California Real Estate Exam: Everything You Need to Know

The real estate exam is the last hurdle standing between you and your career. Once you pass the exam, you can get your license and become a real estate agent. 

The only way you can pass is by feeling confident and prepared. That’s why this article will walk you through everything you need to know about the exam. From submitting your application to best study tips, we have you covered.

In this article, we will go over:

• How to apply for the real estate exam
• How hard is the exam
• What does it cover
• What kind of vocab is on the exam
• What kind of questions will you see
• Best study practices to pass first try

Take a Free CA Real Estate Exam

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How to Apply for the Real Estate Exam in California

To schedule the real estate exam in California, you will need to create an eLicensing account on the Department of Real Estate’s (DRE’s) website. On your eLicensing portal, you may submit an application online.

When you send in your application, you will need to attached the following documents:

• A valid photo ID
• Completed Live Scan form
• 3 Course Certificates

As well as pay the application and licensing fee. Keep in mind, there are additional fees that you will have to pay when you receive a Live Scan Background Check.

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Where Do I Take the Real Estate Exam?

In California, you have the option to take the exam at the following locations:

• Los Angeles Vicinity
• Fresno
• Oakland
• Sacramento
• San Diego

Applicants are encouraged to take the exam at a location nearest to them. Keep in mind, you cannot take the real estate exam online. It must be done in person. Therefore, if you are out of state, you will have to find a way to get to one of the locations above.

What to Bring Day-Of

On the day of your exam, you will need to bring a valid form of photo identification. This includes:

• Valid I.D. or Driver’s License
• Passport
• Military Identification Card

What's on the California Real Estate Exam?

As of 2024, the exam covers 7 categories. These categories include:

• Property Ownership and Land use Controls and Regulations (15%)
• Laws of Agency and Fiduciary Duties (17%)
• Property Valuation and Financial Analysis (14%)
• Financing (9%)
• Transfer of Property (8%)
• Practice of Real Estate and Disclosures (25%)
• Contracts (approximately 12%)

Let's dive into each one to explore what exactly is covered in each category.

Property Ownership and Land use Controls and Regulations (17%)

This category covers various types of property ownership, including individual and joint ownership, as well as the legal regulations and land use controls that impact how property can be used and developed. This includes understanding zoning laws, building codes, and environmental regulations that govern property use and development.

For this category, you should study up on the following:

• Classes of Property
• Property Characteristics
• Encumbrances
• Types of Ownership
• Descriptions of Property
• Government Rights in Land
• Public Controls
• Environmental Hazards and Regulations
• Private Controls
• Water Rights
• Special Categories of Land

Laws of Agency and Fiduciary Duties (14%)

This category focuses on the legal relationship between real estate agents and their clients, emphasizing the duties agents owe to their clients, such as loyalty, disclosure, and confidentiality. It covers the principles of agency law, including how agents must act in their clients' best interests and the legal implications of breaching fiduciary duties.

Expect to see the following:

• Law, Definition and Nature of Agency Relationships, Types of Agencies, and Agents
• Creation of Agency and Agency Agreements
• Responsibilities of Agent to Seller/Buyer as Principal
• Disclosure of Agency
• Disclosure of Acting as Principal or Other Interest
• Termination of Agency
• Commission and Fees
• Responsibilities of Agent to Non-Client Third Parties

Property Valuation and Financial Analysis (14%)

This covers the assessment of property value. It covers assessing the value of properties using various methods such as comparative market analysis, income approach, and cost approach. It also includes financial analysis techniques to evaluate investment potential, including cash flow analysis, capitalization rates, and return on investment calculations.

Be sure to review the following:

• Value
• Methods of Estimating Value
• Financial Analysis

Financing (9%)

You will see methods of property financing, including different types of mortgages, loan terms, and interest rates. It also covers the processes involved in obtaining and managing financing, such as loan applications, underwriting, and the roles of lenders and brokers in real estate transactions.

• General Concepts
• Types of Loans
• Sources of Financing
• Government Programs
• Mortgages/Deeds of Trust/Notes
• Financing/Credit Laws
• Loan Brokerage
• Types of Loan Originators

Transfer of Property (8%)

This part addresses the legal processes and requirements involved in transferring ownership of real estate. This includes understanding deeds, the recording process, title transfers, and the impact of various types of transfers such as sales, gifts, or inheritance.

For this category, you should study up on:

• Title Insurance
• Deeds
• Escrow
• Tax Aspects
• Special Processes
• Transfer through Court Supervision
• Types of Vesting

Practice of Real Estate and Disclosures (25%)

This is a whopper of a category. 1/4 of the entire exam comes down to Practice of Real Estate and Disclosures – it's important! It covers the day-to-day operations of real estate practice, including agent responsibilities, transaction procedures, and compliance with industry regulations. It also emphasizes the importance of disclosures, such as material facts and known defects, that agents must provide to buyers and sellers to ensure transparency and protect all parties involved in a transaction.

A great way to cover all the material is to review:

• Trust Account Management
• Fair Housing Laws
• Truth in Advertising
• Record Keeping Requirements
• Agency Supervision
• Permitted Activities of Unlicensed Sales Assistants
• DRE Jurisdiction and Disciplinary Actions
• Licensing, and Continuing Education Requirements and Procedures
• California Real Estate Recovery Fund
• General Ethics
• Technology
• Property Management
• Commercial/Industrial/Income Properties
• Specialty Areas
• Transfer Disclosure Statement
• Natural Hazard Disclosure Statements
• Disclosure of Material Facts Affecting Property Value
• Need for Inspection and Obtaining/Verifying Information
• Reports
• Servicing Diverse Populations

Contracts (12%)

This section involves understanding the formation, execution, and enforcement of real estate contracts. This includes knowledge of contract elements, types of contracts (such as purchase agreements and leases), and the legal implications of contract breaches and remedies available to the parties involved.

