Texas Realtors Will Need to Pass a Course to Become Brokers

The Texas Real Estate Commission is working to prepare brokers for a law that will outlaw subagency and require education for licensure.

Come January, aspiring Texas brokers will have to take a real estate course to get their licenses, an update that Summer Mandell, government and strategic communications director for the Texas Real Estate Commission, called a “big change.” Additionally, joining several other states, Texas has outlawed subagency.

“SB 1968 is what we call the TREC housekeeping bill,” Mandell said at a committee meeting earlier this month. The state charged TREC with creating the broker license course, which “will be a requirement for initial licensure and for renewal.”

Jim Fite, head of Century 21 Judge Fite, a North Texas brokerage, had one word for the education requirement: “Hallelujah.”

Under the outgoing law, an applicant for a broker license must have experience as a real estate agent and must have completed some real estate coursework. TREC requires additional coursework, but a bachelor’s degree fulfills that requirement. Broker license holders must also take a broker responsibility course every two years.

However, no broker responsibility course requirement for initial licensure existed before SB 1968. The new course will satisfy the requirement.

“There are too many people who obtain a brokerage license,” Fite said. “They don’t have a clue. They don’t know what the risk is; they think that owning a real estate company or being a broker is a matter of, you get all the money and you don’t do anything. That’s just not right.”

The bill also outlaws subagency, which Texas Realtors COO David Jones described as an “antiquated” holdover from the days when buyers typically lacked dedicated agents.

“Subagency occurs when a real estate agent works with a buyer but represents the interests of the seller,” Brown said during his testimony in support of the bill on behalf of Texas Realtors. “By repealing subagency, consumers will have a clear understanding of who represents them. Either represent the seller, or represent the buyer, period.”

SB 1968 will also require agents to execute written agreements with prospective buyers before they show them a property. These agreements must state whether the license holder represents the prospective buyer, and they must also disclose that broker compensation is negotiable, not set by law.

TREC published guidance on SB 1968 last week. The commissioners will consider how to implement changes to broker license requirements at their meeting on Aug. 11.