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Tennessee Real Estate Broker — Requirements & Free Practice

US-TN · License preparation

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Licenses, application pathways and examination requirements

Each license and applicant pathway has its own requirements and exemptions. Choosing practice questions does not determine your eligibility.

Broker

Individual real estate broker license, including principal-broker practice and retirement or reinstatement status. An affiliate broker license is a prerequisite qualification, rather than this broker credential.

Licensing authority: Tennessee Real Estate Commission · Application information

Reissue a broker license revoked for lapsed E&O coverage
Application
Reapply, pay application and applicable penalty fees, and provide qualifying E&O coverage.
Education
Meet current education requirements unless the Commission waives them.
Examinations
Pass all required examinations unless the Commission waives them. The waiver is an applicant condition.
Revocation
Broker license revoked under 62-13-112 for failure to maintain E&O insurance.
Reinstate a license suspended for lapsed E&O coverage
No examination is required for this applicant pathway.
Insurance
Provide proof of E&O coverage satisfying required terms.
Penalties
Applicable reinstatement penalty fees vary by elapsed suspension time and continuous/backdated coverage under 1260-01-.16(1)(a).
Timing
Suspension for lapsed E&O within the statutory reinstatement period; after revocation use the reissuance route.

Official no-examination sources

Effective from 2026-09-22.

Initial licensure by examination
Application Window
Apply for the broker license within one year after passing; otherwise retake and pass, unless the Commission waives the requirement under 62-13-303(d).
Board Experience Instruction
The pinned Broker page states: "24 months actively licensed, if the candidate has a baccalaureate degree with a major in real estate." The statutory 12-month provision for pre-May-12-1988 applicants is retained above.
Character
Satisfactory proof of honesty, trustworthiness, integrity and competence; criminal and disciplinary history is reviewed by the Commission under 1260-01-.01.
Commission Approval
Submit the broker examination application and obtain Commission approval before reserving the examination.
Course Completion
Approved prelicensing courses longer than eight classroom hours have a comprehensive final examination or equivalent measure of achievement; these course requirements are applicant education conditions.
Education
120 approved classroom hours in real estate, including 30 hours of office or brokerage management.
Errors And Omissions Insurance
Provide proof of qualifying E&O insurance.
Experience After May121988
If initially licensed as an affiliate broker after May 12, 1988: 36 months of active real estate licensure, reduced to 24 months with a baccalaureate degree majoring in real estate.
Experience On Or Before May121988
If initially licensed as an affiliate broker on or before May 12, 1988: 24 months engaged as a real estate licensee, reduced to 12 months with a baccalaureate degree majoring in real estate.
Fingerprints
The Board requires an electronic fingerprint receipt if not currently an active Tennessee affiliate; the statute exempts obtaining a broker license after affiliate licensure, and 1260-01-.17 treats an applicant who no longer holds the affiliate license as an initial applicant.
License Application
Submit the PSI examination application, signed by the principal broker where applicable, education proof, entitlement verification and applicable fees through CORE.
Minimum Age
At least 18 years old.
Nonresident Applicants
Applicants residing outside Tennessee provide the nonresident consent-to-suits form and the Board-required licensing documentation.
Vacation Lodging Services
2026 Public Chapter 1095 permits an already licensed broker to provide vacation lodging services without additional designated-agent licensure or training, under principal-broker supervision. This is an authorization of this same broker license.
Good standing reactivation after more than one year expired
No examination is required for this applicant pathway.
Conflicting Rule
1260-01-.21(3) requires reapplication and examinations after more than one year, but the higher-ranked 62-13-319(c), amended by 2026 Public Chapter 1039 §47, permits qualifying good-standing licensees to reactivate with penalties and a 30-hour course.
Eligibility
Licensee in good standing; license expired more than one year and was not temporarily retired under 62-13-318, under 62-13-319(c) as amended by 2026 Public Chapter 1039 §47 effective July 1, 2026. There is no two-year maximum in the enacted text.
Requirements
Pay the statutory penalty and complete a Commission-approved 30-hour continuing education course.

Official no-examination sources

Effective from 2026-09-22.

Reactivate a retired license that lapsed for nonpayment
No examination is required for this applicant pathway.
Education Alternatives
Either supply all education that would have been required if active throughout retirement, or complete a Commission-approved 30-hour continuing education course. Course alternatives are applicant conditions, not examination alternatives.
Eligibility
Broker was in good standing when retired, but did not pay retirement renewal fees and the license lapsed.
Fees
Pay all back renewal fees and applicable penalties.

