©2011 Cengage Learning
California Real Estate
Principles
Chapter 15
A Career in Real Estate & The
Department of Real Estate
License Requirements
©2011 Cengage Learning
Chapter 15
Part I
1.
2.
3.
Describe the major career choices in the real
estate industry.
List the requirements to become a licensed real
estate salesperson or broker.
Examine the personal questions to consider
before becoming a real estate agent.
©2011 Cengage Learning
Real Estate Licenses
 Appx. 500,000 California
licensees (as of 07/06)
 Broker licensees = 30%
 Salesperson licensees = 70%
©2011 Cengage Learning
SALES SPECIALIZATION
 Residential
 Commercial
 Industrial
 Business opportunities
 Agricultural
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LAND USE SPECIALIZATION
 Land development consultant
 Land development
 Urban Planning
 Real estate securities
 Syndication
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PROFESSIONAL SERVICES
 Real estate counselor
 Property manager
 Investment analyst
 Appraiser
 Loan officers
 Real estate educator
©2011 Cengage Learning
Related fields of Employment
 Title company officers
 Escrow agents
 Right-of-Way agents
 Government employee
 Employees of chain operation
©2011 Cengage Learning
REAL ESTATE TRADE
ASSOCIATIONS
 National Association of REALTORS®
NAR (www.realtor.org)
 REALTORS®
 REALTOR-Associate®
 California Association of REALTOR®
CAR (www.car.org)
 National Association of Real Estate Brokers®
NAREB
 Realtists®
 California Association of Real Estate Brokers®
CAREB
©2011 Cengage Learning
DESIGNATIONS
 ABR
Accredited Buyer Representative
Real Estate Buyer’s Agent Council (www.rebac.net)
 AIREA American Institute of Real Estate Appraisers
 AMO
Accredited Management Organization
 ASREC American Society of Real Estate Counselors
 CCIM
Certificate in Commercial Investment Marketing
(www.ccim.com)
 CPM
Certified Property Manager
Institute of Real Estate Management (www.irem.org)
 CRB
Certified Residential Broker
Council of Residential Specialists (www.crs.com)
©2011 Cengage Learning
Designations
 CRE
Counselor in Real Estate (www.cre.org)
 CRS
Certified Residential Specialist
Council of Residential Specialists (www.crs.com)
 GRI
Graduate, Real Estate Institute
 IREM
 MAI
 WCR
Institute of Real Estate Management
(www.irem.org)
Member, Appraisal Institute
Women’s Council of Realtors
©2011 Cengage Learning
IMPORTANT CALIFORNIA
EVENTS
Real Estate License law
1st state to enact a law for licensees
1917 first state license law
Real Estate Act of 1919
Written examination
©2011 Cengage Learning
RE Sales License
1.
2.
3.
4.
5.
6.
Must be 18 or older & legal U.S. Resident
No criminal record
Pass RE Principles, Practice, and one
other DRE approved course
Pass 150 question exam 70% (105
questions)
Application, licensee fee, and fingerprints
Issued a 4-year license
MUST WORK FOR BROKER
©2011 Cengage Learning
Salesperson LICENSE
 Submit to DRE:
• license application
• pay license fee
• provide live-scan fingerprints
 Meet renewal requirements every 4 years
 MUST WORK FOR A BROKER
©2011 Cengage Learning
LICENSING REQUIREMENTS
Broker
 AGE: Minimum 18 years of age
 No criminal record
 Education: 8 approved real estate courses
• Including: RE Practice, Legal Aspects of RE, RE
Finance, RE Appraisal, & RE Economics or
Accounting
 Experience: 2 years as salesperson
©2011 Cengage Learning
Broker Education :
8 Required Courses
1. Real Estate Appraisal
2. Real Estate Finance
3. Real Estate Practice
4. Legal Aspects of Real Estate
5. Real Estate Economics or
Accounting
6. Plus 3 more elective Real Estate
courses
©2011 Cengage Learning
Broker Education
Select 3 additional courses from the following:











Real Estate Principles
Business Law
Property Management
Escrow
Real Estate Office Administration
Mortgage Loan Brokering
Real Estate Advanced Law
Mortgage Loan Brokering
Real Estate Computer Applications
Advanced Finance
Advanced Appraisal
©2011 Cengage Learning
EXPERIENCE
Two (2) years full-time
experience
Or its equivalent
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Broker License
 Pass examination
 200 Questions
 75% correct (150 questions)
 After you pass:
 Submit application,
 Pay required fees
 Provide live-scan fingerprints
 Renew every 4 years
©2011 Cengage Learning
License renewal:
 First renewal for salesperson license requires:
 3 hours of Agency
 3 hours of Ethics
 3 hours each of Fair Housing
 3 hours of Trust Fund Handling
 3 hours of Risk Management
 Second and all subsequent renewals:
 45 hours C/E which must include:
1. Eight
(8) hour survey course covering updates
in Ethics, Agency, Trust Fund Handling, Risk
Management, and Fair Housing
www.dre.ca.gov
©2011 Cengage Learning
CHAPTER 15 QUESTIONS
1.
