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Does the Buyer's Agent Really Have a License?

How many times have you received an offer on a listing and checked out the cooperating Broker to verify that they are licensed to sell real estate?

As I am sure is the case in many states, it would be easy for a former Texas Real Estate Broker to pose as a current Broker and collect a fee at closing without a license...that is if the listing Broker isn't paying attention.

The law in Texas states that real estate related commissions cannot be shared with any person or entity that isn't properly licensed. If the Listing Broker pays the co-op fee to a Buyer's Broker whose license was expired at the time of the contract, the listing broker has broken the law.

Is ignorance bliss? Nope. Ignorance is expensive.

So, today you received a great offer on your favorite listing and prior to presenting the offer to the seller, you look up the buyer agent's status to discover that their license expired last week.

You are the listing agent - what do you do next?

~~Welcome to 2009. It should be interesting.~~

Happy New Year from Amanda Hall, Realtor and Broker of Hall Team Homes

You do the packing, we'll do the rest.

Hall Team Homes proudly and legally provides professional real estate services in Fort Worth, Arlington, Southlake, Colleville, Grapevine and Hurst-Euless-Bedford neighborhoods.

Posted by Amanda Hall * FORT WORTH TEXAS Real Estate Broker * on 12/28/2008 10:25 PM

Comments (34)

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34 Comments on Does the Buyer's Agent Really Have a License?

DEC

HA HA!

Good idea, check for that as many agents are allowing licenses to expire and brokerages are closing down!!!

Hi Amanda... Holy cow! I wonder if his drivers license is expired as well! I have a feeling this will become more and more common as this year's cycle of license renewals start. I have heard several agents say that they will not be renewing their licenses, which would certainly raise the question of what happens to deals in process when their license expires and that close AFTER they are no longer legally licensed.

As an agent I will check another agent's status if I doubt their status. There is an agent in my office that checks every single person she does a transaction with. Let me tell you, she has found some pretty interesting stuff.

I say bring it to the other broker's attention and make deal with it head on. If the buyer wants the house, they are not going to let the agent stand in the way.

How in the world did you think to check their status? Steve raises a good point about the end of the year and agents not renewing. Are we going to have to check on everyone now? This gives me a headache just thinking about it.

James, I think a lot of licenses will be shelved in 09. I am surprised that there weren't more in 08 moved to inactive or just allowed to expire.

Steve, the ticket is to be licensed when the commission is earned versus when it's payable. I think we will see an increase in the number of former agents posing as current ones. Last year, I caught up with several people who were posing for one reason or another.

Audrey, does the agent in your office Google them, too? I do! I like the rest of your answer. Can you think of anything else you'd do prior to getting the other broker involved?

Lisa, I think it's a good idea to check on licenses. In Texas, agents/salespersons compensation is paid to the broker so ultimately it's the headache of the broker to make sure that when the co-op is paid that it is being paid legally. Louisianna is the same, right?

DEC

You present the offer, close it, and refrain from any commission dispute during the course of the transaction. Homeboy doesn't get a check at closing if he isn't a licensed Real Estate agent/broker, but that is a dispute to be resolved separately from the negotiation. Even more expensive to get between willing buyers and sellers with a commission dispute. Do the deal and let the commissioner sort it out.

We saw about a 10% drop this year. Compared to what I've heard in many other areas, this is reasonable. I suspect 09 will be a little worse. KY commissions are also paid broker-to-broker, but this is a very interesting point.

I'm with Paul... present the puppy... it's a binding contract between buyer and seller. Sorry that poor agent is left out in the cold, but hey, you can't pay a non-licensed person. Who knows... he could be doing this asa favor for buyer friends. haha.

Well you do raise a very good point but I'm with Paul and Jesse on this one. Present the contract and let the commission sort out the details, no license no check.

Amanda...

In GA, agent license numbers appear of the contract, so it's easy to verify them, but this practice has been prevalent for some time now!

Amanda, in New York State checks can not be issued to agents, but must be issued to brokerages. I had a similar issue recently with a referral from out of state. The referring agents license had expired which meant she was no longer affiliated with any office - how can that referral be paid? I would have a discussion with the agent involved perhaps they are affiliated with another office now but it has not shown up on the state licensing site. Of the co-op is due to their previous broker because when the offer was made they were affiliated with that broker.

Amanda, it's pretty DUMB if an agent is practicing and has an expired license. There goes that professionalism right out the window again.

Wow - I had no idea it was the broker's responsibility to verify the license of the cooperating broker in Texas.

Truthfully, this does make a lot of sense, have the brokers help regulate the industry, I actually like the idea.

WOW! Sometimes it takes wings to stay above all of it piling up! I need to check because this appears to be a growing problem! Thanks for posting.

How's things in your neck of the woods?

Lovely, one more bizarre fallout from this even weirder market. To be honest, I have never checked the other licensee's status. (Or their broker's) but it's a valid point and I'm sure this may happen more often in the future...