Official no-examination sources

Effective from 2026-09-22.

Medical waiver with reapplication after more than one year expired
Expiration
Expired more than one year and not eligible for the separate good-standing, not-retired statutory course-reactivation route under amended 62-13-319(c).
Licensing Requirements
Reapply, meet current education requirements and pass the national and Tennessee broker state examinations unless the Commission grants a separate examination waiver.
Medical Waiver
Submit a doctor’s statement and signed lapse explanation. If granted, the waiver removes late penalties, while all other licensing conditions remain.
Reinstatement following personal or family health problems
No examination is required for this applicant pathway.
Commission Decision
Commission must grant the medical waiver; pay renewal fees and satisfy all other licensing conditions. Late penalties are not assessed.
Expiration
Medical late-penalty waiver for a license expired at most one year; more-than-one-year reapplication with an examination requirement is recorded separately.
Medical Waiver
Provide a signed doctor’s statement describing the nature and duration of illness and a signed explanation of the lapse.
Other Prerequisites
The health provision excuses late penalties; any independently applicable examination requirement for a long-expired license remains part of the long-expiration route.

Official no-examination sources

Effective from 2026-09-22.

Military temporary permit conversion to full broker license
No examination is required for this applicant pathway.
Additional Acts
Complete all Commission-set additional requirements and supply satisfactory proof. Any unspecified additional qualification or assessment is an applicant condition.
Dating
Full-license issuance date is the original permit date, with the corresponding full-license expiration.
Temporary Permit
Holds the military broker temporary permit.

Official no-examination sources

Effective from 2026-09-22.

Military applicant licensure by substantial equivalency
No examination is required for this applicant pathway.
Application
Apply and pay all fees for a regular broker license.
Eligibility
Applicant must meet T.C.A. § 4-3-1304(d)(1) military eligibility as referenced by 1260-01-.20; the Department identifies eligible servicemembers and spouses holding a current license in good standing.
Equivalency
The Commission determines that the other jurisdiction’s licensing requirements are substantially equivalent.
Existing License
Provide the existing license and documentation of qualifications for Commission equivalency review. An examination of another jurisdiction is an applicant qualification, not a Tennessee leaf.
Military Credit
Substantially equivalent military education, training or experience may count toward qualifications.

Official no-examination sources

Effective from 2026-09-22.

Military family recognition of an existing broker license
No examination is required for this applicant pathway.
Application
Submit military orders, marriage certificate for a spouse, and notarized affidavit affirming identity, truth/completeness, understanding and compliance with Tennessee licensing requirements and scope, and good standing in all licensing jurisdictions. A background check may be conducted.
Board Additional Conditions
The Department article additionally states reasonably similar licensing standards, agreement to Tennessee authority, and a Tennessee application by the earlier of existing-license expiration or one year after exemption registration. These implementing instructions are disclosed alongside the statutory recognition terms; the statute controls the examination set.
Board Registration Instruction
The August 5, 2026 Department article instructs CORE registration by searching Armed Forces, selecting the profession, and attaching active-duty orders and a certificate of good standing.
Covered License
License in good standing, not revoked or disciplined, no pending unprofessional-conduct investigation and no voluntary surrender while under such investigation, under 50 U.S.C. 4025a(f)(1).
Eligibility
Active servicemember or spouse holding a covered broker license, relocating under military orders to Tennessee or to a contiguous state while seeking work in Tennessee, under 58-10-103. No other state’s own licensing requirements are adopted here.
Interstate Compact
58-10-104(6) excludes a covered license subject to an interstate compact to which Tennessee is a party.

Official no-examination sources

Effective from 2026-09-22.

Renew after release from qualifying military active duty
No examination is required for this applicant pathway.
Eligibility
National Guard or armed-forces reserve member whose license expired during activation.
Waivers
No late fees; CE waiver applies where duty prevented CE and waiver was requested, or occupation was performed during military duty with supporting documentation.
Window
Renew within six months after release and provide required activation documentation.

Official no-examination sources

Effective from 2026-09-22.

