Introducing Office Hours with Professor Bill, an audio/visual presentation of fundamental real estate concepts.

In Episode 1, Professor Bill responds to questions about:

  • obtaining a salesperson license and getting started in real estate;
  • upgrading to a broker license;
  • negotiating the sale of a business opportunity; 
  • representing sellers of manufactured homes; and
  • the mechanics of the Real Estate Recovery Fund.


Read the transcript of Episode 1

Hi Professor Bill, I want to start earning income as a real estate agent. Where do I start?

So, you want to start earning income as a real estate agent or broker? Well, the first step is educating yourself, then getting your license.

The California Legislature created the Department of Real Estate or DRE, to oversee, regulate, administer, and enforce the real estate law.

The DRE is an independent department under the Business, Consumer Services and Housing Agency.

The chief officer of the DRE is the Real Estate Commissioner.  The Real Estate Commissioner is appointed by the governor.

The Commissioner ensures that real estate licensees and members of the public dealing with licensees receive maximum protection.

To engage in the business of real estate as a real estate broker or agent, a person first obtains a real estate license issued by the DRE.

A real estate broker is a person who engages in:

  • negotiating the sale, purchase or exchange of real estate, leases, or business opportunities.
  • soliciting listings, buyers, or sellers.
  • leasing or renting property on behalf of a landlord or tenant.
  • negotiating real property sales contracts or mortgages to be secured by real estate on behalf of lenders or borrowers; and
  • negotiating the sale or purchase of a manufactured home.

A real estate agent is an individual who is employed by a licensed broker to do one or more of the acts of a licensed broker.

Real estate agents are legally classified as agents of the agent since they need to be employed by a real estate broker.

The broker employing agents is required under the DRE’s supervisory scheme to reasonably supervise sales agents’ activities.

To qualify to take the real estate agent license DRE exam, an applicant needs to complete three statutory licensing courses.

Two are mandatory: Real Estate Principles and Real Estate Practice. The third course is an elective, such as Legal Aspects.

After the licensing courses have been completed, an applicant can take the sales agent state exam.

The exam contains 150 multiple choice questions and the applicant is provided 3 hours to complete it.

A 70% or greater is required to pass. Once passed, an applicant may apply for a license.

An applicant who fails the agent exam may apply for reexamination.

If you have access to our online exam prep tests, they have a nearly infinite number of question combinations – keep working the tests until your confidence level says you are ready.

When can I apply for my broker license?

An agent who has held a real estate agent license for at least two years within the last five years may apply for a broker license.

The agent is required to have worked on a full-time basis (at least 40 hours per week) as an agent during the two-year time requirement.

Exceptions to the agent employment requirements will be given to an applicant who has:

  • at least two years of general real estate experience; or
  • graduated with a real estate-specific degree from a four-year college or university.
  • A real estate broker and real estate agent license is valid for four years from the date of licensure.

All real estate brokers and sales agents need to complete at least 45 hours of continuing education (CE) to renew a license issued by the DRE.

The CE requirements for license renewal were legislated to help maintain and improve the level of competence of real estate brokers and agents.

Without education, a licensee will not have sufficient knowledge to perform the agency tasks undertaken.

What is a “business opportunity”?

A business opportunity is the sale or lease of the operations and goodwill of an existing business enterprise or opportunity.

For example, think of a restaurant, gar station or liquor store.

The arranging of a sale or purchase of a business opportunity is also governed by the DRE.

The sale of a business opportunity generally consists of two transactions:

  • the sale of the business, including inventory, trade fixtures and goodwill; and
  • the sale of the real property itself, whether a fee or leasehold interest, including the building and land.

However, the sale of a business opportunity may only involve the sale of personal property and not the underlying property.

On the sale of a business opportunity, the inventory of the business is transferred to the buyer by a bill of sale.

The transfer of more than one-half the inventory of a business’ materials or goods to a person other than the business’ customers is called a bulk sale.

What if I wanted to sell a manufactured home?

Manufactured homes have a unique legal status, being either real estate or personal property.

A manufactured home is also called a mobile home.

A manufactured home is a structure:

  • at least eight feet in width, 40 feet in length or more than 320 square feet when transported in one or more sections.
  • built on a permanent chassis; and
  • designed to be used as a dwelling with or without a permanent foundation.

A manufactured home that meets these requirements is no longer considered personal property but real estate, since it is a permanent fixture or an improvement to real estate.

The broker handling the sale of a manufactured home that is considered real estate conducts themselves as though they are handling the sale of any standard real estate.

What is the Real Estate Recovery Fund? What purpose does it serve?

The Real Estate Recovery Fund is available to individuals who have obtained a final-court judgment against a real estate licensee for losses caused while acting as an agent and are unable to recover the judgment from the licensee.

The Real Estate Recovery Fund is also known as the Consumer Recovery Account.

The court judgment needs to be based on:

  • fraud, misrepresentation, or deceit.
  • conversion of trust funds; or
  • criminal restitution.

The threshold for recovery is $50,000 for one transaction and $250,000 for any one licensee.

A licensee’s license will be suspended and will not be reinstated until the licensee repays any amounts paid from the Real Estate Recovery Fund to satisfy a judgment against them.

Of course, if you follow the law, you’ll never have to encounter this in your practice, which I trust will be the case for you.