Below, the Massachusetts Board of Registration of Real Estate Brokers and Salespersons answers queries by agents in the field regarding real estate licensing in Massachusetts.
Satisfying the Supervision Requirement
Q. Do salespeople need to be supervised in order to gain work experience?
A. Yes, they do. The relevant statute does not specifically state what constitutes supervision, which the Board may examine to provide more definition. However, those salespeople with virtually no contact with their “affiliated broker” do not satisfy the supervision requirement and are not getting the work experience that they need.
Brokers who attest that such salespeople are affiliated with them may be misrepresenting the existence of a real working relationship in violation of the licensing law. The Board, mindful of the statute, has been lenient in this respect by not insisting on a specific amount of direct supervision, but clearly those situations involving no supervision do not satisfy the one-year work affiliation requirement.
Paying Referral Fees
Q. Can I pay a referral fee to anyone sending me a prospect?
A. The simple answer is no. The relevant licensing law prohibits real estate brokers from sharing in their fees, commissions, or other valuable consideration with those who are practicing brokering but not licensed to do so. Naturally, someone or some entity sending a broker a potential client who may either list their property for sale with the broker or may be a potential buyer of a listed property is practicing brokering under Massachusetts General Laws Chapter 112, §87PP. The law prohibits brokers from paying a referral fee or valuable consideration of any kind to such person or entity, since doing otherwise would allow such person or entity to practice brokering without the benefit of holding a license as such. The law, then, prohibits brokers from sharing in their valuable consideration with those unlicensed to uphold the integrity of the very licensing law itself.
Having said this, some brokers confuse the prohibition on sharing valuable consideration with those unlicensed as also prohibiting inducements or rebates to sellers and buyers. This is not the case. Inducements or rebates to the seller or buyer are permissible given that the seller or buyer in the transaction is a principal and is not required to be licensed as a broker. Brokers are, by definition, agents for either the seller or buyer. Consequently, using inducements to attract listings or giving incentives such as rebates for those who purchase a listed property do not violate the prohibition on sharing valuable consideration with those who are brokering without the benefit of a license. The sellers and buyers in purchase and sale transactions are not acting for anyone else and, therefore, are not brokering. Indeed, it is their broker who acts on their behalf.