Chapter 1 - Licensing and License Laws

OBJECTIVE: The objective of this chapter is to introduce you to the real estate profession, its laws, and licensing requirements. We will discuss the history of real estate license laws and why they matter. We will also go over the steps needed to become a licensed salesperson.

DEFINITION OF KEY TERMS:

Broker: a person or business entity who, with more education than an agent, is licensed as a broker to perform real estate services for others for compensation.

Broker Associate: a person qualified to be issued a license as a broker but operates as a sales associate in the employ of another. (Also called an associate broker.)

Caveat Emptor: “let the buyer beware;” a principle in commerce: without a warranty the buyer takes the risk.

Compensation: anything of value or a valuable consideration, directly or indirectly paid, promised, or expected to be paid or received.

License: a privilege granted by the state to operate as a real estate broker, broker associate, or sales associate.

Mutual Recognition: a transactional agreement between two states that provides for the recognition of each other's real estate license education.

Realtor: (1) a person who acts as an agent for the sale and purchase of buildings and land; a real estate agent; (2) a real estate agent who is a member of the National Association of REALTORS®.

Real Estate Services: real estate activities involving compensation for performing the activities for another.

Real Property: the interests, benefits, and rights inherent in the ownership of real estate.

Registration: authorization by the state to place an applicant on the register, or record, of officially recognized individuals and businesses.

Sales Associate: anyone who holds a real estate license and values, auctions, sells, exchanges, buys, or rents for compensation under the direction, control, or management of a broker or owner/developer. (Also called a real estate agent salesperson.)