Real Estate Background Checks for Licensing and Hiring

The real estate industry is unique compared to many other sectors. Both public authorities and private bodies regulate it, and regulations often differ between states. Those seeking to become real estate agents must undergo extensive training and education before they can apply for their license. Once they do, individuals should expect (in most states) to prepare for a real estate background check.

States and private real estate organizations want to ensure that the professionals working in this industry are safe and trustworthy. Here, we’ll examine what to know about these procedures, why they exist, and what job seekers should expect. We’ll also explore how agencies and other professional real estate businesses can create astute and strong hiring policies.

What is the Point of Using a Real Estate Background Check? 

There are several reasons why states look to require official licenses for those who will act as brokers or sell homes. Real estate agents have unique responsibilities and duties compared to other industries. A real estate agent might:

• Enter a customer’s home.
• Enter and work in unoccupied dwellings.
• Drive clients to home showings.
• Meet clients alone in unoccupied buildings.
• Possess keys or electronic access codes to enter a client’s or seller’s home.
• Handle extensive amounts of personal information.
• Have access to private financial details.

As we can see, these elements require placing a great deal of trust in a person. Companies and brokerages that employ real estate professionals in groups of agents must be confident that minimal risk is involved. States create a strict licensing process to reduce the risk that someone will abuse their position. Licensing checks and the procedures that brokerages and firms use to hire professionals are slightly different but involve some of the same elements. 

What Goes Into a Typical Background Check for Licensing Real Estate Agents? 

When reviewing screening in the real estate industry, there are two areas to consider. The first is the licensing process. Most states have an official government agency whose sole purpose is to administer the licensing of real estate brokers and agents. Other or additional processes may involve professional organizations that grant real estate qualifications. In many states, from Florida to New York and beyond, the state requires a fingerprint-based background check during the application process.

Each state’s real estate licensing board sets its own requirements. Is a criminal record a barrier to becoming a real estate agent? Not at all, but individual outcomes often depend on the age of the conviction and the severity of the crime. In Illinois, the state government claims that up to 95% of applicants with criminal records received their licenses upon the accurate completion of the application form.

What about when those licensed agents create a property management company or build a brokerage? An employer of such agents may implement additional screening requirements beyond what the licensing boards do. 

Should Agencies and Others Go Farther? 

A brokerage or other firm must ensure that it only hires appropriately qualified and licensed individuals. Likewise, examining other factors about a person’s background is vital. Identifying red flags and making wise hiring decisions can reduce risks and prevent harm. Agencies can and have been held liable for situations where their agents committed wrongdoing. Such crimes have included assaults against clients, stealing from the homes of sellers, and other forms of inappropriate behavior.

While a background check can’t predict the future or provide guarantees, it creates opportunities to identify potential risks and act accordingly. Some of the tools a brokerage may use when hiring agents include:

• Criminal history check. It may include county and state criminal record searches or broader multi-jurisdictional searches.
• Federal civil and criminal record checks.
• Sex offender registry searches.
• Employment verification of past jobs with other agencies.
• Reference checks.
• Alias and address history checks.
• License verification to confirm an agent is in good standing with the state.

Combining the above products can produce a robust background report with essential details about job applicants. Such reports can help you evaluate someone’s suitability and trustworthiness as you work to make an employment decision. Before hiring anyone for an agent role, it is essential to be thorough in your pre-employment vetting practices. 

Exploring Some Best Practices for Real Estate Background Checks 

The first step is understanding what checks and reports you may want to order on a real estate agent. What are some of the other best practices you should keep in mind during the hiring process? Consider the following:

• Always follow hiring and employment regulations surrounding background checks. Follow the rules of the Fair Credit Reporting Act. Provide a standalone disclosure of your intent to use background checks and obtain written consent.
• Obey state and local hiring laws, such as ban the box rules that prohibit criminal history questions on job applications.
• Create a standardized and written policy for screening. Apply it equally to all job applicants.
• Know what reporting products will provide you with the most vital details.
• Consider annual re-screenings or ongoing criminal monitoring for additional peace of mind. Ensure that your agents remain trustworthy and keep clients and property safe. 

Real estate background checks form the backbone of the licensing process and most often involve fingerprint-based checks. However, other professional groups in this sector should strongly consider creating policies that provide detailed information about applicants. Considering this information as part of the hiring process offers opportunities to identify red flags and prevent negligent hiring. Find the right tools for pre-employment screening with backgroundchecks.com.