Licensure following out of state qualification review
Application Window
Apply for the broker license within one year after passing; otherwise retake and pass, unless the Commission waives the requirement under 62-13-303(d).
Board Experience Instruction
The pinned Broker page states: "24 months actively licensed, if the candidate has a baccalaureate degree with a major in real estate." The statutory 12-month provision for pre-May-12-1988 applicants is retained above.
Character
Satisfactory proof of honesty, trustworthiness, integrity and competence; criminal and disciplinary history is reviewed by the Commission under 1260-01-.01.
Commission Approval
Submit the broker examination application and obtain Commission approval before reserving the examination.
Course Completion
Approved prelicensing courses longer than eight classroom hours have a comprehensive final examination or equivalent measure of achievement; these course requirements are applicant education conditions.
Education
120 approved classroom hours in real estate, including 30 hours of office or brokerage management.
Education Equivalency
The Board evaluates accepted education and experience for equivalency. Broker worksheet requires 120 hours, including at least 30 hours of office/brokerage management or equivalent, and three years of active real estate licensure.
Errors And Omissions Insurance
Provide proof of qualifying E&O insurance.
Existing License
Applicant holds or has held a real estate license in another jurisdiction and supplies certified licensing history from every licensing jurisdiction; the worksheet requires a history issued within six months, showing education, examination source and score.
Experience After May121988
If initially licensed as an affiliate broker after May 12, 1988: 36 months of active real estate licensure, reduced to 24 months with a baccalaureate degree majoring in real estate.
Experience On Or Before May121988
If initially licensed as an affiliate broker on or before May 12, 1988: 24 months engaged as a real estate licensee, reduced to 12 months with a baccalaureate degree majoring in real estate.
Fingerprints
The Board requires an electronic fingerprint receipt if not currently an active Tennessee affiliate; the statute exempts obtaining a broker license after affiliate licensure, and 1260-01-.17 treats an applicant who no longer holds the affiliate license as an initial applicant.
License Application
Submit the PSI examination application, signed by the principal broker where applicable, education proof, entitlement verification and applicable fees through CORE.
Minimum Age
At least 18 years old.
National Waiver
The Commission may excuse the uniform national portion for an applicant licensed elsewhere who passed a Commission-approved examination at the minimum uniform-principles score. The national examination remains a leaf because it is involved in this route; a waiver is applicant specific.
No Automatic Reciprocity
The current Board Renewal/Reciprocity page states: "The Tennessee Real Estate Commission does not offer a reciprocal license at this time." Submit Worksheet A and certified histories for individual qualification review.
Nonresident Applicants
Applicants residing outside Tennessee provide the nonresident consent-to-suits form and the Board-required licensing documentation.
Nonresident Firm
The bulletin requires nonresident candidates to affiliate with a firm licensed in Tennessee and a Tennessee-licensed principal broker.
Other Approved Examinations
The bulletin names PSI, ACT, ETS, NAI, Promissor, AMP and ARELLO-certified examinations as prior written-examination evidence at the same license level; it does not identify a separate current nationwide examination/version for each historical vendor name.
Prior National Score
The worksheet requires proof of an accredited national broker examination score of at least 75% for a waiver. A jurisdiction-created examination instead requires taking both Tennessee portions; those other jurisdictions’ own examinations are conditions, not leaves.
Designation or transfer as principal broker
No examination is required for this applicant pathway.
Duties
Full-time management and supervision apply under 1260-02-.01; designation does not create a second broker examination.
Existing License
Hold a current broker license and maintain qualifying E&O insurance.
Firm
Assign or transfer the principal broker to a licensed firm through TREC 1, with TREC 2 when another principal broker is in place, and applicable transfer fees.

Official no-examination sources

Effective from 2026-09-22.

Reactivate a current retired broker license
No examination is required for this applicant pathway.
Application
Submit the reactivation application and TREC 1 through CORE and pay the fee.
Education
16 approved hours during the current renewal period, completed before reactivation; qualifying same-period education before retirement may count.
Insurance And Firm
Provide current E&O insurance and affiliate with an active firm.

Official no-examination sources

Effective from 2026-09-22.

