Consumer Guide To The Texas Real Estate Commission
Buying a home is often the single biggest investment a person can make. Selling a home can be an overwhelming and confusing transaction. Because of the size and complexity of buying or selling a home, most buyers and sellers hire a professional advisor to help them with the process. The Texas Real Estate Commission (TREC) is responsible for licensing real estate service providers in Texas to ensure they are qualified to advise consumers about these transactions. If you are looking for information about the home buying or selling process be sure to check out our consumer resources page where we highlight tools that could help you.
There are two major categories of real estate professionals licensed by TREC.
- Sales Agents, who must be sponsored by a broker. Sales agents work with clients on behalf of the broker.
- Brokers, who are responsible for all brokerage activities, including acts performed by sales agents sponsored by the broker.
Looking for Other Related Real Estate Related Organizations or Professions? Be sure to check out our Related Regulatory and Consumer Protection Groups page.
Why are brokers and sales agents required to be licensed?
Real estate brokers and sales agents are licensed for the protection of consumers. Before someone can be licensed to act for a buyer or seller in a real estate transaction, the person must meet certain requirements. To become licensed, each applicant must pass a background check to assess their honesty, trustworthiness, and integrity. Applicants must also complete qualifying education and experience, and pass the licensing exam before they are granted the authority to help guide you through the complicated process of buying or selling a home.
Each company that provides brokerage services must be licensed as a broker and must operate under the direct oversight of an individual who also holds a broker license. Every sales agent is sponsored and supervised by a broker. A broker or sales agent licensed by TREC is not required to become a REALTOR; although many do voluntarily join this private professional organization.
TREC enforces the laws and rules which govern sales agents and brokers. If you have issues or concerns with the broker or sales agent assisting you, or if you feel you are not being represented fairly, you can file a complaint with TREC. TREC has the authority to take action against a licensed broker or sales agent who is not in compliance with the rules and laws of Texas. Additionally, licensed brokers and agents are required by law to put your interests as their client above all others, including the broker’s own interests. This is called acting as a “fiduciary”. It also involves providing the following minimum services:
- inform the client of any material information about the property or the transaction received by the broker;
- answer the client’s questions and present any offer to or counter offer from the client; and
- treat all parties to a real estate transaction honestly and fairly.
Finally, license holders are required to provide certain consumer notices to you. The first time you communicate about a specific property with a license holder, the broker or agent is required to provide you with a form called the “Information About Brokerage Services”. This form describes the different ways a professional can represent you, the minimum services they must provide to you and key business names, licenses and contact information for the sales agent, their sponsoring broker, and any delegated supervisor. All licensed professionals' websites must also contain a link to a copy of the “Consumer Protection Notice” that contains information about filing a complaint and recovery funds.
Do your homework before choosing a broker or sales agent.
It’s important to make sure you work with an agent or broker that you believe will best meet your needs. Talk to a trusted neighbor, family member or friend to get a recommendation. Be sure to interview any persons you may be interested in hiring and ask them questions about their services. Online research can also be a valuable aid in helping you decide. Check out any licensed sales agent or broker using TREC's License Holder Lookup tool and our consumer resources page, where we highlight tools available for homebuyers and sellers. The license holder lookup tool will provide you information about a license holder’s background history; any prior violations of laws or TREC rules; education they have taken in connection with their license; and if the person is an agent, information about the broker who sponsors them.
Fees are not regulated by TREC.
TREC does not regulate the fees paid to any real estate license holder, including buyer’s agents, seller’s agents, brokers, inspectors or appraisers. All fees are set by your agreement with each professional. Before you sign any representation agreement or service agreement, you should carefully review the fees each individual will be charging.
Standard Contract Forms
When buying or selling a home in Texas, professionals licensed by TREC are required to use the appropriate standard form contracts and addenda drafted by TREC’s Broker-Lawyer Committee and adopted by the agency. These forms are carefully written to meet the needs of a typical home sale or purchase and to balance the interests of all the parties involved. A broker or sales agent is permitted to complete these form contracts to reflect the needs of their client, but cannot make recommendations or offer advice which exceeds their level of expertise. Complex or specialized situations may require the use of an attorney to express and protect the client’s interest.
Other people involved in the buying and selling of a home?
In addition to brokers and sales agents, there are other people involved in the buying and selling of a house. Some of these are also licensed by TREC.
Real estate inspectors are individuals licensed by TREC to perform inspections of real property that is part of a real estate transaction. Inspectors provide information on the performance of certain systems that are part of the property. They are required to use the TREC standard report form and are guided by their “standards of Practice” to ensure consistency throughout the home inspection process. There are three types of inspectors:
- Apprentice Inspector, who must be sponsored and directly supervised;
- Real Estate Inspectors, who must be sponsored and indirectly supervise; and
- Professional Inspectors, who can inspect without sponsorship or supervision
Whenever a loan is involved with a real estate transaction, the property will need to be appraised. An appraisal is essentially a written estimate of a home or property’s value based on current market conditions. This estimate is determined by a licensed appraiser and is delivered in an official appraisal report. In most cases, the appraisal will be requested by the buyer’s lender because the lender is looking for assurance that the property is sufficient collateral and worth the amount that the borrower has agreed to pay. Appraisers are licensed by the Texas Appraiser Licensing and Certification Board (TALCB), which is an independent subdivision of TREC. Information concerning licensed appraisers can be found on the TALCB website.
Residential Service Companies (Home Warranty Companies)
Residential Service Companies or more commonly known as Home Warranties, are licensed by Texas Department of Licensing and Regulation (TDLR) as part of its Service Contract Providers program. These companies offer contracts to consumers for services related to the maintenance of certain systems in the home. Typically, these contracts are offered at the point of sale of a home. The contract can cover a wide range of systems including appliances, plumbing, electrical, pools, and water heaters. Make sure you review each contract and its details before choosing the one. It’s important to note that a residential service company contract is not required when purchasing a home.