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Transferring Brokerages: Rules and Tools for Louisiana Real Estate Agents

Louisiana real estate agents considering a move to another real estate brokerage may find themselves intimidated by the process.  With potentially numerous listing agreements in place, deals under contract, ongoing relationships with buyers, and contractual obligations to a current broker, there is certainly a lot to consider.  But the logistics of a transfer—and the rules that govern—aren’t really as complicated as they may seem.  This article will walk Louisiana real estate agents through the process of transferring to a new real estate broker.

What happens to my listing agreements?

Under Louisiana law, a listing agreement must be between a client and a broker—not an individual agent.  In this regard, the Louisiana Real Estate Commission’s rules say:

Listings and other agreements for real estate brokerage services must be solicited under the name of the broker corporation or supervising broker. These agreements shall be signed by the broker or by a sponsored licensee acting under written authority of the sponsoring broker.

See LREC Rules and Regulations (“LREC Rules”), Ch. 18, §1801.  Technically, what this means is that the brokerage has all rights to listing contracts and can prevent an agent from taking a listing with her.

In practice, however, many brokerages do not want to enforce listing agreements with clients who want to work with their agent—not the brokerage he happened to be with when signing the listing agreement.  Reputable brokerages, therefore, ordinarily make it a policy that agents can “take their listings” with them if they decide to move to another Louisiana real estate brokerage.  Athena Real Estate’s policy, for example, is generally that agents can take their listings with them if they leave the brokerage.  (One exception is often for listings currently pending/under contract.  Brokerages generally won’t allow agents to take those with them, so most agents choose to “close out” any pending deals before making a move.)

What do I tell my clients?

Even the most inflexible brokerages are often reluctant to enforce a listing agreement with a client who has expressed the desire to “stick with” his agent.  Although clients are entitled to make such an assertion, agents must take care not to give a client advice on how to convince a brokerage to cancel a listing agreement.  The LREC rules say agents basically cannot “coach” a client on how to “get out” of a listing agreement:

It is unlawful for any person, licensed or unlicensed, to interfere with the contractual relationship between a licensee or registrant and a client by counseling a client or another licensee or registrant on how to terminate or amend an existing contractual relationship between a licensee or registrant and a client. . . .

See La. Rev. Stat. § 37:1447(C)(2017).

But this provision does not prevent an agent from announcing to clients the agent is moving to a new brokerage.  Indeed, it would be unprofessional for an agent to vanish without communicating a move to a new brokerage to a client.  Such communication crosses the line, however, when the agent suggests ways to convince the existing brokerage to cancel a listing agreement.

What if I’m under contract and what if I signed a non-compete?

Many brokerages require that agents sign contracts with a defined term, often one year.  Some of these contracts even include non-compete provisions that prevent an agent from working for any other brokerage in the area.

The enforceability—and application—of the period of time a contract requires an agent to stay with a particular brokerage will depend on the provisions of her contract.  Often, contracts allow agents to cancel early “for cause”—meaning that the broker did not do what it said it would, as stated in the contract.

Some contracts go a step further than a basic “term” and include non-compete provisions.  As such provisions are disfavored under Louisiana law, non-compete clauses in Louisiana brokerage contracts must strictly comply with certain statutory requirements.

First, the rules require that a non-compete provision in an agent’s contract be in bold faced letter of a font size of not less than 10-point type, and the provision must give the agent the right to “back out” within three days of signing the contract:

[A non-compete provision in a real estate agent’s contract] shall be unenforceable and an absolute nullity unless the licensee shall have the right to rescind the non-compete agreement until midnight of the third business day following the execution of the non-compete agreement or the delivery of the agreement to the licensee, whichever is later. In any agreement between the broker and licensee, which includes a non-compete agreement, the non-compete agreement shall be prominently displayed in bold-faced block lettering of not less than ten-point type.

See La. Rev. Stat. § 37:1448.1(A)(2017).

In addition, the general non-compete statute in Louisiana, La. Rev. Stat. § 23:921, applies to agreements between real estate salespersons and brokers just like all other contracts.  Under the statute, non-compete clauses are valid only if (1) the non-compete obligation is for a maximum of two years; (2) the provision specifies specific parishes in which the salesperson can’t compete, and (3) the broker who required the non-compete actually does business in the specified parishes.

If the non-compete agreement doesn’t comply with any of the foregoing, then it is completely unenforceable.  Even so, before assuming your broker won’t enforce a non-compete, it often makes sense just to ask.  Even if unwilling to allow an agent to entirely “walk” from a non-compete obligation, a broker may be willing to negotiate for an early departure on certain terms.