Reapplication after more than one year of expiration
Board Course Instruction
The Board allows the approved 30-hour T.R.A.C.E. course in lieu of retesting after more than one year. The qualifying good-standing, non-retired course route is separately retained under amended 62-13-319(c); this residual route covers applicants outside that statutory class, with any Commission examination waiver recorded as an applicant condition.
Expiration
Expired more than one year and not eligible for the separate good-standing, not-retired statutory course-reactivation route under amended 62-13-319(c).
Fingerprints
Reapplicants treated as initial applicants submit electronic fingerprints under 1260-01-.17(1)(e)1.
Reapplication
Reapply, meet current education requirements and pass required national and Tennessee broker state examinations unless the Commission grants a permitted waiver.
Waiver
62-13-319(a) permits waiver of reexamination/additional education or reinstatement subject to reasonable conditions.
Reinstatement after sixty days and within one year
No examination is required for this applicant pathway.
Commission Order
Sign and fulfill a reinstatement order, comply with all prerequisites, and pay renewal and penalty fees.
Expiration
More than 60 days but not more than one year expired.
Penalties
$50 per 30-day period through 120 days, then $100 per 30-day period from day 121 through one year, as specified by 1260-01-.21(2)(b).
Statutory Discretion
62-13-319(a) permits reapplication after 60 days with the Commission’s waiver of reexamination/additional education or reinstatement on reasonable conditions; the rule implements the reinstatement-order pathway.

Official no-examination sources

Effective from 2026-09-22.

Reinstatement within sixty days of expiration
No examination is required for this applicant pathway.
Compliance
Provide proof of compliance with licensing/renewal prerequisites, pay renewal and applicable penalty fees.
Expiration
License expired no more than 60 days ago.
Penalty
Board assesses $50 per thirty-day period or portion thereof within this interval.

Official no-examination sources

Effective from 2026-09-22.

Active broker license renewal
No examination is required for this applicant pathway.
Board Grandfather Instruction
The August 31, 2026 CE FAQ states that brokers licensed in Tennessee before 2005 have grandfathered status, with CE required starting January 1, 2026 for principal brokers overseeing an affiliate; the statutory exemption is recorded above.
Board Post Licensing Instruction
The Board broker page and August 31, 2026 CE FAQ describe the four-year deadline. The January 2026 compilation’s three-year text is superseded by Public Chapter 1039 §39.
Continuing Education
After completing the postlicensing hours, 16 classroom hours every two years; a broker originally licensed before January 1, 2005 who supervises no affiliate brokers is exempt under 62-13-303(h)(3).
Course Composition
Board specifies 6 TREC CORE hours and 10 elective hours.
License
Existing broker license; renew every two years and pay required fees.
Post Licensing
Complete 120 additional approved hours within four years of original broker issuance, under 62-13-303(h) as amended by 2026 Public Chapter 1039 §39, effective July 1, 2026.

Official no-examination sources

Effective from 2026-09-22.

Requalify as broker after downgrading to affiliate broker
Post Licensing
Board says that failure to complete 120 postlicensing hours within four years requires downgrade or retest/reapply.
Prior Status
Former broker who downgraded to an affiliate broker license.
Retesting
The Board requires retesting to become a broker again; satisfy current broker qualifications and obtain Commission approval.
Renew temporarily retired broker license
No examination is required for this applicant pathway.
Education And Insurance
While retired, CE and active E&O insurance are not required.
Renewal
Pay the renewal fee before expiration every two years.
Status
License remains temporarily retired; no practice is authorized.

Official no-examination sources

Effective from 2026-09-22.

Place broker license in temporary retirement
No examination is required for this applicant pathway.
Application
Submit the retirement application and TREC 1 through CORE and pay the change-of-status fee.
Existing License
Holds an existing broker license; retirement changes its status.
Insurance And Education
The Board does not require active E&O insurance, CE or firm affiliation while retired.
Practice
No real estate transactions while retired; commissions from transactions completed before retirement may be received.

Official no-examination sources

Effective from 2026-09-22.

Real Estate Firm

A real estate firm must be licensed by the Tennessee Real Estate Commission, have a principal broker, and maintain a fixed location and adequate facilities for affiliated licensees.

Licensing authority: Tennessee Real Estate Commission · Application information

Branch office firm licensure
No examination is required for this applicant pathway.
Application
Submit the firm license application and fees; each licensed branch is a firm-license application.
Location
A branch may be at a home where the Board’s office requirements apply. The 2016 form and 1260-02-.03 still ask for zoning documentation; 2026 Public Chapter 1039 §40 removes the statutory wording requiring the real estate office location to conform with zoning laws and ordinances. The surviving Board requirements remain applicant conditions.
Nonresident
A firm physically outside Tennessee supplies Consent to Jurisdiction and Secretary of State registration, unless a sole proprietor.
Principal Broker
Have a full-time principal broker and provide the required firm and principal-broker documentation.

Official no-examination sources

Effective from 2026-09-22.

