June 2022 Bar Bulletin
By Kary Krismer
While law practice can offer great career opportunities, some attorneys actively look for alternatives outside the law. Fortunately, the skills learned as an attorney transfer well into many areas. This piece will provide information an attorney may want to know before becoming a real estate broker.
Licensing: Bar admission generally requires a law school degree and passing a rigorous exam. In comparison, becoming a broker is a breeze. Take some “clockhour” courses,1 or not,2 and then pass a relatively easy test.
Before offering “brokerage services,” a new broker’s license must be associated with a real estate firm, and a newly licensed broker will require “heightened” supervision the first two years.3 This means it is virtually impossible for a new broker to operate solo. Instead, a broker will most likely hang their license with an established firm and be responsible to that firm’s “Designated Broker,” and perhaps also a “Managing Broker.”4
Firm Organization: Real estate firms most commonly are a collection of independent contractors, each competing with other brokers sharing the same address. In effect, most real estate firms provide office sharing together with government mandated document retention services. “Teams” have become common within firms, with several brokers working together, usually centered around a single rain-maker who must be a Managing Broker.
Interviewing Firms: Lawyers interview hoping they will be picked by a law firm, while brokers interview to decide if they want to pick the real estate firm. This is largely because most real estate firms offer neither salary nor benefits. Real estate firms are willing to risk a new broker succeeding because the new broker bears most of the effort and expense.
Practicing: In many ways being a real estate broker is similar to practicing law. In fact, a real estate broker completing a purchase sale agreement is practicing law.5 Unfortunately, the quality of practice can be very low. Far too many brokers struggle counting a period of time less than five days and lack a working understanding of frequently used forms. These broker deficiencies may be disturbing and/or frustrating to the attorney/broker.
Clients and Opposing Brokers: Real estate brokers deal with clients and opposing brokers, similar to how attorneys will deal with clients and opposing attorneys. A broker obtaining clients is similar to an attorney obtaining clients, with some possible supplemental sources, such as Zillow advertising and relocation referrals. Neither is recommended and ideally a new broker will get leads mainly through their existing contacts, something known as a “sphere” in the world of real estate.
“Practicing real estate” will thus seem very familiar, except that broker interactions tend to be less adversarial, especially once a transaction is in contract and past the inspection contingency. And this leads into perhaps the biggest benefit an attorney will face becoming a broker — less stress!
Stress: Being an attorney can be extremely stressful. The attorney will prepare their work product knowing that opposing counsel will attempt to rip it to shreds, and that a judge might ridicule their theories in open court. Similar stressful events will be scheduled years into future. In contrast, brokers live happy-go-lucky lives, and may have no idea what projects they’ll be doing in three months. While disputes between brokers sometimes arise, for the most part everyone is very cheerfully engaged.
While no datum is offered, it is suspected lower stress results in brokers living longer than attorneys. Compensating attorneys’ lives may seem longer, especially while listening to testimony from accountants.
Forms: Residential real estate transactions generally use the “statewide forms,” provided locally through the NWMLS. While overall decent quality, there are some very problematic terms and problematic forms.6 Forms drafted by third parties can also be problematic. Unfortunately edits and changes will not be well received by other brokers.
Work Hours: Attorneys at some point have to work long hours to prepare for a hearing, trial or other project. That is nothing compared to real estate brokers whose regular start and stop times will likely be 7:00 a.m. to 9:00 p.m., 365 days a year. Showing houses, taking phone calls and preparing contracts is not a 9 to 5 activity. Depending on current workload, those activities may involve the broker’s entire waking hours, unless the broker forgets to silence their phone at night. Becoming a broker can be an effortless transition for the workaholic attorney. Others may not like the hours.
Deadlines: The expected turn-around time for tasks is very short in real estate. Brokers work on turnaround time of less than three hours regardless of how far off a deadline actually is. Brokers will get upset when they have to deal with an attorney, knowing the attorney will take too long to do absolutely everything. 7
View of the World: Attorneys can be very pessimistic because their work may involve contemplating every possible default and the worst outcomes. Brokers tend to be optimistic and live worry free, assuming a sufficient income stream allows (See Financial Resources below). Unfortunately, the attorney/broker will not share the industry optimism, instead remaining concerned through closing about a party dying, a house fire, wire fraud, a loan hiccup, etc.
Community Respect: Attorneys can be held in low regard. The new attorney/broker will notice little change.
Discipline: Professional discipline is fairly straightforward for attorneys: The Bar Association disciplines lawyers. Brokers face discipline from the Department of Licensing, the state AG, local Realtor Associations and the broker’s MLS. But the differences are greater. When the Bar Association disciplines a lawyer detailed facts usually become public. In contrast, brokers are left wondering what another broker possibly did to be fined $2,500 for visiting a listing in a manner that was not “normal or customary.” MLS fines are typically well in excess of what it would have cost to have instead rented a nice hotel suite to engage in such activity.
Ethics: All attorneys are subject to the Rules of Professional Conduct. Only “Realtor” members are subject to any ethical rules. For other brokers, an ethical violation is literally impossible. Related, brokers are not fiduciaries.8
Market Forces: Brokers are greatly impacted by market forces. 2009 was part of a historically strong buyers’ market. More recently we’ve been in a historically strong sellers’ market. An attorney broker should be able to survive both, but may like neither. The buyers’ market would be more familiar to an attorney, with parties acting properly adversarial, but with added difficulties if the transaction involves a “short sale” with one or more banks having a say.9 Absent the involvement of a bank, the attorney broker should be comfortable in a buyers’ market or normal market. Extreme sellers’ markets will seem foreign, with buyers jumping out of their socks to offer sellers more than they asked for or possibly imagined, all with no contingencies. The legal risks taken by both sides in a strong seller’s market with atypical terms might make the attorney broker uncomfortable.
Financial Resources: Brokers will need to have the resources to survive periods of little or no income, unless working for one of the real estate firms which hire brokers as employees.10 This is particularly important for the new broker who may take some time to start earning commissions. Probably at least six months of savings should be available when starting out as a broker, assuming no other sources of income.
Business Cards: For some unknown reason, it is practically a licensing violation for a broker not to have their picture on their business card and signs. For older brokers DOL allows those pictures to be over 10 years out of date.
Conclusion: The transition from attorney to real estate broker is relatively easy with the main benefit being a less stressful work environment. But there are downsides, particularly the hours. The author found it a good change, mainly due to the reduced stress. Your mileage may vary.
The material above should not be considered career advice to any particular person or entity. In addition to being a licensed but nonpracticing attorney, Kary Krismer is also a real estate managing broker with John L. Scott, Inc., in Renton. He may be contacted at email@example.com.
1 Insert plug for Rockwell’s on-line courses and their cartoon talking wizard and parrot.
2 Some can ask DOL for an exemption from the course requirements. RCW 18.85.151.
3 RCW 18.85.285.
4 A “Managing Broker” is merely licensed to supervise other brokers, and should not be confused with a “Managing Partner” of a law firm.
5 Cultrum v. Heritage House Realty,103 Wn.2d 623 (1985).
6 E.g., Forms 22AD (Additional Down Payment) and 35E (Escalation). Forms 21 and 28 not having default provisions for certain choices is also problematic and could in high amounts of liability.
7 More than three hours.
8 RCW 18.86.110.
9 Becoming a “short sale negotiator” is another career choice to be considered only by attorneys with masochistic tendencies who want to work only during recessions.
10 Such firms do not tend to hire new brokers.