Brokerage affiliation

Key Takeaways

• A Washington broker's license is held with one firm at a time, and the broker works under that firm's designated broker or managing broker.
• Listings, purchase and sale agreements, and other brokerage service contracts are the property of the real estate firm, not of the individual licensee who wrote them.
• The terms of an affiliation, including the commission split, any desk fee, and training, are negotiated with the firm rather than set by statute.
• During a broker's first two years of licensure, a managing broker must provide a heightened level of supervision.

What It Means

Brokerage affiliation is the working relationship a licensee forms with a licensed real estate firm. Washington does not license brokers to practice on their own. A new licensee passes the exam, finds a firm willing to hold the license, and only then starts taking listings and writing offers. Until that happens the license cannot be used.

The affiliation is more than paperwork. The firm supplies the licensed name the broker advertises under, the Trust Account that holds client money, the transaction files, and the supervision the state expects. In exchange, the firm sets the business terms: the Commission Split, any Desk Fee, errors and omissions coverage, training, and which office the licensee reports to. None of those numbers are fixed by law, which is why interviewing several firms before signing on is standard advice for new brokers.

One consequence catches new licensees off guard. The listings a broker signs belong to the firm, so leaving a firm does not mean leaving with the business.

How It Works in Washington

RCW 18.85.101(3) states the rule in a single sentence: the broker is licensed to one firm at a time and is supervised by a designated or managing broker. There is no solo license in Washington and no way to hold two active affiliations at once.

RCW 18.85.275 fills in what the firm owes in return. The Designated Broker or managing broker must supervise the conduct of brokers for compliance with chapter 18.85 RCW, chapter 18.235 RCW, and RCW 18.86.030, and a managing broker must provide a heightened level of supervision during a broker's first two years. The same section makes listings, transactions, management agreements, and other contracts relating to brokerage services the property of the firm, and gives the designated broker authority to amend, terminate, or release those contracts. Advertising follows the firm as well: WAC 308-124B-210 requires the firm name or a licensed assumed name in all advertising and solicitations for brokerage services, including web pages, email, and other visual media. The Department of Licensing publishes advertising guidelines that cover internet, print, and social media.

If the licensing tiers still blur together, our explainer on broker versus managing broker sorts out who supervises whom, and our piece on enhanced supervision of new brokers covers that first two year window.

Example

Marisol passes the Washington broker exam in March and interviews two Spokane firms. Cascade Ridge Realty offers a 70/30 split with no desk fee. Inland Property Group offers 85/15 with a $350 monthly desk fee and a $95 per transaction fee. Marisol projects six closings in her first year at an average gross commission of $9,000, so $54,000 total. At Cascade Ridge her share is $37,800. At Inland her share is $45,900, minus $4,200 in desk fees and $570 in transaction fees, leaving $41,130. She affiliates with Inland, and the designated broker activates her license to that firm.

In October Marisol lists 1412 Hawthorn Lane. In January she moves to a third firm. The Hawthorn listing stays with Inland Property Group, because the listing contract is the firm's property. If the seller wants to follow her, the seller has to ask Inland's designated broker to release the contract.

Common Mistakes and Exam Traps

• A broker license is not permission to open a business. Washington licenses the broker to one firm, and that firm's designated broker supervises the work.
• The firm, not the individual broker, owns the listing agreement. Any answer that lets a departing licensee take listings along is wrong.
• Designated broker and managing broker are not interchangeable. A firm has one designated broker, may have several managing brokers, and supervision can be delegated to them by written agreement.
• Advertising must carry the firm's licensed name even when a broker markets under a personal team name or brand.