Real Estate Practice and Licensing
Licensing Basics
States license brokers and salespersons. A salesperson works under a broker; a broker may operate independently. Know the requirements for licensure, continuing education, and the difference between an active and inactive license. Unlicensed assistants may perform clerical tasks but not negotiate or show property for compensation.
Brokerage Activities and Compensation
Activities requiring a license include listing, selling, leasing, and negotiating for compensation. Compensation may be paid only through the broker, not directly to a salesperson. Commissions are negotiable and not set by law; antitrust rules prohibit price-fixing and group boycotts.
Regulation and Discipline
Know the grounds for license suspension/revocation: misrepresentation, commingling of trust funds, failure to disclose, and undisclosed dual agency. Trust/escrow accounts must be handled carefully; commingling and conversion are serious violations. Understand the role of the state real estate commission and the complaint process.
Advertising and Records
Advertising must identify the brokerage; records must be retained per state rules. Traps: assuming a salesperson can advertise independently, or that a license is portable across states without reciprocity.
Worked Example
A salesperson negotiates a sale and the buyer wants to pay the salesperson directly. The salesperson must refuse-compensation flows through the broker. Accepting direct payment could be an unlicensed-activity or trust-account violation.
Rule of Thumb
If the task involves negotiating or procuring a transaction for compensation, a license is required; clerical and ministerial tasks generally are not.