Real Estate
Trainers, Inc.

I. Licensing Requirements

A. Real estate is a business, in many ways similar to any other business.

1. It tries to maximize income.

a. real estate commissions;

b. property management fees;

c. loan fees; and

d. escrow fees.

2. It tries to minimize expenses.

B. It is different in that real estate activities require a real estate license. A real estate license is required of any who performs real estate activities, for another, for compensation. Activities which require a license include, but are not limited to:

1. Soliciting for agency relationships with buyers or sellers;

2. Property management services, including collecting rents and negotiating leases; and

3. Soliciting or negotiating real estate loans.

C. Exemptions — Certain activities are exempt from licensing requirements, including:

1. Property owners may sell their property personally without any real estate license

a. This also means that a subdivider (or its corporate officers) could sell lots or homes in a subdivision without a real estate license if they did so personally, not through an employee or broker.

2. An attorney-in-fact does not need a real estate license. (An attorney-in-fact is someone who has received a power of attorney from a person [the principal], which authorizes the attorney-in-fact to sign the principal’s name to contracts. The attorney-in-fact can do virtually anything that the principal can do, including the sale or purchase of real property. If the owner could sell the property personally without a license, so can the attorney-in-fact.

a. There are limits to this attorney-in-fact relationship:

1. If the acts involve real estate, the power of attorney must be recorded;

2. The attorney-in-fact could not use the power of attorney to sell the principal’s primary residence, even at market value.

3. An attorney at law would not need a real estate license for actions performed as part of his or her law practice.

4. If the attorney performs the functions of a real estate broker, then the attorney would need a real estate license.

3. A trustee selling property under a trust deed would not need a real estate license.

4. Clerical employees of a real estate broker would not need a real estate license.

5. Real estate appraisers do not need a real estate license. (There is a separate appraisal license or certification.)

6. A resident property manager would not need a real estate license.

II Real Estate Brokers’ License

A. Must have either:

1. A law degree or 8 college-level real estate courses; and

2. Either a four-year college degree or two years full-time real estate sales (or related) experience.

B. Must pass a 200 question, multiple-choice test, with a 75% score or better.

C. Reasons for getting a brokers’ license include:

1. The desire to own an operate an independent business venture;

2. A desire for higher commission splits, or no commission splits; and

3. The prestige obtained from having the higher license.

D. There are continuing education requirements (for both brokers and salespersons’ licenses).

1. There are four required courses:

a. Ethics;

b. Fair Housing;

c. Trust Funds; and

d. Agency

2. Except for the licensee’s first renewal, (where only the required courses must be taken), the continuing education requirement is 45 hours for each four-year license term.

3. Of the 45 hour requirement, at least 15 hours must come from courses covering the category of "consumer protection."

E. Broker’s license may be held by either a natural person or a legal person.

1. An example of a "legal person" is a corporation. Corporations may hold a brokers’ license, but some individual within the firm must hold a personal license and be "broker of record" for that corporation.

2. Any broker’s license has a four-year term.

III Salesperson’s License

A. Requirements: The individual must have taken a Department of Real Estate approved Real Estate Principles course (or its college equivalent) and must pass a 150 question, multiple-choice test with a score of 70% or better.

B. After taking the state exam, the applicant must apply for the license within one year of the date of the test.

C. A salesperson’s license is not active unless it is held by some licensed real estate broker.

D. Once a person becomes licensed, they must take two additional 45-hour real estate courses within eighteen months of getting the license.

1. Prior college courses (such as economics, accounting, or business law) may satisfy this requirement.