Initial real estate firm licensure
No examination is required for this applicant pathway.
Application
Submit New Real Estate Firm Application through CORE and pay $90; principal-broker transfer fees apply where required.
Entity
Corporations and LLCs provide current Tennessee Secretary of State certification or good-standing letter and any DBA name.
Escrow
Provide proof of escrow account signed by the principal broker, or submit the Board waiver if no third-party funds will be held.
Nonresident
A firm physically outside Tennessee supplies Consent to Jurisdiction and Secretary of State registration, unless a sole proprietor.
Premises
Maintain a fixed location and adequate facilities.
Principal Broker
Designate an existing Tennessee-licensed principal broker and submit TREC 1; if replacing a principal broker, provide TREC 2.

Official no-examination sources

Effective from 2026-09-22.

Reactivate a retired firm license lapsed for nonpayment
No examination is required for this applicant pathway.
Education Text
62-13-318(d) requires either all otherwise-required real-estate education or a Commission-approved 30-hour CE course; the condition is recorded as written without converting it into a firm examination.
Fees
Pay back renewal fees and applicable penalties.
Status
Firm was in good standing when retired and its retired license lapsed for nonpayment.

Official no-examination sources

Effective from 2026-09-22.

Reactivate a current retired firm license
No examination is required for this applicant pathway.
Application
Submit the proper change-of-status form and fee with current firm and principal-broker information.
Education Text
62-13-318(b)(2) states that the licensee supplies proof of 16 classroom hours in the current license renewal period; the provision is recorded as written, without assigning the firm’s hours to a different person.
Status
Existing firm license temporarily retired under 62-13-318.

Official no-examination sources

Effective from 2026-09-22.

Reapply for expired firm license after sixty days
No examination is required for this applicant pathway.
Application
Use Firm Reapply under the firm credentials in CORE and answer all application questions.
Entity
Corporation or LLC supplies current Secretary of State certification or good-standing letter and DBA name.
Escrow
Supply signed escrow-bank/account details or applicable escrow waiver.
Expiration
Firm license fully expired more than 60 days.
Fee
$90.
Insurance
Provide errors and omissions insurance as the Board requires.

Official no-examination sources

Effective from 2026-09-22.

Firm license renewal
No examination is required for this applicant pathway.
Existing License
Existing active real estate firm or branch-office firm license.
Grace
Within 60 days after expiration, use the renewal application and pay applicable late fees.
Renewal
Renew through CORE with required fees and current firm/principal-broker information.

Official no-examination sources

Effective from 2026-09-22.

Renew a retired real estate firm license
No examination is required for this applicant pathway.
Board Timing Instruction
The September 14, 2026 firm-retirement article says renewal is within 90 days of expiration; 62-13-318(a)(2) requires payment before expiration, which controls.
Renewal
Board requires renewal every two years and the renewal fee to prevent full expiration.
Status
Existing firm license in retired status.

Official no-examination sources

Effective from 2026-09-22.

Place a real estate firm license into retirement
No examination is required for this applicant pathway.
Application
Submit the completed, signed old TREC 2 form with $25 by mail or in person; Board states this is a paper process.
Continuing Renewal
Renew every two years and pay the required fee to avoid full expiration.
Eligibility
Firm license active and in good standing.
Practice
A retired firm may not engage in licensed activities under 62-13-318(a)(3).

Official no-examination sources

Effective from 2026-09-22.

Temporary license

Discretionary temporary license with permanent-license rights where the licensing authority cannot complete required military recognition within thirty days of the application.

Licensing authority: Tennessee Real Estate Commission · Application information

Temporary licensure pending military family recognition
No examination is required for this applicant pathway.
Application
Submit military orders, marriage certificate for a spouse, and notarized affidavit affirming identity, truth/completeness, understanding and compliance with Tennessee licensing requirements and scope, and good standing in all licensing jurisdictions. A background check may be conducted.
Board Additional Conditions
The Department article additionally states reasonably similar licensing standards, agreement to Tennessee authority, and a Tennessee application by the earlier of existing-license expiration or one year after exemption registration. These implementing instructions are disclosed alongside the statutory recognition terms; the statute controls the examination set.
Board Registration Instruction
The August 5, 2026 Department article instructs CORE registration by searching Armed Forces, selecting the profession, and attaching active-duty orders and a certificate of good standing.
Covered License
License in good standing, not revoked or disciplined, no pending unprofessional-conduct investigation and no voluntary surrender while under such investigation, under 50 U.S.C. 4025a(f)(1).
Discretion
The authority may issue a temporary license; the statute does not make issuance mandatory.
Eligibility
Active servicemember or spouse holding a covered broker license, relocating under military orders to Tennessee or to a contiguous state while seeking work in Tennessee, under 58-10-103. No other state’s own licensing requirements are adopted here.
Interstate Compact
58-10-104(6) excludes a covered license subject to an interstate compact to which Tennessee is a party.
Pending Recognition
Authority is required to recognize the covered license but cannot do so during the 30 days after receiving the application.
Rights
Same rights, privileges and responsibilities as a permanent license.

