Should You Get a Broker’s License? Class Starts Aug. 27
By Professor Edwin Estes Jr., Esq. Mt. San Antonio College
Most real estate licensees never consider obtaining a real estate broker’s license, and why should they? While a sales licensee can do everything a broker can as long as you are working for an active broker, a smart real estate agent will obtain their broker’s license, even if they have no intention of opening their own office.
Here are three benefits to having a broker’s license:
1. If you want to take time off, having a broker’s license will allow you to separate from your broker and keep your license “at home.” Because you still have an active license, you can make referrals to your old brokerage company and receive referral fees (without having to pay MLS or REALTOR® dues). And, when you are ready to re-enter the market, it’s a simple online submission to the Department of Real Estate and a trip to your local Association of REALTORS® office to rejoin, and you’re back in business.
2. Let’s say you have a past client who needs help with a rental property. To legally assist him or her, you need a real estate license and a broker who must consent to your activities. Even items as mundane as picking up a rent check or showing a prospective tenant the property because your former client is at work and cannot get away, not only require a real estate license but consent of your broker. Your broker is the true agent in all of your real estate activities under the Real Estate Law (California Business and Professions Code) and Real Estate Commissioner’s Regulations.
Most brokerages are not covered under their Errors and Omissions Insurance Policy (E&O) for property management. Property Management is fraught with liability due to the extensive handling of trust funds. For that reason, most brokers do not allow their agents to engage in property management. But if you are a broker associate, you may conduct a “separate property management business” from your home and thus, assist former clients with their properties. Simply enter into a written agreement with your current broker where you agree to run all sales and listing activities through their office and maintain your property management activities separate at home; indemnifying your broker for any damages resulting from your property management activities.
3. At some time in the future, you may be interested in obtaining your mortgage loan originator (MLO) endorsement and broker loans as an additional income source. If your broker has an in-house mortgage business, it is most likely under a separate corporation, which means you would need a broker’s license since you would be operating under two different brokerages (sales and mortgage). A broker can work for multiple brokers, but a salesperson cannot.
If your broker does not have an in-house mortgage company but you know someone who does, again, with both brokers’ permission, you can operate under both companies doing loans at the mortgage company and listings and sales at the brokerage company. Just be sure (as mentioned above with property management) that you have written agreements with both brokers, clearly stating your activities and indemnify them for all actions you take at the other company.
Bonus: Finally, having “broker associate” after your name on your business cards and marketing materials will give you instant recognition and credibility among your peers in real estate. While you are not the broker at your firm (a real estate company can only have one “broker”), you will have a real estate broker’s license. This can give you a competitive advantage when making listing presentations and presenting offers on behalf of your buyers (most people only see the word “broker”). Sometimes something as simple as this can make the difference in your success.
Where do you start?
Of course there are home study and correspondence schools, but the average pass rate on the broker’s exam is about 50%–half of those taking the exam fail even though they previously passed the sales exam. And the DRE uses the same question bank for both exams.
I strongly recommend you consider taking your broker qualification classes at a community college: At Mt. San Antonio College, for instance, we work at selecting professors who actively practice in the field they teach–a lender to teach Real Estate Finance, a lawyer to teach Legal Aspects of Real Estate, a property manager to teach Property Management. This way you not only fulfill the requirements, but you have a “from the trenches” perspective to give you insight in your real estate practice the next day.
Now is the time to gain your competitive edge.
Fall 2018 semester at Mt. SAC begins on Aug. 27. To find out more about the Real Estate Program, contact Ed Estes, program coordinator, at firstname.lastname@example.org. (It takes a few days to complete the enrollment process after submitting your information online, at www.mtsac.edu.)
Ed Estes is a real estate broker and member of CVAR, an attorney and professor of real estate at Mt. SAC. He also teaches contract classes for CVAR Education, so watch for his classes on the CVAR calendar at www.cvar.net.