2.
3.
4.
To obtain a DRE salesperson license, you
may miss how many questions on the
salesperson exam?
How many minutes and how many seconds in
time is allowed for each one question on the
salesperson exam?
How many questions are you allowed to miss
on the broker’s exam?
To spread the required hours of C/E equally
over the renewal period, about how many
hours would the licensee have to complete
each year on a per year basis?
©2011 Cengage Learning
CHAPTER 15 Answers
1. Pass = 70%
 Miss 150 Q x 30% = 45 questions
2. Test time = 3 hours and 15 minutes
(60 min)+(60 min)+(60 min)+(15 min) =
195 minutes / 150 questions = 1.3 minutes
.3 of 60 seconds = 20 seconds
1 minute and 20 seconds
3. Pass = 75% Miss = 25% x 200 = 50
questions
4. 45 hours C/E every 4 years =
45 / 4 = 11.25 hours per year (11-12 per year)
©2011 Cengage Learning
California DRE
DEPARTMENT OF REAL ESTATE
Financed by Subdivision and license fees
Created by Legislature
 Governor appoints R. E. Commissioner who:
• Screens applicants, administers testing, issues
•
•
•
•
licenses, investigates complaints
Disciplines licensees who violate laws
Regulates subdivisions
Issues rules and regulations
Initiates real estate education and research
©2011 Cengage Learning
No License Required for:
 Principals, acting on their own behalf
 Attorney, acting in the normal course of their
business of the practice of law
 Attorney-in-fact, acting for another
 On-site resident manager
 Trustee, acting in a foreclosure
©2011 Cengage Learning
Fines for receipt of
Illegal Commission
 Individual
=
$20,000
 Corporation
=
$60,000
 Person who pays
the illegal commission =
©2011 Cengage Learning
$100
Business Opportunities
 Bill of Sale
 Financing Statement
 Balance sheet for a given date
 Profit and Loss statement for one year
 Bulk Sale Law requires Notice (12 days) before
close of escrow to notify creditors of the inventory
 Goodwill
 Real Estate licensee can sell Business
Opportunities
©2011 Cengage Learning
Business Opportunity
Balance Sheet:
Assets
(Accounts receivable, personal property,
goodwill/patronage, inventory)
- Liabilities What the business owes others
(Accounts payable, debts, loans)(unremitted taxes)
= Net Worth (owner’s equity, retained earnings)
State Board of Equalization clearance receipt or successor’s liability
Income Statement: Profit & Loss Statement (P&L):
Income
- Expenses
= Profit
©2011 Cengage Learning
Profitability of the business
For a specific period of time
Liquor License
 Alcoholic Beverage and Liquor Licenses
 Related by Alcoholic Beverage Control Act (ABC)
 Types of licenses
On-Sale
Off-Sale
Beer and Wine only
 All alcoholic Beverages (General license)
New general license sold by state = $6,000
1st 5 years: Resale limited = $6,000
Cannot be transferred intercounty
Bulk Sales: Involves inventory of a business.
©2011 Cengage Learning
The World of Real Estate
(as of 07/06)
 California population = 37 million people
 California licensed real estate agents =
Approximately
500,000
 1 licensed agent for every 74 persons
©2011 Cengage Learning
Working Conditions
 Long working hours
 Competitive business
 Liability high for disclosure issues
 Frequently work nights and weekend
 Commission – no salary
 No fringe benefits
 Pay your own taxes
 NOT “Get rich quick scheme”
©2011 Cengage Learning
Benefits of real estate license
 Independent working conditions
 Good referral system and good time management
equals good money
 Select insurance & vacation with your own
earnings to fit your individual needs
 With small capital, can make excellent income
 Excellent opportunity to acquire personal
investments for profit or retirement income
©2011 Cengage Learning
Is a career in Real Estate right for YOU?
1.
2.
3.
4.
5.
6.
7.
8.
Why are you leaving your current job?
How many sales per month do you need to earn
your present income?
What vacations & holidays and fringe benefits do
you need to have and how much do you need to
earn to get them?
Are you free to work nights and weekends?
Do you have the stamina & energy to work sales?
Can your personality work peaks and valleys?
Can you financially afford to begin sales?
Can your family & relations cope with your
change?
©2011 Cengage Learning
Personal Checklist
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze results of an interest inventory test
Complete DRE approved real estate courses
Check local real estate employment market
Select a geographic work area
Select offices for work for your selected area
Interview salespersons in several offices
Make an appointment with the office manager
Submit your resume, background, credentials
Make a specific list of interview questions
©2011 Cengage Learning
Review You Understanding of
California Real Estate
 Please take the self administered 150-question
review examination for the entire course.
 Answers are provided to enhance your learning
experience.
 Best of Luck on YOUR real estate career!
©2011 Cengage Learning