Official no-examination sources

Effective from 2026-09-22.

Temporary permit — Broker (military applicants)

Temporary permit for an eligible military applicant whose existing license is not yet substantially equivalent; permits broker services during the Commission-set completion period.

Licensing authority: Tennessee Real Estate Commission · Application information

Military temporary permit extension or renewal
No examination is required for this applicant pathway.
Good Cause
An extension may be granted by the Commission for good cause.
Renewal Cycle
If an extension exceeds a full-license renewal cycle, file a renewal application with documentation, fees and required continuing education.
Term
The permit otherwise expires on its Commission-set date; timely completion of equivalency requirements can also extend it.

Official no-examination sources

Effective from 2026-09-22.

Military temporary permit issuance
No examination is required for this applicant pathway.
Application
Apply and pay regular-license fees; the permit authorizes broker services during the completion period.
Completion Period
Commission sets a period shorter than a full renewal cycle to complete those acts.
Eligibility
Applicant must meet T.C.A. § 4-3-1304(d)(1) military eligibility as referenced by 1260-01-.20; the Department identifies eligible servicemembers and spouses holding a current license in good standing.
Existing License
The applicant’s existing license is not substantially equivalent, but additional education, training, experience or other Commission-required acts can establish equivalency.

Official no-examination sources

Effective from 2026-09-22.

Tennessee State Portion of the Real Estate Broker Examination

Provider
PSI Services LLC
Format
Computer administered examination
Exam questions
50 scored questions (50 points); PSI may additionally administer 5–10 unscored experimental questions.
Time limit
90 minutes
Passing score
38 correct answers out of 50; PSI labels the passing standard 75%
Exam fee
$26 for the state portion
Examination outline
  • Duties and Powers of Real Estate Commission
    • Purpose of Commission
    • Persons and Disputes Not Within Commission Jurisdiction
    • Complaints, Notifications, Hearings
    • Disciplinary Actions
  • Licensing Requirements
    • Licensing Examinations
    • Educational Requirements
    • Other Qualifications
    • Change of Status, Name or Address
    • Firm Licenses; License Display
    • Renewal of License
    • Errors and Omissions Insurance
  • Advertising and Marketing
    • Requirements for Owner/Agent Advertising
    • "For Sale" Signs
    • Brokerage Company and Team Advertising
    • Internet Advertising
    • Information Required in Advertised Listings
    • Gifts and Prizes
    • Advertising on Social Media
  • Broker/Affiliate Relationships
    • How Compensation May Be Paid
    • Permitted Affiliations
    • Broker’s Supervisory Responsibility
    • Change of Affiliation
    • Ownership of Affiliates’ Listings
  • Handling of Documents and Record Keeping
    • Responsibility for Keeping Records
    • Length of Time to Keep Records
    • What Information/Documents Must Be Kept
    • Handling Offers and other Transaction Documents/Leave Copies
    • Commission Access to Records
  • Handling of Trust/Escrow Funds
    • Permissible Disbursements of Trust/Escrow Funds
    • General Requirements of Trust/Escrow Accounts
    • Commingling; Improper Use of Trust/Escrow Funds
    • Depository and Account Requirements
    • Interest; Non-liquid Valuables as Earnest Money
    • Time Requirements for Deposit of Funds
  • Other Improper Activities and Consumer Protection
    • Improper Listing Agreements
    • Discrimination
    • Other Misconduct
  • Agency and Disclosure Issues
    • General Agency Duties and Creation of Agency Relationship
    • Disclosure of Agency Relationships
    • Disclosure of Material Facts and Misrepresentation
    • Disclosure of Agent’s Interest
    • Handling of Offers
    • Designated Agents
    • Facilitators
    • Dual Agency
  • Special Areas of Practice
    • Timeshare
    • Property Management
    • Commercial/Industrial Real Estate
Examination sources

National Broker Exam — National Portion (Real Estate Principles and Practices)

