Can a REALTOR License be in Referral Only Status?

Real Estate License

I found this question in my site logs. Let’s clear up some terms.

Each state is responsible for licensing agents and brokers. Each has its own set of requirement and rules. For example, the Texas Real Estate Commission licenses and regulates salespersons (agents) and brokers within the State of Texas.

REALTORs® are members of the National Association of REALTORs® (NAR). NAR is a membership trade organization rather than a licensing agency.

A number of years ago NAR allowed Designated REALTORs® to establish Limited Function Referral Only (LFRO) Brokerages. LFROs have to be a separate business entity. NAR did not want brokers to commingle their “regular” agents with their LFRO agents. LFROs, like Referral Agents of Texas LLC, are established under NAR rules. Since it is also a licensed broker within the State of Texas, it can sponsor agents. Why is this important? Agents can only receive compensation through their sponsoring broker.

As far as the state is concerned LFRO agents are active agents sponsored by a Texas broker. What limits the agent’s activities is the Independent Contractor Agreement between the agent and the broker. This agreement specifically limits the agent’s actions to generating referrals.

A few states may have different “classes” of licenses with include referral-only agents. When in doubt check with your state regulatory agency for details.

Tom Branch

Originally posted at

Investors, Do You Really Want The Highest Possible Rent? – Part 1

Modern Home for Rent

As a property manager I often have this conversation with my investor clients. I understand trying to get the most possible cash flow out of a property but this has to be tempered by two issues–occupancy rate and quality of tenants.

You might ask, “How are they related?”

In part one, I’ll discuss occupancy rate.

Occupancy Rate is defined as the amount of time a property is rented over a period of time. If your rental is vacant for one month out of the year you have an occupancy rate of 91.6 percent. You arrive at the occupancy rate by taking the time the rental is occupied and dividing it by the total time available.

As an investor you should never plan on a 100 percent occupancy rate. We typically use 85 or 90 percent just to be conservative in our approach.

If your rental list price is set too high the property will sit vacant for a longer period of time. Let’s assume you have a rental unit that would quickly rent for $1500 but you list it at $1600. If it takes you an additional 30 days to find a tenant willing to pay $1600, you actually lost $400. What?

While the $1600 rent generates an additional $100 in monthly revenue, you lost $1500 for the month the property could have been rented at the lower price. So, over the course of a year you generated $1100 in additional revenue but lost $1500 due to the vacant month. This results in a loss of $400 during the year!

A higher rental price is usually only profitable if you can rent the property in a similar amount of time. Otherwise you typically wind up losing money.

In part two, I’ll discuss how rental price also impacts the quality of tenants.

Have questions or want to work with an experienced real estate team on purchasing or managing investment properties? Contact us at 214-227-6626.

Photo licensed from iStockPhoto

Golf Course Homes in Allen Texas

Twin Creeks Golf Course

I was out speaking with some buyers yesterday and they were talking about living in Allen in a home on a golf course. Allen has lots to offer but the only golf course within the city is Twin Creeks.

Located in west Allen, Twin Creeks is a wonderful master planned community. The 18 Hole championship course was designed by golf legend Arnold Palmer who wrote, “The Golf Club at Twin Creeks could be one of the best courses in the State of Texas, and the most peaceful 18-hole course I have ever designed. The golf course is of a traditional nature and is very much in harmony with the natural landscape.”

According to the course website:

The Golf Club at Twin Creeks offers an award-winning golf course that winds its way around two natural, free-flowing, tree-lined creeks. Known for its “peaceful” setting and as one of the most naturally preserved golf courses in the state, Twin Creeks has become a favorite of Collin County.

Click here to see all Golf Course Homes in Twin Creeks Allen TX 

Click here to see all Homes For Sale in Twin Creeks Allen TX

Have questions or need more information? Contact us at 214-227-6626.

Photo: Copyright 2007 Realty Revolution LLC

Pool Homes in Plano Texas

Pool Homes in Texas

While we’re right in the middle of winter, a number of new clients have indicated they are looking for a pool home in Plano. Some buyers are telling me they will put the pool in after closing.

My best advice for buyers looking for home and want a pool is to find a home where the pool has already been installed. You can always update a kitchen or make other changes to the home. Installing a pool is a guaranteed way to lose money. A pool that costs $40k to install is worth about $17k when it’s done. Let someone else take the loss.

The good news is there are plenty of pool homes currently on the market and that number should grow as we enter into the spring sales season.

Click here to see Pool Homes in Plano Texas | Click here to see all Pool Homes in Dallas Fort Worth

Have questions? Contact us at 214-227-6626.

Are Referral Fees Legal In Texas?

Referral Fees in Texas

“Are referral fees legal in Texas?” We seem to get this question all the time. There are two kinds of referrals. One comes from unlicensed people and the other from licensees.

Referrals From Unlicensed People

The Texas Administrative Code (TAC) 535.20 limits payment to non-licensed people to $50. Some people will try to skirt the law by purchasing gift cards or paying directly on behalf of the referral source. The rule clearly states, “the term valuable consideration includes but is not limited to money, gifts of merchandise having a retail value greater than $50, rent bonuses and discounts.”

Note that it’s not illegal for the consumer to accept the payment but the payment of consideration exceeding the amounts specified in 535.30 is grounds for a licensee to have their license suspended or revoked.

Referrals From Licensees

The Texas Occupations Code 1101.651 allows brokers to share fees and commissions with salespersons (agents) they sponsor and other brokers. TAC 535.131 clarifies this to include the sharing of fees and commissions with out of state and foreign brokers.

The bottom line is that referral fees paid to non-licensees cannot exceed $50 in cash, goods, services, rebates, etc. Referral fees paid to other brokers are acceptable and subject to the agreement between the brokers.

Tom Branch

Photo licensed from iStockPhoto

Originally posted at

Standing Watch

Standing Watch

Aspens in the Sangre de Cristo Mountains north of Santa Fe, New Mexico.

Standing Watch - Copyrigh 2012 Tom Branch

Click photo for larger view.

Photograph taken on January 3, 2012 at 1:54 PM with an 18mm lens. The only post-shoot processing was a little sharpening and conversion to black and white.

Tom Branch, Broker, CDPE, SFR

Photo Copyright 2012 – Tom Branch

Ringing in the New Year in Santa Fe’s Majestic Mountains

Ski Santa Fe

New Year’s Day 2012 was cool and crisp and snow-covered as we wound our way to the top of the mountain 18 miles outside of Santa Fe, New Mexico.  Above 12,000 feet the air is very thin and I could feel myself starting to breathe heavy.  When you’re used to being near sea level, this increase in altitude has a definite impact. 

Skiing Lessons at Ski Santa FeI was excited to try my hand at skiing again, but since it had been 25 years, ski school was a must.  After half a day, I was ready to head downhill, at least a small hill.  Most of the skills came back just like riding a bike. 

The view from the chair lift was beautiful.  Many of the snow covered trees were still green and the fresh snow glistened in the sunshine.  There wasn’t a cloud in the sky and the journey to the bottom was invigorating. 

I can’t think of a better way to ring in the New Year than pointing the skis downhill and feeling the cold breeze on your face.  The Ski Santa Fe facility was near perfect with short lift lines, reasonable prices, a nice cafeteria, a great ski and snowboarding school, and breathtaking scenery. 

The best part was sharing the experience with my husband and close friends.  I can’t wait to visit again!

Click here to see more photos of the trip to Ski Santa Fe.