Is it worth getting a brokers license???

[Victoria Mack]

I am a real estate agent doing rehabs. When I buy or sell I go through my broker and doing that costs me a lot of money. I was thinking about getting a brokers license but I am not sure what are pros and cons doing that. Is it worth getting a brokers license and what are additional costs associated with that.

[Bill Gulley]

When brokers talk about liability as a big bad boogie man, I find it kinda funny, as that really is not the issue, that some poor homebuyer is going to sue because the agent didn't disclose that there was a hole in the roof where the chimney use to be. That's why you have E&O and a blanket liabilty policy and require that you agents have a business auto policy with reasonable limits.

The hidden liability is something that most agents never see or hear about.....the dreaded Real Estate Commission Compliance Reviews!

Brokers are conservative not so much as in fear of a suit from any client, but the sanctions against them by the state for doing or allowing something that in their SOLE OPINION is not in the public's best interest!

If you are a small broker and not turning out much business, you could go several years before a regulator comes and knocks on your door. If the brokerage is running 100 million in sales, they are probably there every year, and if they found any significant discrepecies, they could be there every three months or just live there! They can put a broker on probation, they can put you out of business! If any commission puts a brokerage on suspension for 90 days, what do you think all the agents will do....they aren't hanging around the coffee pot , they will be moving their license!

Being conservative is all about compliance issues, not some law suit you can easily manage that! Not there is no liability or any concerns, but allowing someone to do deals that look like a net listing for example and call it a cooperative option is another.

As to the original post, is it worth it? I think not, at least in my state. The brokerage must have:
An office, a toll free telephone, a sign,posted office hours or if by appointment only, a place and time for appointments, a performance bond, E&O, an insured escrow account and the office must be sufficient for the business contemplated (boy that's an opening). Your books must be kept at the place your business is registered and copies of all agreements where you were a broker (offers for a year, closed contracts 7 years) so if you do any business, you're going to have file cabinets that you never really open. (I beleive exceptions can be made for storage facilities that you can access fairly quickly). You'll have MLS fees, NAR and CE requirements.

To say paper work is an understatement. The commission can dictate where each piece of paper goes in the file, file maintenance alone can be a job for someone. Compliance reviews are accomplished in all offices, making sure that the time and date on a contract is actually in line ensuring that the contract of 20 pages of addendums were executed properly.

Most agents don't have a clue as to what goes on in an operating RE brokerage or why, IMO. They just are not exposed to the business side of a brokerage, except when they have to go to the office and provide a correction.

While many think the closing company is responsible for a closing (they are to a degree) but itis the listing broker who is ultimately responsible and gives closing instructions to the settlement agent if there is anything off center from the customary, depending on state law. So, there is also the closing compliance with each transaction.

So, IMO, while you think you are just free to do anything you like because you no longer have a broker to answer to, you're under a misconception IMO. If you think appraisers are opinionated, wait till you meet a regulator or compliance officer from the state RE commission on a complaince review!

IMO, you have two choices as a broker, work by yourself and keep overhead low or grow to a point where your agency is paying for the expenses of them being there, which is about 20 agents. Who you get will be very important and I know brokers who pay 100% to the agent and have them pay expenses and a small monthly amount as Jason pointed out. Doing that, the broker is usually not getting rich!
I chose to go alone.

Pros, there is a slightly better public perception, IMO in saying you are a broker instead of an agent. Most in the public don't know the difference between the two. And frankly, according to many in my area, the public perception of a used car dealer is higher in the community eye than a real estate agent...maybe that's a bum rap. Professionals you may work with do know the difference and you would be held in higher esteem. That's about it.

Check again on the powers of your state real estate commission and what kinds of penalties they can impose, with a simple hearing, not going to court. I know of some brokers who bucked the MO. commission in court and they didn't get far.

So my answer is .... it depends on what you want to do, just be sure you understand what all is involved in hanging your own shingle on the door. I think it's much better to find a broker you can work with who trusts your judgment and work as an agent.