Here's what to review:

• General Concepts of Contracts
• Listing Agreements
• Buyer Broker Agreements
• Offers/Purchase Contracts
• Agreements
• Promissory Notes/Securities
• Purchase/Lease Options
• Advanced Fee

There's a lot here! This is why it’s imperative to find good, high quality state exam study help. You can also enroll in a real exam crash course to get guided help, exam taking strategies, and more.

Is the Real Estate Exam Hard?

The California real estate exam is considered to have moderate difficulty by many. However, the level of difficulty can vary depending on an individual's level of preparation and understanding of concepts.

The exam is 3 hours long and consists of 150 multiple choice questions. All you need is a score of 70% to pass. Preparation is key and many successful candidates recommend studying comprehensive study materials and taking practice exams prior to taking the actual exam. 

What is the California Real Estate Exam Passing Rate?

The passing rate in 2023 was 53%. A 50/50 shot can feel daunting. But, with proper preparation and understanding of what you will be tested on, passing can be easy!

Will There Be Math on the Real Estate Exam?

It’s hard to say if the exam contains math. The reason why is because the questions change frequently. Some people may find math questions while others do not.

Remember this helpful tip if you do find a math question on the exam: skip it. Unless the answer is obvious, save the math questions for last because they will take the longest to solve.

You just need a 70% to pass the exam and scoring higher has no effect on you or your career.

What is the Exam Passing Rate?

Over the past eight fiscal years, California has seen many changes in the number of people taking real estate exams and holding active licenses. Both the salesperson and broker exams show interesting trends that reflect shifts in the industry and challenges faced by candidates.

In FY 2015–16, about 50,200 people took the salesperson exam and around 5,000 took the broker exam, with approximately 408,300 active licenses in the state. Over the next few years, these numbers slowly increased. By FY 2016–17 and FY 2017–18, active licenses reached roughly 415,500 and 419,154 respectively. However, the FY 2019–20 period was unusual. Due to the COVID-19 pandemic, exam centers closed for several months, and the number of exams dropped significantly.

In FY 2020–21, exam capacity was limited, and only about 39,649 salesperson and 3,861 broker exams were given. Interestingly, during this period, the total number of active licenses jumped to around 458,955. This increase was partly due to extensions on license renewals during the pandemic.

The numbers changed again in FY 2021–22 when 63,069 salesperson exams were administered as many candidates took advantage of the opportunity to finally sit for the exam. Active licenses adjusted to about 435,267. In the most recent fiscal year, FY 2022–23, exam numbers normalized to 44,183 salesperson and 3,360 broker exams, with about 434,401 active licenses.

A key point to note is the difficulty of the California real estate exam. With pass rates averaging around 45–50%, nearly half of the exam attempts each year come from repeat test-takers. This means many candidates need to try more than once before passing, which has led to a growing demand for better preparation and study resources.

Number of salesperson exam administered.

Number of broker's exam administered.

Vocabulary on the Real Estate Exam

The real estate exam will test you on an array of vocabulary words that popped up in your pre-licensing courses. There is a foundational set of vocab words that you should know before you take the exam.

By studying this foundational set, you will increase your chances of passing or, at the very least, feeling more confident to take it. Drilling your terms is also a great way to understand the concepts and real word applications you will see on the exam.

What are the Real Estate Exam Questions Like?

This test has deceptive and tricky questions to intentionally confuse you. Every test taker should expect double negatives, odd phrasing, and unnecessary information in the questions for the purpose of keeping you on your toes.

The best way to overcome questions like these is to take your time reading the question thoroughly. Also, make sure you do more than memorize the concepts and terminology. You should have a well-rounded understanding so you are more mentally flexible to apply what you know.

Best Study Tips to Pass the California Real Estate Exam

The best way to study for the California real estate exam is to create a plan. Make sure you utilize the following strategies:

• Create a study schedule
• Diversify the study material
• Use acronyms and mnemonic devices
• Form a study group
• Get guided help

Create a Study Schedule

To not overstudy or understudy, you should plan out a study schedule. This will help you organize what it is that you should study as well as break it down into manageable study sessions. Pull out a calendar and select a few days a week and a few hours on those days to study.

Diversify What You Study

We learn best by expanding what we study. In other words, don’t review the same material over and over. Make time to study the material that is new to you and challenge yourself to learn about concepts and vocab that may confuse you.

Use Acronyms and Mnemonic Devices

These are simple, abbreviated, and oftentimes rhyming shorthand words or phrases to help us remember. Acronyms are an effective way to remember big concepts and the specific rules that govern them. Whereas mnemonic devices can help us recall important information that we will otherwise forget.

Form a Study Group

Study groups are a great way to learn because you can work together as a group to learn the material. You can ask others questions that might stump you for help or you can reinforce your understanding of a concept by explaining it to someone else. These are practical ways to instill the knowledge you will be tested on.

Get Guided Help

Guided exam study help is by far the fastest and simplest way to feel confident and prepared to pass on your first try. We provide real estate crash course and exam prep to students who need additional study help that makes learning fun and easy. Our program has helped thousands of students become licensed agents in California.

Final Thoughts on the Real Estate Exam in California

The real estate exam is a challenge for most people. But, with consistent studying, remaining calm, and getting guided help, you can pass on your first attempt. This test is hard but it’s not impossible!