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The Framework for Teamwork

“There is no ‘I’ in ‘team’” … but in a successful real estate team, there are lots of other important things. There may be a managing broker, an assumed name, division between listing and selling brokers, commission sharing agreements, assistants, contingency plans to avoid dual agency and other critical elements.  This article will look at the team concept from a licensing and office logistics perspective.  As other articles in this magazine amply illustrate, there can be significant business benefits that flow from the efforts of an effective team.  Construction of an effective team, however, requires implementation of some fundamental practices. 

Does your team need a managing broker?

Teams come in many shapes, sizes and structures.  Some teams include a group of brokers who cover for each other without any broker in a position of authority. Other teams consist only of two spouses while still others reflect a hierarchy with one or more brokers directing the actions of others.  Some teams include assistants who may or may not be licensed. With one exception, the question of whether a team requires at least one managing broker must be answered by comparing the structure of the team against the Licensing Law.  The exception to this rule is the team that consists only of a married couple.  So long as the only licensed brokers on the team are married to each other, neither must have a managing broker’s license.  In every other case, a managing broker’s license is required if any broker supervises or controls the actions of other brokers.

The Licensing Law requires that “a broker who supervises or exercises right of control over other brokers in the performance of real estate brokerage services must be licensed as a managing broker.” RCW 18.85.275(5).  If any team member supervises or controls the actions of other licensed team members, including licensed assistants, while those other team members provide brokerage services, the supervising team member must have a managing broker’s license.  To determine if this requirement is triggered, one must begin with a clear understanding of what constitutes brokerage services.

“Real estate brokerage services,” defined in the Licensing Law, means generally: listing, selling, leasing or negotiating any real property interest; advising or consulting buyers, sellers, landlords, or tenants or collecting funds in connection with a real estate transaction; advertising as a broker; and issuing a broker’s price opinion. RCW 18.85.011(16). If team members perform any of these actions under the supervision or control of another team member, the supervising team member must be a managing broker.  

Every team will have to conduct its own analysis to determine whether this requirement is triggered and thus, whether a “team leader” must hold a managing broker’s license.  The analysis requires a critical inquiry into how the team really operates, day to day, as opposed to how job descriptions or team structures may be outlined in writing.  If a team leader actually supervises or controls other brokers’ provision of brokerage services, even though a written team description may indicate no such supervision or control, the supervising broker must be a managing broker.  If the Department of Licensing is given cause to investigate a team, the Department will look at the actual conduct of team members and will not be limited to any written description of team member roles.

When Does a Team Member Become a Dual Agent?

It is important to begin this discussion by reviewing how dual agency is created.  A broker is a dual agent if, and only if, there is a written agency agreement between seller and broker’s firm in which broker is appointed as an agent for the seller AND in another written agency agreement between buyer and broker’s firm, the same broker is appointed as an agent for the buyer.  With these two written agency agreements, the broker is unavoidably a dual agent.  In the absence of either written agreement, the broker is not a dual agent … unless the broker is a managing broker who becomes a dual agent through management.  The managing broker of a dual agent is, necessarily, a dual agent.  Similarly, a listing broker who manages the buyer’s broker is a dual agent and a buyer’s broker who manages a listing broker is a dual agent.

It is important to recognize that not all team members represent all clients of the team unless all team members are appointed, by the firm, as agents of the client.  This means that a listing broker team member can represent the seller exclusively while a buyer’s broker team member represents the buyer exclusively … so long as neither is appointed, by the firm, to represent the other party and so long as neither is the managing broker of the other.  If one or both of the team members is a dual agent, that is not a problem, with proper disclosure and consent.

If a team member is about to become a dual agent but wants to represent only one of the parties in the transaction, certain steps must be taken.  First, broker cannot independently sever an agency relationship.  Rather, both the client and the firm must agree that broker’s agency relationship with one of the clients will terminate.  That agreement should be written, signed by the client and by the firm.  Broker must then retain the former client’s confidences learned during the prior agency relationship, even though broker now represents the other party to the transaction exclusively.  In this scenario, it is important to pay attention to the timing of events.  Until the agency relationship is severed, broker represents the client.  This may mean that broker’s agency relationship changes from the time a buyer first views a home to the time the agreement is fully executed. This shifting agency relationship (and corresponding duties) can be difficult to manage.

