is california's structuring of the real estate business a legal scam?

[cranrab]

beyond my own home ownership and commercial property from my business, i know very little else about the real estate business in california (or other states)...

i've been bored and looking for another project to expand my horizons, so i browsed california's department of real estate website. while there i discovered that all licensed real estate agents can NOT work unless they do so for a real estate BROKER.

from my understanding, it is completely NORMAL for brokers to do a 60/40 or 70/30 split of the SALESPERSON'S commissions for DOING NOTHING.

SALESPERSONS cannot apply to become BROKERS until after they have completed 2 years of experience.

persons with a 4 year university degree DO NOT REQUIRE ANY EXPERIENCE REGARDLESS OF MAJOR, but must complete the equivalent of 2 semesters worth of real estate related classes (loans, mortgages, escrow, finance, principles, practice, etc)...

i must be missing something, because it APPEARS as though someone with a college degree could IN LESS THAN A YEAR become a california real estate BROKER, recruit a group of SALESPEOPLE, and take a percentage of their income while they do MOST of the work, thereby having people earn an income for you...

can someone with experience as a SALESPERSON and/or BROKER please tell me where my understanding is going off track? because that has to be one of the sweetest legal scams i've heard of since mandatory auto insurance...

 

[Pik6235571]

Brother brother brother brother! Its true, but this whole "scam" is in partnership with the state government. California realized a long time ago thats its land is probably the richest in the nation (resources as well as buisness). So it decided this was the best way to proctect and cultivate its value rather than letting it go in the "markets" hands, as Texas does.

The whole Broker thing isnt as easy as you think. You have annual testing, random checks on your accounts by the real estate departments, and your credit is constantly in check with the banks. Yes a broker can basically use the salespeople to make his money, but he must be experienced enough to know when he signs his name on their papers, his salespeople didnt fuck up ANYWHERE! One fuck up is all it takes, and your banned from selling in Cali, period. Then you might say, fine, get some experieced salepeople to sell for you, no experieced salesperson will work with a brand new broker. The risk is too high for they themselves losing out on their license. Cause if the broker fucks up, EVERYONE fucks up. So, being a Broker in cali is probably the highest risking job right now. Hope I helped.

 

[Lick]

beyond my own home ownership and commercial property from my business, i know very little else about the real estate business in california (or other states)...

i've been bored and looking for another project to expand my horizons, so i browsed california's department of real estate website. while there i discovered that all licensed real estate agents can NOT work unless they do so for a real estate BROKER.

from my understanding, it is completely NORMAL for brokers to do a 60/40 or 70/30 split of the SALESPERSON'S commissions for DOING NOTHING.

SALESPERSONS cannot apply to become BROKERS until after they have completed 2 years of experience.

persons with a 4 year university degree DO NOT REQUIRE ANY EXPERIENCE REGARDLESS OF MAJOR, but must complete the equivalent of 2 semesters worth of real estate related classes (loans, mortgages, escrow, finance, principles, practice, etc)...

i must be missing something, because it APPEARS as though someone with a college degree could IN LESS THAN A YEAR become a california real estate BROKER, recruit a group of SALESPEOPLE, and take a percentage of their income while they do MOST of the work, thereby having people earn an income for you...

can someone with experience as a SALESPERSON and/or BROKER please tell me where my understanding is going off track? because that has to be one of the sweetest legal scams i've heard of since mandatory auto insurance...

In addition to brother Cranrab… The Broker had the overhead. Ya know, Phones, Rent or Mortgage on the office, Etc.
Ya have to pay to be the boss and everyone is not cut from the same cloth.

 

[cranrab]

The Broker had the overhead. Ya know, Phones, Rent or Mortgage on the office, Etc.
Ya have to pay to be the boss and everyone is not cut from the same cloth.

that's NOT a problem at all.

i co-founded a small chain (grew to 5 brick and mortar stores) of DVD and home entertainment retail sales in 2 states.

i sold off controlling interest in that chain in 2004, and the $ continues to roll in while i enjoy time to pursue other interests...

the 3 executive staff that i left in place are all good friends of mine, and now have the experience to acquire and manage any sort of office space for me, should i need it.

i'll ponder this BROKER business a bit more over the summer months. thanks to all for the input.

 

[deputy dawg]

as a R.E. investor you by-pass all the liscensing requirements and just buy and sell for profit.
I'm over-simplifying it, but there's so much money to be made adjascent to Brokers/Realtors. You're in a good place financially, but Cali R.E. is just plain CRAZY!!
Look at markets outside of your immediate area that are just emerging in population growth and property values. DON'T listen to the daily news about R.E. What you hear is just someone reading from a tele-prompter, not a thoroughly researched analysis.

Hit me up on PM...