When is the right time to get licensed in other states?

New markets require new approaches and new tactics. Experts and industry leaders will take the stage at Inman Connect New York in January to help you navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.

Having your real estate license in one state is an accomplishment in itself, so imagine having your license in multiple states. This can be a great idea for agents that are often in multiple states, or live near the border of multiple states. They can continue to conduct business regardless of what state they are in, keeping their sales high throughout the year.

Before you decide this is a great idea for you, there are a few things to consider before taking the plunge into having a license in more than one state. 

Let’s take a look at when having a real estate license in multiple states is a good idea, and exactly how it works. 

What are the options for getting a license in additional states?

First, let’s understand the different ways you can sell real estate in more than one state. 

Let’s start with real estate license reciprocity. This is where there is an agreement between states that allows the agent in one state to fast-track getting a license in the new state. They can often bypass pre-licensing courses completely and go directly to taking the real estate exam. Some states offer reciprocity, but not all do. Some states only offer it to specific states. 

The other option is license portability, which is a breakdown of the rules each state has for agents that don’t have a license in their state but are working with clients that are looking into buying or selling there. There are three classifications of this type of agreement: cooperative, physical location, and turf. 

• Cooperative is when states allow real estate agents not licensed there to help clients buy or sell property and still make their commission. The only catch is that the agent needs to co-broker the transaction with a real estate agent who has a license in the state. 
• Physical location is where an agent can represent their client in buying or selling a property in another state where they don’t have a license, they just have to be remote to conduct the transaction.  
• Turf refers to states that will not let any agents conduct business in their state without a license there, no matter what. 

Given that each state is different in how they approach outside agents doing business in their state, it’s important to look into how they each operate before making the decision to try and conduct transactions in other states.  

When is it a good time to get licensed in other states? 

While not everyone needs to get their real estate license in more than one state, there are some times it can be very beneficial. Let’s take a look at some instances where you should consider representing clients in multiple states. 

• You have multiple clients that have interest in another state. If you have a few clients that are all interested in property, whether that be buying or selling, in a common state that you are not currently licensed in, it could be lucrative to look into the reciprocity rules for that state. 
• You don’t want to be tied down to one state. If you are constantly feeling ‘stuck’ within your state and want to be able to move more freely while still earning money, it is probably time to take the plunge. This also gives you the freedom to move if you are looking to explore new areas.
• You are looking into attracting more clients. Being able to represent clients in multiple states can attract a larger group of prospects to work with, increasing your income. 
• You are located close to a state border. When you are on the state border it can be beneficial to be able to represent clients in the bordering state as it expands your territory and is a convenient way to do so. It’s an additional bonus if your bordering state has lenient reciprocity rules. An example would be Colorado. They allow all states reciprocity meaning you will only have to take the portion of the exam that ensures you are familiar with Colorado-specific laws. 

Drawbacks to getting licensed in multiple states

There are a few things to be aware of with having your license in multiple states. For example, you may get stuck with extra income taxes in the new state you’re working in.

Another way you may lose some money is if you choose a state that requires you to co-broker with an agent that is already licensed there. While these are not necessarily deal breakers, it is good to be fully aware of any potential pitfalls.  

Should you get your license in additional states?

Ultimately the only way for you to decide if this is the right move for you is to weigh the pros and cons. Most Realtors would likely agree that getting your license in additional states has more advantages than disadvantages and is a great way to expand your client base and therefore your income.