Provider
PSI Services LLC
Format
National portion of state real estate broker licensing examinations with its own minimum passing score; scenario-based questions with more than four options and one best answer, each option weighted zero, one or two points; candidates who fail one portion retake only that portion
Examination outline
  • I. Property Ownership (Broker 10%) (10%)
    • A. Real and personal property; conveyances
    • B. Land characteristics and legal descriptions: 1. Metes and bounds method of legal property description; 2. Lot and block (recorded plat) method of legal property description; 3. Government survey (rectangular survey) method of legal property description; 4. Measuring structures (linear and square footage); 5. Land measurement
    • C. Encumbrances and effects on property ownership: 1. Types of liens and their effect on the title and value of real property; 2. Easements, rights of way and licenses, including their effect on the title, value and use of real property; 3. Encroachments and their effect on the title, value and use of real property; 4. Potential encumbrances on title, such as probate, leases, or adverse possession; 5. Property rights that may be conveyed separately from use of the land surface, such as mineral and other subsurface rights, air rights, or water rights
    • D. Types of ownership: 1. Ownership in severalty/sole ownership; 2. Implications of ownership as tenants in common; 3. Implications of ownership in joint tenancy; 4. Forms of common-interest ownership, such as Timeshares, Condominiums and Co-ops; 5. Property ownership held in a trust or by an estate; 6. Ownership by business entities; 7. Life Estate ownership
  • II. Land use Controls (Broker 5%) (5%)
    • A. Government rights in land: 1. Government rights to impose property taxes and special assessments; 2. Government rights to acquire land through eminent domain, condemnation and escheat
    • B. Government controls on land use
    • C. Private controls: 1. Deed conditions or restrictions on property use; 2. Subdivision covenants, conditions and restrictions (CC&Rs) on property use; 3. Condominium and owners’ associations regulations or bylaws on property use
  • III. Valuation (Broker 8%) (8%)
    • A. Appraisals: 1. Appraisals for valuation of real property; 2. Situations which require appraisal by a licensed or certified appraiser and brokerage-related actions that constitute unauthorized appraisal practice; 3. General steps in appraisal process
    • B. Estimating Value: 1. Economic principles and property characteristics that affect value of real property; 2. Sales or market comparison approach to property valuation and appropriate uses; 3. Cost approach to property valuation and appropriate uses; 4. Income analysis approach to property valuation and appropriate uses
    • C. Comparative Market Analysis (CMA): 1. Competitive/Comparative Market Analysis (CMA), BPO or equivalent; 2. Automated Valuation Method (AVM), appraisal valuation and Comparative Market Analysis (CMA)
  • IV. Financing (Broker 9%) (9%)
    • A. Basic Concepts and Terminology: 1. Loan financing (for example, points, LTV, PMI, interest, PITI); 2. General underwriting process (e.g., debt ratios, credit scoring and history); 3. Standard mortgage/deed of trust clauses and conditions; 4. Essential elements of a promissory note
    • B. Types of Loans: 1. Conventional loans; 2. Amortized loans, partially amortized (balloon) loans, interest-only loans; 3. Adjustable-rate mortgage (ARM) loans; 4. Government Loans — a. FHA insured loans; b. VA guaranteed loans; c. USDA/Rural Development loan programs; 5. Owner financing (for example, installment or land contract/contract for deed); 6. Reverse-mortgage loans; 7. Home equity loans and lines of credit; 8. Construction loans; 9. Rehab loans; 10. Bridge loans
    • C. Financing and Lending: 1. Real Estate Settlement Procedures Act (RESPA), including kickbacks; 2. Truth-in-Lending Act (Regulation Z), including advertising; 3. Requirements and time frames of TRID (TILA-RESPA Integrated Disclosures); 4. Equal Credit Opportunity Act; 5. Lending Process (application through loan closing); 6. Risky loan features, such as prepayment penalties and balloon payments
  • V. Contracts (Broker 19%) (19%)
    • A. General Contract Law: 1. General principles of contract law; 2. Elements necessary for a contract to be valid; 3. Effect of the Statute of Frauds; 4. Offer and a contract; 5. Enforceability of contracts; 6. Void, voidable and unenforceable contracts; 7. Bilateral and unilateral contracts; 8. Nature and use of option agreements; 9. Notice, delivery, acceptance and execution of contracts; 10. Appropriate use, risks, and advantages of electronic signatures and paperless transactions; 11. Rights and obligations of the parties to a contract; 12. Possible remedies for breach or non-performance of contract; 13. Termination, rescission and cancellation of contracts
