Understanding the Different Real Estate Designations in California: Agent, Broker, Realtor, and Salesperson

Getting into the real estate industry can be a fulfilling choice, offering financial reward and an opportunity to meet and work with different people. In California, one of the most vibrant real estate markets in the country, you will encounter various designations like agent, broker, realtor, and salesperson. It can be confusing initially, but each designation represents a different level of responsibility, training, and competency. Let’s dive in and understand each one.

Real Estate Salesperson: The Entry-Level Designation

The entry-level designation in the California real estate industry is the Real Estate Salesperson. It’s the perfect stepping stone for individuals venturing into the real estate realm.

Steps to Become a Real Estate Salesperson in California:

  1. Complete 135 hours of pre-license education, which include Real Estate Principles, Real Estate Practice, and one elective course.
  2. Pass the salesperson examination.
  3. Submit a salesperson license application along with required documentation and fees.

What Can You Do as a Real Estate Salesperson?

As a licensed Real Estate Salesperson, you can represent buyers or sellers in real estate transactions, but you must work under a supervising real estate broker. You cannot operate independently or open your own brokerage.

Real Estate Agent

In California, the term ‘Real Estate Agent’ is often used interchangeably with ‘Real Estate Salesperson.’ Both require the same training, testing, and supervision under a licensed broker.

Real Estate Broker: The Next Level Up

Most people, after gaining sufficient experience and education as salespersons, decide to level up their career by becoming a Real Estate Broker.

Steps to Become a Real Estate Broker in California:

  1. Gain at least two years of full-time licensed salesperson experience within the last five years.
  2. Complete 360 hours of approved real estate courses.
  3. Pass the broker examination.
  4. Submit a broker license application with necessary documentation and fees.

What Can You Do as a Real Estate Broker?

Brokers can perform the same tasks as a salesperson, but with additional benefits. They can work independently, operate their own business, and hire salespersons to work under them. This ability to manage their own firm often leads to higher earnings.

Do Brokers Make More Money?

Typically, brokers earn more than salespersons due to their advanced level of responsibility and the ability to run their own brokerage. They can make money from their transactions and also earn a portion of the commissions from salespersons working under them. However, the increased earnings also come with increased responsibility and overhead costs.

Realtor: A Mark of Professionalism and Ethics

‘Realtor’ is not a designation per se, but a registered trademark of the National Association of Realtors (NAR). Any real estate professional who is a member of NAR is allowed to use this title.

Steps to Become a Realtor:

  1. Obtain a valid real estate salesperson or broker license.
  2. Join your local real estate board or association affiliated with NAR.
  3. Adhere to NAR’s stringent Code of Ethics and Standards of Practice.

What Can You Do as a Realtor?

Realtors can do everything that a salesperson or broker can do, depending on their license type. The Realtor designation is a symbol of professionalism and commitment to ethics, helping them to stand out in the market and build client trust.

The Journey from Salesperson to Broker: Is it Common?

Many salespersons do choose to become brokers, but not all. The decision largely depends on career goals. If you aim to run your own business and are prepared for the responsibilities that come with it, then becoming a broker could be an excellent next step.

Final Thoughts

In conclusion, each designation within the real estate industry represents a different level of professional development. Starting as a salesperson allows for a great introduction to the industry, and moving up to become a broker can offer greater financial and professional independence. The Realtor designation adds an extra layer of professional and ethical reputation. Choose the path that best aligns with your professional aspirations and enjoy the journey in the exciting world of real estate.

Remember, real estate is not just about transactions; it’s about building relationships and trust. Regardless of your designation, your success will depend largely on your commitment, integrity, and dedication to your clients’ needs and dreams. Good luck on your real estate journey!

How Can I Become a Real Estate Broker in California?

Are you considering a career as a California real estate broker? Becoming a licensed broker can open up new opportunities which are not available to an agent with only their salesperson license. To become a broker in the Golden State, we will walk you through the process step by step, from the minimum requirements to the costs involved, and even the differences between a broker and a real estate agent

What is a Real Estate Broker?

In simple terms, a broker is a professional who has obtained a higher level of real estate licensing, allowing them to oversee and operate their own real estate business. Brokers have more responsibilities and greater authority compared to real estate agents. They can supervise agents, handle transactions, and even open their own brokerage firm.

