Becoming an Agent

So you’re thinking about getting your real estate license in CO. First off, everyone wants to know the time and cost. The total cost is around $1,000 and the time required is as quick as 3 weeks. Not exactly spare change, but not a huge amount either. This article outlines the steps and gives you a no BS answer of what to expect. 

Step 1: Decide Whether You Should Get Your Real Estate License in CO

The first step in getting your license is actually deciding whether you even should.

If you are looking to make real estate sales your job, know that it can be a difficult career to start in. During the real estate course, I was told that most new agents are no longer working in real estate two years later. 80% drop out in fact. It is a grind to find new clients and to carry them through the entire sales process. The job can be emotionally taxing and tends to not pay very well initially. Most agents in Denver make less than 50k their first year and often make nothing for the first several months of being an agent. This isn’t to scare you, but to simply make you aware of the lay of the land your venturing into.

Now, if you’re looking to use your license to be a real estate investor, make sure that this fits into your overall investing strategy. Contrary to popular belief, you absolutely do not need your license to become a successful investor in real estate. In fact, most of the successful investors that I meet, do not have their license, or only obtained it long after their investing business was well off the ground.

This is for a couple of reasons. Being an agent, and especially a great agent takes a ton of time. Most investors would rather use their time to find deals, find money, network, and not be working! Second, by splitting up the labor, you can network with high-value agents. That way, they can bring you deals and buyers for your deals. This costs more money, in the form of commissions, but over the long run will create a much larger and scale-able business.

Some investors do like to get their license. This may be because they want to gain knowledge of the industry, be seen as an expert/professional, gain access to the MLS, and to be able to generate extra income or profit on their deals. For the newer investor, it can make a lot of sense to spend the extra time as an agent on your first couple of deals to allow you to scale up faster. At the end of the day, it is a personal choice, but know that you do not need your license to be an agent.

Step 2: Commit to Getting Your License

This may sound redundant or counter-intuitive, but once you have decided that you’re going to get your license, commit to getting it. This is really about committing to the process. It is not that hard to do but does require a fair bit of time, and several steps. What you don’t want to have happened is to spend 3 months working towards your license, spend $800, and then decide that no, you’re going to quit and work on perfecting your double bass on the drums full time instead.

Time is money, as they say. Out of the handful of agents that I know personally, several of them have spent months working on just finishing the class. Then because they didn’t plan well, it took them another couple of months to actually become an agent. For context, I was able to complete the entire process in 1 month from start to finish. I was also working a job, and this was in December during Christmas break. I was committed to the process.

Step 3: Get your Fingerprints Done for the Background Check

I’m actually putting this as the first step since it is the one that is out of your control, and the one that could potentially take the longest. Getting your fingerprints done is easy, painless and cheap. These are sent off to the CBI (Colorado Bureau of Investigations) for a background check. The whole process takes about 20 minutes, and the results take a couple of weeks to receive. You will not get any notification, or confirmation when they arrive unless there is an issue. However, if you are curious, you can call the CO Real Estate Commission (CRES) to find out if they’ve received the information yet and noted any issues. The cost here is $49.

The link for the fingerprint guide is here. And the CRES phone # is (303) 894-2166.

Step 4: Complete Your Required Educational Course

You will need to complete a state certified learning course on becoming an agent. The course is 168 hours of material, which is one of the longest courses in the US for any state. However, a CO real estate license is also one of the strongest ones in the country and allows you to do deals in every other state. Additionally, you can write contracts, which not every state allows.

There are many schools, but I would recommend an online-only school. The reason that I was able to finish the class so quickly, is that I was able to skip a lot of the videos, and simply learned the material by reading the textbook. Depending on your learning style, this may be a great fit for you as well. Almost every agent that I speak with does not remember all of the material, nor uses it on a consistent basis. So it behooves you to get this out of the way as soon as possible. I recommend Colorado Real Estate School. The cost is $399 for the entire program.

Step 5: Find a Brokerage to Work For

Before you finish your class, you will want to find a brokerage to take you on. It isn’t a required step in order to take the test, but it does take some time to network and meet with different brokerages. During this step, it is important to remember your goals in getting the license in the first place. If you are using this license to transact your own deals for your personal business, make sure that you won’t have to give your brokerage a ton of money to do so. This would defeat the purpose of getting your license. Some, including the brokerage that I work for, will let you buy and sell your own homes for a nominal fee. It’s only $250 in my case, making it a no brainer.

If you’re using the license to go full time as a sales agent, then things get a lot more complicated. Some people will advise you to choose the agency with the most training. In my opinion, that is solid advice, but not if it comes at a high personal financial and/or time cost. You want to be making transactions happen, and not wasting your time on more theory and course learning. Therefore, I chose to look for an agency with great mentors, but very little formal class requirements.

One complaint of agents in general is that there are a high number of fees associated with being an agent. You can be nickel and dimed to death, and then forced to pay a high percentage of your commissions once you do transact a deal. Again, this is not to scare you, just to make you aware. Spend time finding a great agency to work for. Other licensees can be a great reference to find a company that will work well for you.

Step 6: Pass the State and National Exam

This is a two-part test that happens all at the same time. It is a 3-hour test and is actually somewhat difficult to pass due to the tricky nature of some of the questions. I passed on the first try though, which is a vote of confidence for the school strategy I outlined above. To schedule your exam, head to the PSI website. The cost here is $45. I would schedule this a little in advance as the spots tend to fill up rather quickly. Make sure not to let too long go by though after your class, so that the information is still fresh.

Step 7: Purchase Errors and Omissions Insurance

Now that you’ve finished all of the formal requirements, you’re nearly there. The next step is to purchase insurance for yourself as an agent. This is a legal requirement for agents and businesses in the state of CO. The cost is somewhat low. I ended up paying $163 for the year at cresinsurance.com.

Step 8: File the Application and Receive Your License

This is the last and most simple step. It is, strangely enough, the most expensive! You need to complete the application from the CRES. The application can be found here. You’ll need proof of completing your class, personal information, and information about your sponsoring broker (the company you work for). The cost for this is $485.

Summary

In summary, getting your license is a personal decision. If you’re looking to invest, it can be helpful but is certainly not absolutely necessary. The money and time are relatively minimal, but the test can be difficult and there are several steps. 

If you decide to get your license, let me know how the process goes, and if I left out anything important by writing a comment below. Have a great day!