Most Teams Need a Firewall

If a team includes brokers who will potentially represent different parties within the same transaction, that team must build “fire walls.”  A “fire wall” is not necessarily a physical obstruction but rather an organizational and logistical structure that protects client confidences from brokers who do not represent the client.  For example, teams could have a filing system that secures client confidential information outside the view of brokers who do not represent the client.  Brokers could have password protected files on their computers that other team members do not access.  Brokers will need to be careful not to leave their notes or files exposed on their desks.  Emailing within the team will require extra scrutiny so that confidential information is not inadvertently included in a group email.

There is no required protocol for a “fire wall”.  Each team and each firm is free to construct the systems best suited to the team’s needs and logistics.  It is critical to have a system in place, however, and to educate all team members as to the use and importance of the system.  Without a “fire wall,” it would be nearly impossible for a team with brokers on both sides of a transaction to comply with the Agency Law requirement to safeguard client confidential information

Commission Sharing Instructions Should Be Written And Provided To The DB

Teams often create their own commission sharing agreements that have nothing to do with the commission agreement contained in a listing agreement or a buyer agency agreement. For example, a team may have a commission sharing agreement that requires payment of X% of every commission to a licensed assistant or Y% of every commission to the team leader. These commission sharing agreements are wholly acceptable.  But, the agreements should be in writing, signed by the affected team members, clearly identify the payments owing to affected team members and be provided to the designated broker.  

Ultimately, it is up to the DB to determine, in every case, how commissions should be shared between the firm and its brokers.  Typically, DB decisions are guided by independent contractor agreements executed between the firm and its brokers.  A team may want to add an additional layer to the compensation structure and the DB must be given the opportunity to agree.  If a DB cannot understand the commission sharing arrangement or if a dispute develops between team members without a written commission sharing agreement, then it is up to the DB to determine how the commission will be shared. This is likely to create hard feelings among all involved and it is the type of situation that can render a team dysfunctional.  The best way to avoid this outcome is to create clear commission sharing instructions from the outset so that everyone involved operates with the same expectation.  

Most Teams Have a Team Name; Some Need An Assumed Name License

Most teams have a team name that is separate and distinct from the firm name.  Yet, most firms have an office policy requiring that the firm’s name be included on all advertising.  This typically results in a situation where the team name and the firm name are both displayed on advertising.  So long as the name of the firm, as licensed, is displayed in all advertising in a clear and conspicuous manner, there is no requirement for the team name to be separately licensed.

However, if a team name is used in any advertising, in the absence of the firm’s licensed name, then the team must have an assumed name license.  Only the firm’s designated broker can procure an assumed name license but if a team intends to advertise without including the firm’s name, then the team’s DB must obtain an assumed name license for the team.  In most cases, an additional licensing fee is required to obtain an assumed name license and any assumed name license expires when the firm license expires.  It is up to the firm and the team to determine who will pay the cost of the assumed name license but it is important to note that the assumed name license belongs to the firm.  If the team relocates to another firm, the team’s assumed name license will not transfer with the team, to the new firm.

Making Effective Use of An Assistant

Many teams benefit from an assistant, licensed or unlicensed.  Whether a team needs a licensed assistant depends upon what the team needs an assistant to accomplish for the team.  The Department of Licensing has established clear, understandable guidelines for what unlicensed assistants may do to support the team.  If an assistant’s job requirements require more, then the team will have to hire a licensed assistant.  

The guidelines can be found, in detail, here: Summarized in general terms, an unlicensed assistant’s compensation cannot be based on compensation earned by the team or by any individual licensee and the unlicensed assistant may provide written and approved information about a listing or transaction, transport people to properties, write and place advertising, perform clerical duties, greet people at an open house, submit changes to a multiple listing association, record and deposit earnest money and conduct telemarketing to schedule appointments.  An unlicensed assistant may not show properties, answer questions, or interpret information about the property, price, condition, titles, financing, contracts, closing, or other information relating to a transaction, fill in legal forms or negotiate price or terms.

Each team will have to assess the tasks it needs an assistant to accomplish to determine whether the assistant must be licensed.  A licensed assistant can provide any real estate brokerage service and may be compensated based on compensation earned by brokers and the team.

As illustrated by other articles in this magazine, team work can yield outstanding results.  There is a framework in which a team must operate, however, and certain logistics that must be attended before a team can work as a unit.  Assuring the logistical details are met at the outset will liberate team members to focus on the provision of brokerage services and business success.

Hotline Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week.  If you’d like to submit questions to the Legal Hotline, e-mail them to or call (800) 562-6027. Please have your NRDS number ready when you call or e-mail the Hotline with your question.  The Legal Hotline lawyer does not represent Washington Association of REALTORS® members or their clients and customers.