License Reactivation
License Reactivation
The process for reactivating a real estate license to referral status, often referred to as converting or reactivating a license for referral-only status, depends on your current license status and the state's real estate commission requirements. Below is a general outline of the steps to reactivate your license to referral status in most states, with a focus on the process in California. If you are in a different state, the specific steps may vary slightly, but the overall process should be similar.
1. Determine Current License Status
Active License: If your real estate license is currently active, you can simply transition to a referral-only role by affiliating with a Limited Function Referral Office (LFRO) or a brokerage that offers referral-only services.
Inactive License: If your license is inactive or expired, you will need to complete additional steps (such as fulfilling continuing education requirements) to reactivate it before moving to referral status.
2. Affiliate with a Licensed Broker or LFRO
To reactivate your license for referral status, you must affiliate with a licensed real estate broker or an LFRO (Limited Function Referral Office) that handles referral agents.
You cannot work as a referral agent independently; a licensed brokerage must sponsor your license. In most cases, if you plan to be a referral-only agent, you’ll want to join an LFRO, as they specialize in managing referral agents.
Your broker or LFRO will help file the necessary paperwork with the real estate commission to indicate your status as a referral-only agent.
3. Complete Continuing Education (if applicable)
If your license has been inactive for a period of time, you may need to complete continuing education (CE) credits to reactivate it. The exact requirements depend on how long your license has been inactive or expired.
In California, for example, if your license has been inactive or expired, you will need to complete 45 hours of continuing education before you can reactivate it.
You will need to complete courses in topics like real estate ethics, consumer protection, agency relationships, trust fund handling, and risk management to meet state requirements.
4. Submit License Reactivation Application
If your license is inactive or expired, you will need to file a license reactivation application with your state’s real estate commission. This will often involve:
Submitting proof of your completed continuing education credits.
Filling out the application form to reactivate your license.
Paying any required license renewal fees or reactivation fees.
In California, you can file this application online through the California Department of Real Estate (DRE) portal, or submit the paper forms.
5. File Status Change as Referral-Only Agent
Once your license is reactivated, you can file the status change to reflect that you will operate as a referral-only agent. Your brokerage or LFRO can help facilitate this change with the real estate commission.
This status change does not require you to join the MLS or local real estate boards, as you will not be actively engaging in transactions.
You’ll only need to maintain the referral-only status with your brokerage, and in most states, this involves filing paperwork that indicates your sole activity will be making client referrals.
6. Pay License Fees
Depending on the state, there may be fees associated with reactivating your license and affiliating with a brokerage or LFRO. In California, for example, there are renewal and reactivation fees that vary depending on your license type and whether it has been expired.
Fees can include:
Reactivation or Renewal Fees: To reinstate your real estate license, you’ll need to pay the necessary renewal fee, which can range from $200 to $400, depending on your state.
LFRO Fees: Some LFROs or referral-only brokerages charge minimal administrative fees for managing your referral status.
7. Sign Referral Agreement with LFRO or Broker
Once your license is reactivated and you’ve officially transitioned to referral-only status, you’ll sign a referral agreement with your LFRO or brokerage. This agreement outlines the terms of how referral fees will be shared, the processes for referring clients, and any administrative expectations.
Your brokerage or LFRO may also provide tools for managing your referral business, such as a CRM system or referral tracking software.
8. Market Yourself as a Referral Agent
As a referral-only agent, you can begin marketing yourself to your network as someone who specializes in connecting buyers and sellers with trusted real estate agents.
Be sure to comply with state advertising rules, which often include:
Displaying your brokerage or LFRO affiliation on all marketing materials.
Disclosing that you are a licensed referral agent rather than an active real estate agent involved in transactions.
Key Considerations for California:
License Status: To operate as a referral agent in California, your real estate license must be valid and affiliated with a licensed broker or LFRO.
Continuing Education: If your license has expired, you must complete 45 hours of continuing education to reactivate it.
No MLS Requirement: As a referral-only agent, you are not required to join the MLS or local real estate associations, which can reduce your overhead costs.
Summary of Steps to Reactivate a License for Referral Status:
Check License Status: Verify whether your license is active, inactive, or expired.
Affiliate with a Brokerage or LFRO: Partner with a broker or LFRO that supports referral agents.
Complete Continuing Education: If your license is inactive, complete the necessary education credits.
Submit Reactivation Application: File the paperwork with the state’s real estate commission to reactivate your license.
Change Status to Referral-Only: Work with your LFRO or broker to file for referral-only status.
Pay Fees: Ensure all reactivation, renewal, and LFRO fees are paid.
Sign Referral Agreement: Set up an agreement outlining referral fee terms with your broker or LFRO.
Start Referring: Begin marketing yourself as a referral-only agent to your network.
By following these steps, you can reactivate your real estate license and operate as a referral agent, maintaining your license while earning income through referrals without the demands of active real estate work.