Featured @ Club Chaos

I agree with Paul and Jesse on this one. I had this happen two years ago and the guy never had a license but was working in a shop and the Broker knew this clown wasn't legal. I found out during escrow and that broker got nada. Told him to file a complaint against me to collect but I never heard from him again.

Haven't had this one happen yet, but I'm sure this will happen a time or two after the new year.

Thanks for bringing that up. I'm glad I work a small market where we all pretty much know each other. I think I will check on their status though, as things progress.

In PA the copensation is paid to the broker so it's the broker's problem. I wouldn't think to check but with the new year upon us and the market it sounds like a good idea.

Paul, good call. Do you think it's appropriate for the buyer to know that the professional they have hired to represent them cannot legally represent them?

Erik, it sounds like most states have rules that the brokers get paid instead of the agents. I don't think that very many listing brokers are checking on the co-ops to make sure they are legal, though.

Jesse, would you want your agent to let you know if as a listing agent they received an offer from an unlicensed buyer agent? As the listing broker, I'd be on the phone with the buyer broker pronto. What if it's the BROKER that is expired? Yikes.

Don, I think the buyer's broker should know who is licensed and who isn't and that the listing broker has the obligation to make sure they are legally paying co-op, but what about the buyer???

Richard, verifying in any market is a good idea. I mentioned to an agent who sent me an offer that his license was set to expire within the week late last year. He had no idea.

Miriam, I think it probably happens a lot. No broker, no referral. In Texas, we look agents up by agent name and the system identifies the broker so it's very easy to confirm what we need to know.

Gary, dumb begins to describe it and dumber describes the ones who think no one will find out. My concern is that too many might be getting away with it. My thought is that if I have to play by the rules, everybody has to play by the rules.

Mark, I bet it is the responsibility of listing brokerages in every state when you consider that the listing brokerage is paid by the seller and the listing brokerage pays (or authorizes payment) to the co-op brokerage. As far as brokers cleaning up the industry, it'd be a great start but I know of way too many that aren't paying attention to what's going on.

Russell, my neck of the woods is rocking and I am licensed! I might be in Austin in a few weeks--will call you in advance.

Colleen, don't you just love being a broker? I know I do!

CTS, Thanks, swwetie!!

Cameron, there is nothing that is worth risking the investment of time, money and energy I have in my brokerage. I am not sure what Brokers are thinking sometimes. Even more shocking is how they so often don't know what their agents are doing during transactions and with advertising.

JL, be sure to look up membership in your local MLS as well. Licenses renew at different times of year but NAR/MLS dues are due this week. The 1st quarter of 2009 should be interesting.

Georgina, a couple of the inactives I discovered this year were people I know. I wouldn't mind working where you work, either. :)

Krista, ultimately it is the broker's problem.

DEC

I would definitely want to know... and would definitely tell the sellers, but I would also tell them the contract is between them and the buyers... the fact that the buyers 'agent' and/or broker isn't licensed has no bearing on the validity of the contract. Primary obligation is to the client... Truth be told I would present it and then deliver the acceptance or counter to the buyer directly... since the CoE wouldn't prohibit me from doing so... then I would call the commission. No need for the seller to take it in the shorts (if it's a good offer that is) because the 'agent' is a dip$hit. No matter what, this is a mess.

Oh I know you are licensed and funny thing, I have gotten bust since Christmas too. Email or leave a msg. on my cell before you head this way and i will buy your lunch!

JAN

Happy new year kiddo. Kathy said to tell you if this damn deep freeze continues much longer, she's ready to head south. Somewhere, of course, where the goose is chilled and the company is great. Heck, Big Daddy and I can even do a little fixin on that step well cover. :) No doubt we can come up with something that looks good!

I would bring this to the buyers agents attention quickly. As well as my own brokers. Yoiu cant pay in this situation period!

Amanda-I would not put my self in jeopardy. I would consult the broker of the buyer's agent. Happy New Year.

JAN

Russell, Will do! Happy New Year!

Jesse, Hopefully, we won't have to deal with these situations but it doesn't hurt to be somewhat prepared for it.

I wish you would come down here, Jesse! I would love to see you and Kathy!

Laura J, I like to hear that people are turning to their brokers in these situations.

Laura W, you'd like to think that the other broker would know these things already. I know plenty that would miss it. Happy New Year to you, too!

JAN

Now that should be a motto for the new year! " Is ignorance bliss? Nope. Ignorance is expensive." Amen! :-)

JAN

I just stopped by to say hello, have not heard from you in awhile and of course

Happy New Year!

your friend in Charlottesville

My former broker let people's licenses expire all the time and that was a big DOH! We have a "lookup licensee" portion in our real estate division website :)

If I were the listing agent, I'll tell you what I'd do next:

I'd hire my slum tenants to take a couple friends over there with a baseball bat and put a hurting on a couple kneecaps!

Oh crap that only works in Baltimore, never mind.

Luv ya Amanda!

-CSD

JAN

Looked potential buyer's agent up.......no license........Next day he calls me and wants the builder to "gift his buyer equity".....I said "like loan fraud" C-Ya!

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