Minimum Requirements to Apply for the California Broker Exam and License

To obtain a California real estate broker license, you need to meet several minimum requirements:

  1. Age: To apply for a license, you must be 18 years of age or older.
  2. Residence: License applicants must provide proof of legal presence in the U.S. If you’re not a California resident, there are specific guidelines for out-of-state applicants.
  3. Honesty: License applicants must be honest and truthful. Conviction of a crime or failure to disclose any criminal violation or disciplinary action may result in the denial of a license.
  4. Education and/or Experience: Effective January 1, 2013, broker applicants must meet one of the following criteria:
    • Have a minimum of two years full-time salesperson’s experience within the last five years.
    • Have two years of unlicensed equivalent experience.
    • Hold a four-year degree from an accredited college or university with a major or minor in real estate.

Statutory Courses

In addition to the education and/or experience requirements, broker applicants must successfully complete at least eight statutory-required college-level courses. These courses are divided into two categories:

  1. Five required courses:
    • Real Estate Practice
    • Legal Aspects of Real Estate
    • Real Estate Finance
    • Real Estate Appraisal
    • Real Estate Economics or General Accounting *
  2. Three elective courses (choose at least three from the following):
    • Real Estate Principles
    • Real Estate Property Management
    • Real Estate Office Administration
    • Escrows
    • Business Law *
    • Mortgage Loan Brokering & Lending *
    • Advanced Legal Aspects of Real Estate *
    • Advanced Real Estate Finance *
    • Advanced Real Estate Appraisal *

*courses are not available at Chamberlin Real Estate School.

Note: If you complete both Accounting and Economics, you only need to choose two courses from the second group.

Costs Involved

While pursuing a real estate broker license in California, you will need to factor in the costs associated with the process. Here are the primary expenses to keep in mind:

  1. Education Costs: These can vary widely from one school to another. Chamberlin Real Estate School offers each course for only $89, with discounts for purchasing multiple courses at the same time.
  2. Examination Fee: There is a $95 fee required when you apply for the state examination. This fee covers the administrative costs of processing your application and scheduling your test date.
  3. License Fee: Once you have successfully passed the state examination, you will need to pay a $300 license fee to obtain your real estate broker license. This fee allows you to legally operate as a broker in the state of California.
  4. Fingerprinting: As part of the application process, you will need to provide one set of classifiable electronic fingerprints. The fingerprinting process incurs a separate fee, which is currently $56 for California residents and out-of-state applicants. This is not required if you are currently licensed by the DRE or were licensed by the DRE in the past two years.

It’s important to budget for these costs and ensure you have the necessary funds to cover them. Remember, investing in your education and licensing is an investment in your future as a real estate broker.

Exam and Licensing Process

Here are the steps for the exam and licensing process to become a real estate broker in California.

  1. Course Completion: Before you can apply for the state exam, you must successfully complete all eight required courses, including the five mandatory courses and three electives.
  2. Application Submission: Once you have completed the required courses, you can submit your license application to the California Department of Real Estate (DRE). The application will be reviewed, and if approved, you will receive further instructions regarding the examination process.
  3. State Examination: The state exam consists of 200 multiple-choice questions, and you must achieve a minimum score of 75% to pass. The exam covers various topics related to real estate practice, legal aspects, finance, appraisal, and more. It’s essential to study and prepare thoroughly to increase your chances of success.
  4. License Issuance: After passing the state examination, it typically takes approximately 6 to 8 weeks for the DRE to process your application and issue your real estate broker license. Once you receive your license, you are officially recognized as a licensed real estate broker in California.

Continuing Education as a Broker

As a licensed real estate broker in California, you are required to complete continuing education courses to maintain your license. These courses are designed to keep you updated on industry trends, changes in regulations, and best practices in real estate.

The California Department of Real Estate (DRE) mandates that brokers complete 45 hours of continuing education every four years. This requirement includes a 15-hour course on ethics, agency, trust fund handling, fair housing, and risk management, along with other elective courses.

What Can a Broker Do Differently from a Real Estate Agent?

Brokers will have additional responsibilities and privileges compared to real estate agents. Here are some key differences:

  1. Supervision: Brokers have the authority to oversee and supervise real estate agents. This means you can hire and train agents, provide guidance, and ensure compliance with regulations and ethical standards.
  2. Independent Operation: Brokers can operate their own real estate brokerage firm, while agents typically work under the supervision of a broker. This allows brokers to establish their brand, develop business strategies, and build a team of agents.
  3. Transaction Handling: Brokers can handle real estate transactions directly. They can represent clients in buying, selling, leasing, or renting properties. This added responsibility gives brokers more control over the entire transaction process.
  4. Higher Earning Potential: Brokers often have the potential to earn higher commissions compared to agents. With their own brokerage, brokers can set commission structures and earn a percentage of the transactions facilitated by their agents.

