Why this matters: The Winter 2026 Real Estate Bulletin lays out the California Department of Real Estate’s (DRE’s) expectations for ethical conduct by its licensees. As the government agency in charge of broker and agent interaction with consumers of real estate services, the DRE uses this quarter’s bulletin to strongly advocate consumer protection, standardized compliance and provide actionable rules for licensees’ use of AI technology in their practice.
A year of bills
Department of Real Estate (DRE) began its winter bulletin recapping legislation introduced in 2025. Beyond showing important work done to enshrine best practices, the summary sets a fresh tone for the start of the year, showcasing new laws in effect or on the horizon.
Notably, new laws address the devastating Los Angeles Area wildfires including prohibiting unsolicited offers from buyers and requiring a year of mortgage forbearance by the servicer.
For property managers and owners of rental income properties, this year also debuts more rights for tenants to receive specific appliances — namely a functional refrigerator and stove — as part of a habitable space as well as access to electronic security deposit returns.
To view the legislation in detail and keep an eye on regulatory changes which affect your practice, visit Legislative Gossip.
1990s flashback for brokers
To remind longstanding brokers and educate new agents, the DRE looked back on the brick-and-mortar offices of the 1990s.
When client interactions transitioned from face-to-face meetings to an online platform, it altered the dynamic between a supervisory broker and their agents.
Brokers present in the office dealt with a wider range of responsibilities. Now brokerages work with clients from further afield, and a broker can become more specialized.
But leaving the physical world for a digital one increased the risk of noncompliance and opened up the world of mega-brokerages. These large-scale digital offices host hundreds — sometimes thousands — of affiliated agents and extend the reach of the employing broker far beyond what used to be possible.
The DRE warns of the risks that come with removing brokers from direct, easy access to their agents and providing tools that expand their reach, but not necessarily their oversight.
Despite new issues with data security, privacy, cryptocurrency and AI, the fundamental responsibilities of control and oversight still take precedence. Employing brokers need to extend supervision and use their years of experience to enforce compliance — always.
Disclosures and advice on property conditions or transactional activity are duties still owed to each client, regardless of whether your agent is present in a zoom room or a conference room.
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How far do ARMs reach for your buyer?
Continuing this look backwards at mortgage advice, mortgage loan originators (MLOs) and agents are once again pitching adjustable rate mortgages (ARMs). Their purpose is to offer an alternative to FRM interest rates while buyers await a decline in short-term rates.
For the quarterly bulletin, the DRE lays out the differences between the long-term stability of a fixed-rate mortgage (FRM) and a far riskier short-term ARM.
The appeal of an ARM is the lower starting interest rate, called a teaser rate. Primarily, an ARM provides the ability to borrow more funds to acquire a more expensive home. However, since buyer brokers and their agents typically earn a percentage fee based on the price or rent paid to acquire an interest in a property, this financial benefit may bias them to push a transaction that isn’t in the best interest of their client.
This advice is especially noticeable in 2026 when buyers are scarce.
High mortgage rates, both FRMs and ARMs, and elevated prices collided in recent years, dramatically decreasing the number of sales. Sales volume retains a balance with one or the other rising, but not both at the same time. This has been the case in the past several years, with the pandemic economy being an aberration.
Since mortgage rates are controlled by our international bond market (but property prices are local) it is the seller who needs to offset the increasing cost of mortgage money by dropping their asking price. But rather than negotiate a price adjustment, agents and MLOs have placed the risk for paying too much on the buyer.
Until prices adjust, the appeal of ARMs will grow. When the buyer agent fails to give advice, the homeowner is exposed to the ARM’s inherent risk of losing the property in the recession fast approaching — the reason for ARM rates to decline.
While ARMs may be capped for a fixed period (a deceitful misnomer), the rate adjustments are unpredictably temperamental and typically change exactly when the new homeowner notices an economic downturn in their income.
To take advantage of an ARM’s teaser rate, the homeowner must create a fast turnaround time for a sale or refinance before the first adjustment runs the monthly payment up — sometimes by a lot. However, as the growing inventory available for sale shows, selling a home quickly compels a decline in property prices. Getting the old asking price — or any price — has taken a hard turn.
But a potential homeowner wanting to act now may be persuaded by their buyer agent or MLO to take on an ARM since these lower interest rates expand their homebuyer purchasing power for the moment.
For buyer clients who are potential ARM users, the buyer agent is responsible for understanding what they are advising about. If not, their explanation won’t demonstrate the distinct consequences of ARM and FRM rates on ownership, and, coincidentally, the similarities between 2026 and 2008 economics for property transactions.
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Mortgage Concepts: The birth of the adjustable rate mortgage (ARM)
Get to know your renewal
Every four years, licensees throw themselves into 45 hours of continuing education (CE).
Brokers and agents who plan ahead buy themselves both time and peace of mind. But how many actually know the requirements they need?
A growing number of CE audits by the DRE are asking licensees to provide copies of their Certificates of Completion for recent course completions after they’ve already renewed. During this routine consumer protection effort, the DRE reaches out randomly and asks for certificates from the most recent renewal cycle.
This serves as a good reminder to always update and keep your current physical and email address on file with the DRE.
While all brokers and agents must complete a total of 45 hours every four years, the DRE sets different expectations for returning licensees and new agents and brokers. Topics for both renewal requirements overlap significantly and a full list can be found in the Winter 2026 Bulletin or the DRE’s website.
Editor’s note — firsttuesday offers 7 total CE courses which you can trust meet all requirements for both first-time and subsequent renewals. This includes the only video-based 45-hour renewals available to brokers and agents.
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Video Renewal Course: Real Estate Matters™ — the 2026 cinematic CE release for your DRE renewal
Common uses (and common sense) of AI
Lastly, the DRE turns their attention to the newest technology joining the office as an unlicensed assistant: artificial intelligence (AI).
More agents are beginning to rely on AI for creative marketing or office management. However, the role AI may play in an office’s real estate activities remains completely under the managing broker’s supervision. AI is a tool, but the agent and thus their broker are in control at all times as the guiding hands assuring compliance with real estate law.
The DRE considers AI as one type of unlicensed assistant in the office, albeit a digital one.
Delegating more and more responsibilities to an AI assistant puts employing brokers in a familiar old-fashioned situation. Whether human or digital, an unlicensed assistant is limited in what they may administratively do for clients.
For example, recent legislation draws the line between AI improving real estate photography and distorting images needed to market a property. This all falls under the larger umbrella of brokers and their agents needing to carefully review all work done by or with AI.
An AI assistant may talk an agent through an issue, but it can also quickly talk them into breaking regulatory requirements — a legal minefield. Any and all oversight falls squarely on the shoulders of the agent’s employing broker.
To review the role of a supervisory broker when an AI assistant is put to work by an agent, or just to tackle regularly scheduled continuing education, sign up for one of our courses today at www.firsttuesday.us — certified human-made by California licensees.
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