Brokerage services

Key Takeaways

• Real estate brokerage services is the statutory list in RCW 18.85.011 that decides which activities require a Washington real estate license.
• The list runs to eight categories, including negotiating a purchase or lease, advertising oneself as engaged in brokerage, advising a buyer or seller, issuing a broker's price opinion, handling transaction funds, and property management.
• The definition covers services offered for compensation or the promise or expectation of compensation, and services a licensee performs on the licensee's own behalf.
• No suit for compensation as a broker, managing broker, designated broker, or firm may be brought without alleging and proving the plaintiff was licensed at the time (RCW 18.85.331).

What It Means

Real estate brokerage services is a list, and that list is the licensing line in Washington. RCW 18.85.011 defines the phrase as any of eight kinds of service offered or rendered directly or indirectly to another, or on behalf of another for compensation or the promise or expectation of compensation, or by a licensee on the licensee's own behalf.

The eight cover more ground than most students expect. Listing, selling, purchasing, exchanging, optioning, leasing, or renting real estate or an interest in it. Negotiating or offering to negotiate any of those. The same activities for a manufactured or mobile home handled together with the land. Advertising or holding oneself out to the public as engaged in brokerage. Advising, counseling, or consulting buyers, sellers, landlords, or tenants about a transaction. Issuing a Broker Price Opinion. Collecting, holding, or disbursing funds connected to those transactions. And property management, including marketing, leasing, renting, and the physical, administrative, or financial maintenance of property.

Two consequences follow. Anything on the list is license territory, which is what limits the work an Unlicensed Assistant can be handed. And the definition of broker in the same section ties the activity to a firm, since a broker acts on behalf of a real estate firm under supervision rather than as a free agent.

How It Works in Washington

In Washington the definition in RCW 18.85.011 is the trigger for the rest of the license law. The same section defines a broker as a natural person acting on behalf of a real estate firm to perform real estate brokerage services under the supervision of a Designated Broker or managing broker, so the activity and the supervision are bolted together. Rendering those services for a buyer or seller also starts the agency clock, because RCW 18.86.020 requires the firm to enter a written services agreement with that principal before, or as soon as reasonably practical after, the appointed broker commences rendering them.

The enforcement edge is money. RCW 18.85.331 provides that no suit or action may be brought for the collection of compensation as a real estate broker, real estate firm, managing broker, or designated broker without alleging and proving that the plaintiff was duly licensed before offering to perform the transaction or procuring the promise of compensation. Someone unlicensed who does the work has no court to collect in. One nuance sits inside the list itself: a broker's price opinion is an oral or written report of property value prepared by a licensee, and RCW 18.85.011 says it is not an appraisal as defined in RCW 18.140.010 unless it complies with chapter 18.140 RCW. Our post on audit proofing a Washington practice covers the records side of these duties.

Example

Elena, a broker at a Vancouver firm, takes on three jobs in one month, and all three are brokerage services under RCW 18.85.011. She issues a broker's price opinion for a lender at $350. She manages a duplex for 8 percent of the $3,400 monthly rent, which is $272 a month. And she signs a Listing Agreement on a house at $499,000.

Because all three sit on the statutory list, all three run through her firm and under her designated broker's supervision rather than under her own name. Her sister, who is unlicensed, offers to negotiate the duplex lease renewal for a share of the management fee. Negotiating a lease is on the list, so it is licensed work and cannot be handed over that way. If a client refused to pay, Elena's firm could sue only by alleging and proving it was licensed at the relevant time under RCW 18.85.331. Her sister could not sue at all.

Common Mistakes and Exam Traps

• Advertising or holding oneself out to the public as engaged in brokerage is itself a brokerage service under RCW 18.85.011, even if no transaction ever closes.
• A broker's price opinion is a brokerage service but not an appraisal, unless it complies with chapter 18.140 RCW.
• Property management sits inside the definition, so leasing, renting, and the financial maintenance of a client's property are licensed activities.
• The definition reaches services a licensee performs on the licensee's own behalf, so a licensee selling their own property is still performing brokerage services.