    • B. Purchase and Lease Contracts: 1. Addenda and amendments to contracts; 2. Purchase agreements; 3. Contract contingencies and methods for satisfying them; 4. Leases and rental agreements; 5. Lease-purchase agreements; 6. Types of leases
    • C. Proper handling of multiple offers and counteroffers
  • VI. Agency (Broker 13%) (13%)
    • A. Agency and non-agency relationships: 1. Agency relationships and how they are established; 2. Types of listing contracts; 3. Buyer brokerage/tenant representation contracts; 4. Other brokerage relationships, including transaction brokers and facilitators; 5. Powers of attorney and other assignments of authority; 6. Conditions for termination of agency or brokerage service agreements
    • B. Agent Duties: 1. Fiduciary duties of agents; 2. Agent's duties to customers/non-clients, including honesty and good faith
    • C. Agency Disclosures: 1. Disclosure of agency/representation; 2. Disclosure of possible conflict of interest or self-interest
  • VII. Property Disclosures (Broker 7%) (7%)
    • A. Property Condition: 1. Seller's property condition disclosure requirements; 2. Property conditions that may warrant inspections or a survey; 3. Red flags that warrant investigation of public or private land use controls
    • B. Environmental and Government Disclosures: 1. Environmental issues requiring disclosure; 2. Federal, state, or local disclosure requirements regarding the property
    • C. Disclosure of material facts and material defects
  • VIII. Property Management (Broker 5%) (5%)
    • A. Duties and Responsibilities: 1. Procurement and qualification of prospective tenants; 2. Fair housing and ADA compliance specific to property management; 3. How to complete a market analysis to identify factors in setting rents or lease rates; 4. Property manager responsibility for maintenance, improvements, reporting and risk management (BROKER ONLY); 5. Handling landlord and tenant funds; trust accounts, reports and disbursements (BROKER ONLY); 6. Provisions of property management contracts (BROKER ONLY)
    • B. Landlord and tenant rights and obligations
  • IX. Transfer of Title (Broker 6%) (6%)
    • A. Types of deeds
    • B. Title Insurance and Searches: 1. Title insurance policies and title searches; 2. Potential title problems and resolutions; 3. Marketable and insurable title
    • C. Closing Process: 1. When transfer of ownership becomes effective; 2. Process and importance of recordation; 3. Settlement procedures (closing) and parties involved; 4. Home and new construction warranties
    • D. Special Processes: 1. Special issues in transferring foreclosed properties; 2. Special issues in short sale transactions; 3. Special issues in probate transactions
  • X. Practice of Real Estate (Broker 12%) (12%)
    • A. Antidiscrimination: 1. Federal Fair Housing Act general principles and exemptions; 2. Protected classes under Federal Fair Housing Act; 3. Protections against discrimination based on gender identity and sexual orientation; 4. Prohibited conduct under Federal Fair Housing Act (Redlining, Blockbusting, Steering, Disparate Treatment); 5. Fair housing advertising rules; 6. Americans with Disabilities Act (ADA) obligations pertaining to accessibility and reasonable accommodations
    • B. Legislation and Regulations: 1. Licensees’ status as employees or independent contractors; 2. Antitrust laws and types of violations, fines and penalties; 3. Do-Not-Call List rule compliance; 4. Proper use of Social Media and Internet communication and advertising
    • C. Duties and Responsibilities: 1. Protection of confidential personal information (written, verbal or electronic); 2. Duties when handling funds of others in transactions; 3. Licensee responsibility for due diligence in real estate transactions
    • D. Supervisory Responsibilities (BROKER ONLY): 1. Broker's supervisory responsibilities (licensees, teams and unlicensed assistants and employees) (BROKER ONLY); 2. Broker relationship with licensees (employees or independent contractors and governing rules) (BROKER ONLY)
  • XI. Real Estate Calculations (Broker 6%) (6%)
    • A. Calculations for Transactions: 1. Seller’s net proceeds; 2. Buyer funds needed at closing; 3. Real property tax and other prorations; 4. Real property transfer fees; 5. PITI (Principal, Interest, Taxes and Insurance) payments estimate given loan rate and term
    • B. General Concepts: 1. Equity; 2. Rate of return/Capitalization rate; 3. Loan-to-Value ratio; 4. Discount points and loan origination fees
Examination sources