Everything You Need to know About Real Estate License Reciprocity

Reciprocity exists in the real estate industry to give agents the ability to expand their businesses by working in more than one state. Reciprocity is a process that allows licensed real estate agents to meet qualifications and work in states other than the state in which they were originally licensed. Reciprocity agreements and requirements differ from state to state, so it’s important to do your research. In this guide, we break down what you need to know about real estate reciprocity, including the different types of reciprocity agreements, reciprocity versus portability, and which states offer reciprocity and portability agreements.

What is Real Estate License Reciprocity?

As stated earlier, reciprocity is a process that allows licensed real estate agents to meet qualifications and work in states other than the state they were originally licensed in. There are five different classifications of real estate reciprocity: 

1. Full Real Estate Reciprocity
2. Partial Real Estate Reciprocity
3. Mutual Real Estate Reciprocity
4. Limited Real Estate Reciprocity
5. None

How Does Real Estate Reciprocity Work?

Here is a scenario of how real estate reciprocity works: You live in Cincinnati, Ohio. Just across the river from your office is Kentucky. You get frequent calls to help people with their listings and to help them find a home in Kentucky. Can you just go across the state line to Kentucky and practice real estate if you’re a licensed agent in Ohio? The answer is yes if you meet the requirements to be a reciprocal agent in Kentucky. So, how does that happen?

Each state has reciprocal agreements with some adjoining and non-adjoining states. For example, Kentucky has a reciprocity agreement with Ohio, but also with Florida.

What is Real Estate Portability?

Reciprocity is not to be confused with portability, which refers to where you can and cannot practice real estate beyond the state in which you were originally licensed. There are three types of portability classifications: 

1. Cooperative License Portability
2. Physical Location License Portability
3. Turf License Portability

When we discuss portability of a license, we are talking about two scenarios:

Scenario #1: A real estate licensee physically moves to another state. The destination state may give them credit for the experience and education they completed for their original real estate licensing. The destination state may also require the licensee complete a few updates to gain their new license.

Scenario #2: A real estate licensee from one state travels to another state to perform a transaction and the other state has a portability agreement with their home state. The agent performs the transaction in cooperation with a broker in the portability state. (Scenario #2 sounds a lot like reciprocity, but it will depend on what states you are dealing with).

Reciprocity Versus Portability

Simply put, reciprocity may allow a licensee to cross the border and do business provided they meet the requirements for doing business in the other state. Portability mainly addresses what a licensee must do to be licensed in the state they are moving to or working in regularly. Below, we showcase an example of reciprocity versus portability.

• Reciprocity: You are a licensee in Colorado and want to sell a home in Nevada. With proper licensing submission, passage of the Nevada real estate exam, and an association with a licensed Nevada broker, you can do that. That’s just for single transactions.
• Portability: If you live in Colorado and want to move to Nevada and get licensed as a real estate agent, you will need additional education and all of your records of compliance for your license in Colorado.

Real Estate Reciprocity Agreement 

The chart below details what states offer reciprocity to which other states and what requirements must be met as well as indicates what states offer portability agreements and what type.

The 5 Types of Real Estate Reciprocity Agreements

Different states use different titles for reciprocal licenses. Some “endorse” the licensee to do single transactions through a licensed agent in their state. Some call these licensees “out-of-state cooperative license endorsements.” The state is indicating they are aware that this person from another state is doing business with confirmation by the state licensing agency. There are five classifications of real estate reciprocity agreements that are detailed below.

Full License Reciprocity States

In these states, the state you want to do business in will confirm your current license in your home state, check your background, and have you sign an “endorsed” license agreement, or prove you are working with a licensed real estate broker in their state.

For example, Minnesota has reciprocity agreements with North and South Dakota to issue reciprocal licenses for licensees of both those states (among others). No additional coursework needs to be completed. 

Partial License Reciprocity States

For these states, there are more requirements to be met to gain reciprocity rights. Comparing the above requirements of Minnesota with  South Dakota and North Dakota,, Minnesota is only a partial license reciprocity state for Wisconsin. A Minnesota agent must complete a 13-hour Wisconsin real estate course and pass the Wisconsin state exam. Same endpoint of reciprocity in both cases but there are different requirements to get there.

Mutual License Reciprocity States

This type of real estate reciprocity speaks to agents who want to transfer their license to another state. If State A has a mutual license reciprocity agreement with State B, licensees from State A must only pass an exam for State B to issue a new license.

Florida has mutual reciprocity agreements with ten states including Alabama, Illinois, and Rhode Island, so it is not always just surrounding states that another state may have a mutual agreement with.

Limited License Reciprocity States

In states that offer limited reciprocity, a licensee from State A will still have to meet  requirements from State B to do business in State B. Even though State B may not offer reciprocity to their own agents, they may allow state B licensees to qualify to do business there.  Think of it as “One-Way” reciprocity limited to out-of-state agents.

While these Limited Licenses Reciprocity States are few, their licensing department makes the decision whether to offer an applicant from another state an opportunity to work in their state and sets all requirements to earn a license. 

No License Reciprocity States

In a state that offers no reciprocity, a licensee from State A will have to meet all the requirements to do business in State B as if they were a new applicant.

California is a no reciprocity state. If you are licensed in Minnesota and spend three months of the year in California and want to do business there, you must  start from the beginning and earn an additional real estate license in California, meeting all of their local requirements. 

The 3 Types of Real Estate License Portability Agreements

At the risk of making this even more complicated, portability is broken into three  classifications  which determine what an agent must do to work in that state. 

Cooperative License Portability

In this case, an agent from State A can do business with State B if they have cooperative license portability. Think of this as your license being portable. This portability  gives you the ability to cross a state line and do business there with your original license. You will, however, have to work with a licensed State B broker in this other location

Colorado offers cooperative license portability for agents who are licensed in other states so long as you follow the requirements of transaction in Colorado. (That’s why it’s important to work with a local broker in the state).

Physical Location License Portability

This is not as strange as it used to be given our ability to do business remotely and from great distances. In a Physical Location License Portability state, the agent from State A may not enter to do business in State B but may assist customers in State B. As noted, this is not the burden it once was since we can send “paperwork” for signatures electronically.

Minnesota is a state where you can do business as a licensee from another state remotely. The licensee is aiding buyers or sellers without actually entering the state.

Turf License Portability

This type of portability does not allow out-of-state licensees to do business in their state (on their turf).

Missouri is a Turf State. On the other hand, Missouri offers full reciprocity, so by taking a 24-hour Missouri course and passing the exam, you can do business there.

Why is Real Estate License Reciprocity important in 2024 and beyond?

Reciprocity and portability have common elements. If you are a licensee in State A, you will want to thoroughly investigate what, if any, options you have if you want to do business in another state, whether you are moving there or staying in your home state.

It’s clear that meeting reciprocity requirements in states where you have family, friends, or clients could broaden your business opportunities.  With real estate transactions mostly electronics based, there’s little reason to turn down business in another state on a regular basis if you meet  the requirements to do business there.

Reciprocity has long been used by northern agents who spend winters in Florida or Arizona and want to continue business while snow-birding. The ability to do business in more places will always be a way licensees can broaden their revenue streams of business.