Logistics – what paperwork do I need to file to get my Louisiana real estate license transferred to a new broker?

The paperwork required to transfer a Louisiana salesperson’s license to a new brokerage is relatively basic.  An agent just needs to file two forms (both available on the LREC web site):

  • Termination of Sponsorship Form. This form must either be signed by the existing broker, or the agent must send the LREC a copy of proof that notice was sent to her existing broker by registered or certified mail.  In either case, the form must be returned to the LREC within five days of when it is signed.
  • Request to Transfer License to New Broker Form. This form must be signed by the agent AND the new broker.

In addition, there is a $35 fee for transferring to a new broker.  If you are considering making a transfer, ask your new broker if they will send you copies of the forms to sign electronically.  The broker might even pay the transfer fee for you.  Athena does.

Conclusion

For most, the prospect of change can cause unease.  But often a move away from a stale, stodgy operation to a fresh, enlivened one can be invigorating.  Of course, in the end, everyone’s situation is different, and only you can decide if—and when—a move is right for you.  It certainly takes courage to step out of your comfort zone, even if you know it will be for the best long-term.

At Athena, we understand how intimidating a move to a new broker can seem.  So we do everything we can to make the transition as smooth and seamless as possible.  Run by a pair of corporate attorneys, Athena provides helpful guidance on the paperwork and steps necessary to complete a transfer.  And each lateral agent is assigned a transition team to help with preparing new marketing materials, developing a marketing plan, making announcements to existing clients, photo shoots, and other steps necessary to hit the ground running.  Often, we may pay for the cost of replacement signs and materials, and for established agents we offer a sign-on bonus, in addition to the aggressive commission compensation structure we offer to all our agents.

Give us a call or send us an email if you want to learn more.  We’d love to talk with you.

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Getting Your Real Estate License in Louisiana: New Agent Hacks

So you’ve decided to get your Louisiana real estate license.  Maybe you’re embarking on a new career.  Maybe you’re employed full time and want to get started investing in real estate and handling your own deals.  Maybe you’re a stay-at-home parent and want the flexibility to make your own hours and go at your own pace.  Whatever is driving your decision, this article will walk you through the process of getting your real estate license in Louisiana so you can hit the ground running.

Who’s in charge?

Most Louisiana agents have three “big brothers” always looking over their shoulders:

  1. The LREC. The governing authority for real estate agents in Louisiana is called the Louisiana Real Estate Commission (the “LREC”).  The LREC handles applications for new real estate agents, monitors compliance with continuing education requirements, and penalizes and disciplines agents for violations of real estate laws and rules in Louisiana.  Fear the LREC.  Seriously.
  2. Brokers. There are two types of real estate agents in Louisiana: salespersons and brokers.  Everyone starts out as a salesperson, and every salesperson has to be affiliated with a broker.  Think of it like an apprenticeship: new agents in Louisiana “attach” to a broker, who is supposed to guide them through the regulatory, operational, and marketing steps involved in being an agent.  After four years as a salesperson—and a bunch of extra courses—a salesperson can apply to become a broker.
  3. Realtor associations. The general public thinks of “agents” and “realtors” as the same thing. Technically, though, an agent can call herself a “realtor” only if she is a member of the National Realtor Association (through one or more of its local chapters).  And one of the great prizes of being an agent—access to the multiple listing service—requires that you belong to a realtor association.  So, though it’s technically not mandatory, almost all Louisiana agents are members of a realtor association, and most Louisiana brokers require it.

The local realtor association for the Greater New Orleans area is called the New Orleans Metropolitan Association of Realtors (“NOMAR”).  It costs good money to belong to NOMAR, the MLS, and the “lockbox” services that NOMAR offers.  You can learn more about the process for becoming a realtor with NOMAR by clicking here.

What do I have to do to get my real estate license in Louisiana, and how much does it cost?

Prerequisites for becoming a real estate agent in Louisiana are pretty straightforward.  New agents must:

  • be over 18 years old;
  • have a high school diploma (or GED equivalent);
  • complete 90 hours of pre-licensing education from a certified instructor in Louisiana;
  • pass a criminal background check;
  • pass standardized testing; and
  • sign up with a Louisiana real estate broker and provide proof of errors and omissions insurance.