Becoming a broker offers greater autonomy and the opportunity to take your real estate career to the next level. It allows you to have more control over your business and opens doors to new avenues of success.

 

The Bottom Line

Becoming a real estate broker in California requires dedication, commitment, and fulfilling specific requirements. By meeting the minimum qualifications, completing the necessary coursework, passing the state examination, and obtaining your license, you can further your career in the real estate industry.

Remember, the path to becoming a broker involves investing in your education, both in terms of time and finances. However, the benefits and opportunities that come with being a licensed broker in California make the journey well worth it.

Whether you aspire to run your own brokerage, have more authority in the industry, or increase your earning potential, obtaining a real estate broker license can be a game-changer for your career. So, take the first step by clicking here!

Real Estate Subagency in California: What Prospective Agents Need to Know

What Is Subagency In Real Estate

As a prospective real estate agent in California, it’s important to understand the concept of subagency in real property transactions. In a typical transaction, the listing broker may seek the cooperation of other brokers to fulfill the objective of the agency, such as finding a buyer, a tenant/lessee, or a lender. Nonetheless, this cooperation can result in complex legal relationships between the brokers and principals involved.

The following information will cover the basics of subagency in California real estate, including its definition, legal principles, and potential consequences. We’ll also learn how the industry has evolved to avoid subagency and provide tips for navigating this area of the law.

What is Subagency in Real Estate?

Subagency refers to the appointment of a second broker to represent the principal (either the buyer or the seller) in a real property transaction. This appointment can occur in two ways:

  • Express or Implied Authority: The principal may expressly authorize the listing broker to appoint a subagent on their behalf, creating a new contractual and fiduciary relationship directly between the principal and the subagent. Alternatively, the appointment may be implied based on the actions of the parties involved.
  • Without Consent: If the listing broker appoints another broker without the consent of the principal, the second broker becomes the agent of the listing broker rather than the subagent of the principal.

Legal Principles of Subagency in California

The rules of subagency in California have been criticized for being complex and leading to unfavorable outcomes for both buyers and sellers. For example, if a cooperating broker makes fraudulent misrepresentations about the property to a prospective buyer, the seller can be held liable for the broker’s actions. This is because the listing broker had express authority under the exclusive listing agreement to engage the services of the cooperating broker, making them jointly responsible for any misconduct.

Under California law, the acts, errors, and omissions (negligence) of a subagent appointed by the seller may be imputed to the seller. Similarly, if the cooperating broker is the authorized agent or subagent of the listing broker, any negligent acts may be imputed to the listing broker, potentially resulting in liability to third parties under the legal theory of respondeat superior.

Avoiding Subagency in California Real Estate

Given the potential risks and complexities of subagency, the real estate industry has grown to avoid it wherever possible. For example, the National Association of Realtors (NAR) amended its Multiple Listing Rules in the early 1990s to establish the concept of Multiple Listing Plus. Under these rules, the listing broker has the option of either offering a unilateral offer of subagency to the cooperating broker or simply sharing the commission without extending any offer of agency or subagency on behalf of the seller or the listing broker.

This common practice in the industry now is to avoid subagency altogether, and it’s essential for prospective real estate agents in California to understand these changes and navigate them effectively.

Tips for Navigating Subagency in California Real Estate

As a prospective real estate agent, it’s critical to stay up to date on the latest developments and best practices for navigating subagency. Here are some tips to keep in mind:

  • Understand the listing agreement: Review the listing agreement between the principal and the listing broker carefully to determine whether the broker has express or implied authority to appoint subagents.
  • Know your role: If you’re a cooperating broker, be clear about your role in the transaction and whether you’re acting as an agent or subagent.
  • Use Multiple Listing Plus: Consider using the Multiple Listing Plus option to avoid subagency and any potential legal issues that may arise.
  • Disclose everything: Be transparent about all relevant information and disclosures with the parties involved in the transaction. This includes disclosing any potential conflicts of interest, such as dual agency or any existing relationships with other parties involved.
  • Consult with a legal professional: If you have any questions or concerns about subagency or other legal issues in a transaction, it’s always a good idea to consult with a legal professional who specializes in real estate law.

By following these tips, you can navigate subagency and other complex legal issues in California real estate transactions effectively and help protect yourself and your clients from potential liability.

The Bottom Line

Subagency in California real estate can be a complex and potentially risky area for prospective agents. By understanding the legal principles involved, staying up to date on industry best practices, and being transparent and honest with all parties involved in a transaction, you can navigate this area effectively and help ensure a successful outcome for everyone involved. Remember, when in doubt, consult with a legal professional who specializes in real estate law to help guide you through the process.