By Vicki Trapp, AHWD, ASP, CRS, GRI, SRES, SRS, President
Greater Chattanooga Association of REALTORS®
In a market such as ours that encompasses a neighboring state, it is common for REALTORS® to hold a real estate license from more than one state licensing body. The jurisdiction, or market area, of many REALTOR® Associations crosses state lines, which especially is meaningful for REALTORS® that use the Association's multiple listing service (“MLS”).
The Greater Chattanooga Association's MLS requires REALTORS® to enter their listings when the subject property is located within Hamilton and Sequatchie Counties (Tennessee) and Catoosa, Dade and Walker Counties (Georgia). In addition to these five counties, our MLS will accept listings of properties located outside these five counties.
While our MLS allows the entry of such listings, the licensing law cannot be ignored when determining whether to represent a seller or buyer. In most circumstances a REALTOR®, whether representing seller or buyer, must be licensed in the state where the property is located. When the opportunity presents itself to represent a seller or buyer, consider the old adage – Just because you CAN (enter it into the MLS as a listing or comp sale), doesn’t mean you SHOULD (participate in activities that require a license.)
Why is this matter of concern for sellers and buyers? Consumers often work with the same REALTOR® over the course of several years. One scenario might be a buyer, who worked with a REALTOR® in 2004 to purchase a home. Fast forward ten years to 2014, the home owner seeks to sell their current home and purchase a new one. Can the seller use the same REALTOR® to sell their current home and purchase their new home? It depends. Is that REALTOR® still licensed in the state in which the current home is listed? What about the state in which the home is being purchased? With either question, the REALTOR® may proceed in representing the consumer provided the REALTOR® is licensed to broker property in that state.
There are a few circumstances in which a state licensing authority will allow an out-of-state broker to participate in a transaction and/or receive compensation. Since our Association's MLS jurisdiction includes counties in Tennessee and Georgia, we provide the following information regarding Tennessee and Georgia licensing law:
Tennessee Code Annotated 62-13-302 prohibits a licensed broker from employing or compensating any person who is not a licensed broker or a licensed affiliate broker for performing any of the acts that require a Tennessee real estate license. However, a licensed broker may pay a commission to a licensed broker of another state if such nonresident broker does not conduct in Tennessee any of the negotiations for which a commission is paid.
The Official Code of Georgia Annotated 43-40-9 (e)) allows out-of-state brokers to participate in real estate transactions and commissions with Georgia brokers through (1) referral of clients or prospects, (2) written agreements with GA brokers and/or (3) nonresident licensure.
Working with a REALTOR® with whom you are comfortable is important, and that comfort level certainly can make for a smoother working relationship. However, we strongly suggest you confirm whether your REALTOR® is able to practice real estate in that state where the property in question is located. If not, there are options, including being referred to another REALTOR® who legitimately is licensed.