One huge “hack” you need to know about: the LREC will often accept college coursework or other education in lieu of some or most of the pre-licensing education requirement.  For many, this could mean shaving off 40-60 hours of pre-licensing education requirements. To get credit for prior coursework, simply submit your school transcripts to the LREC with a letter requesting credit.  Here is the LREC’s contact information:

  • Phone: (225) 925-1923
  • Email: info_licensing@lrec.state.la.us

After you get credit lined up for your prior coursework, submit the following paperwork (available online) to the LREC to get your Louisiana real estate license:

  • Salesperson License Application “Part A”: With this form, you tell the LREC all about yourself and authorize a background check.  Technically, you can submit this “Part A” form before or after you complete your pre-licensing education, but you have to submit it before you take the Louisiana real estate exam.
  • Salesperson License Application “Part B”: This is the “Sponsorship Affidavit” form that your new real estate broker needs to fill out. You can submit this form before or after you complete your pre-licensing education and before or after you take the Louisiana real estate exam.

Next, you will need to take the Louisiana real estate exam.  A company called PSI administers the real estate exam in Louisiana.  To schedule the exam, go online to PSI’s site, create an account, and schedule it (for a fee).

Speaking of fees, you should know that it can be somewhat of an investment to get your real estate license in Louisiana and pay for everything you need to get started.  Here are the typical fees you will be facing as a new real estate agent in the New Orleans area:

 Item Cost
1LREC Application: $90 (one-time fee)
2Initial licensing fee:$45 (one-time fee)
3Mandatory E&O Insurance:$190 (annual fee)
4Realtor Association:$484 (combined annual fees)
5MLS Fee:$84 (quarterly fee)
6Total First-Year Fees:$893

Choosing a Louisiana real estate broker and brokerage

As a new real estate agent in Louisiana, you have to affiliate with a licensed broker.  Although you will report to your broker—and your broker will be responsible for monitoring what you do—the broker is not your “boss.”  Except in very rare circumstances, Louisiana real estate agents are independent contractors—not employees—of brokers.  This means that you have more flexibility in how you run your business and what hours you work.  But it also means that you don’t get a regular paycheck: real estate agents “eat what they kill” and earn money only when they do deals.

In return for the support and guidance your broker is (supposed) to provide, you split a portion of the commission you earn on any deal with your broker.  The commission split with Louisiana real estate brokerages can vary substantially—from 25% or less to as much as 60%.  In other words, if you do a deal for a $10,000 commission, your broker might keep somewhere between $2,500 to $6,000 of that commission.

Beware, too, that many Louisiana real estate brokerages charge their agents fees in addition to commission splits:

  • many Louisiana real estate brokerages charge monthly fees (supposedly for things like email accounts, your own “personal” web page, and other “cutting edge” technology);
  • many Louisiana real estate brokerages charge transaction fees for things like “national dues,” general marketing services, and local “royalty” fees that effectively increase the commission split you pay as an agent; and
  • many Louisiana real estate brokerages pass the entire cost of basic support services like graphic design work and electronic fax service onto their agents.

Like an airline that offers “cheap” flights but then charges passengers for soft drinks, carry-ons, and “upgrades” for things included on other flights, real estate brokerages can be pretty slick about hiding fees in addition to the commission splits they advertise.  To make sure you’re comparing “apples to apples” when choosing a real estate brokerage in Louisiana, you need to consider the hidden costs of doing business with that brokerage.

Of course, commission splits aren’t everything.  If the option were either to get zero support for a lower commission split or full-service support for a higher split, then it would be a no-brainer to cough up more cash to your brokerage.   But, unfortunately, agents often end up worse off on both accounts: attracted by “big brokerage” marketing, they sign up with a national brokerage, agree to a higher commission split (and ridiculous hidden fees), and end up getting little additional support than a smaller shop would offer.

At Athena, we believe that our agents shouldn’t have to choose between coughing up half (or more) of their commission splits to their brokerage or getting little or no support in return for a lower split.  We view our agents as our partners and firmly believe that your success will mean our success.  By pumping our resources into our agents—and allowing them to keep more of their own commissions—our model has allowed new agents to quickly rise as stars.  And when our agents win, we win.  As the old saying goes, “a rising tide lifts all boats.”

We are also transparent about our commission split and don’t knick our agents for hidden fees:  you keep 75% of your commissions—every time, on every deal.  No annual “dues,” marketing “assessments,” or monthly “subscriptions.”  No hidden fees.  We truly have one of the best commission splits of real estate brokerages in the New Orleans area and Louisiana at large.

To learn more about Athena—and see if our brokerage would be a good fit as you embark on your new career in real estate—check out our web site, give us a call, or send us an email.  We’d love to talk with you.

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