocity with another, but that reciprocity isn’t honored in return, the states have limited reciprocity.
Example: Alabama, as a full reciprocity state, allows agents licensed in Texas to obtain licensure in Alabama with reduced licensing requirements. However, Texas is a no reciprocity state (which we will discuss in a moment), so Alabama has limited reciprocity with Texas.
It’s more common for states to have partial reciprocity than full reciprocity.
No Reciprocity
If a state has no reciprocity, it means they do not honor the transfer of real estate licenses with limited requirements in their state. If you want to become licensed as a real estate agent in these states, you’ll have to meet the full burden of requirements (including pre-licensing courses, post-licensing courses, and the full exam) for that state.
How Is Reciprocity Different From Portability?
License reciprocity is a long-term solution that allows you to work continuously in another state. As long as you meet the yearly requirements of the reciprocity agreement, you can renew your license and continue your business in these states.
However, if you don’t need to conduct business in another state very often, license portability is a better option. Portability is a short-term solution that works best on a transaction-by-transaction basis and doesn’t require that you take any part of another state’s real estate licensing exam.
Real estate license portability allows you to conduct transactions in other states on a limited basis. There are three different ways a state may allow portability.
1. Cooperative
If a state has cooperative portability, it means they will allow you to enter their state to conduct business, show properties, negotiate and submit offers, and attend and conduct closings. However, the cooperative state requires you to have a co-brokerage agreement with a licensee of the state.
2. Physical Location
If a state has physical location portability, it means you can conduct business in their state remotely. This means you cannot enter their state to conduct showings, attend the closing, or attend inspections. You can, however, negotiate offers and handle closings remotely from your home state.
This might require the assistance of a licensed agent on the field in the physical location state. Additionally, you will still be required to have a co-brokerage agreement with a licensee of the state.
3. Turf States
Turf states do not allow portability. This means you cannot conduct business in any way in that state, either in person or remotely. If you have a client who needs assistance in a turf state, you’ll have to refer them to a licensed real estate agent conducting business in that state.
Why Reciprocity and Portability Matter
Reciprocity matters because it allows you to build your network and ultimately make more money. Additionally, it builds your experience and helps you add services that can be even more valuable to your existing clients.
As you build your business, you will have clients that wish to move out of state or buy investment properties. Having reciprocity licensing can give you the ability to retain their business, a mutual benefit for both you and your client.
How To Learn More
If you’re interested in learning more about reciprocity and enriching your career as a real estate professional, Premier Coaching at Harris Real Estate University is your solution. Our coaches are experienced, successful real estate agents who are driven to help you succeed.
Harris Real Estate University coaching offers you the ability to learn while you build your business, connect with a community of like-minded professionals, and build a valuable tool kit to help your business grow.
Aim Higher
Sure, you got your real estate license to become an agent in your local area. You can be of better service to your hometown by exploring reciprocity and portability options with other states. Find out more information and explore other hot real estate topics by checking out the Tim and Julie Harris Coaching Podcast.
Setting bigger goals (and actually achieving them) is within reach. Harris Real Estate University supports real estate agents who are driven to succeed.
Sources:
Real Estate License Reciprocity & Portability Guide|Fits Small Business
Here’s How Much Real Estate Agents Earn In Every State | Forbes
How to Network Effectively | Inc
