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Background Investigation For Real Estate License

By Edited Feb 23, 2014 1 0

Although each state has varied requirements in order to become a real estate agent and acquire a real estate license, there is one thing all states have in common.  Each state requires a thorough background investigation for real estate license issuance.  By making this a strict requirement, each state protects not only real estate agents, but also real estate buyers and sellers.

Variations of the Background Investigation for Real Estate License

Some states require a simple background investigation, asking only for the basic information such as credit report and credit history, criminal history, civil lawsuit history including open judgments, employment history and fingerprints.  Other states require a more rigid background check, some even requiring applicants to submit to an FBI background investigation for real estate license issuance.  Some background checks also disclose information based on local sex offender registration.  The FBI background investigation is more stringent than a local background investigation and requires a drug test and a polygraph examination, or a lie detector test. 

Advantage of Background Investigation to Brokers, Buyers, and Sellers

The purpose of a background investigation for real estate license issuance is for the protection of real estate brokers, buyers and sellers.  Background investigations are the main way to test the trustworthiness of an applicant.  This protects the members of the National Association of Real Estate Brokers and other affiliated groups of brokers.  This protects other real estate brokers by maintaining a good image within the community.  If one real estate broker makes a bad decision or does something wrong or illegal and the community sees this, it is quite possible, if not even probable, that the community will assume the view of the entire real estate brokerage agency. 

Background investigation for real estate license issuance can also protect buyers.  An honest and trustworthy real estate broker will never overstate the price in an attempt to embezzle funds from the brokerage by overstating the sale price to a buyer.  A trustworthy real estate agent will also ensure that all the listings shown to a buyer are within the price range, size and other requirements stated by the buyer. 
Background investigation for real estate license issuance can also protect sellers.  Many sellers list their house on the market before they actually relocate.  This means that the real estate agent generally has access to the seller’s house, and all the contents within.  This also gives the real estate agent the opportunity to bring outside parties into the residence.  This can increase the risk of theft or personal injury.  The use of information based on the sex offender registry can protect the seller’s family if there are children in the home.  Background investigations help ensure that the real estate agent is an upstanding citizen, and trustworthy enough to handle the processes between the buyer, seller, and the real estate agency.

Background investigation checks can be beneficial to the community, as well. If a new residential area is constructed, such as a subdivision, where many houses are sold by one agent, it is important that the real estate agent be trustworthy and does not influence the buyer or seller prices to the benefit or detriment of either party.  Preferential treatment within a community can be harmful to both the buyers and the seller.  If the agent shows preferential treatment to one person whose bid for a house is lower than most, it is possible that the seller may take a loss, and a buyer may be bid out of an establishment that he or she may need to accommodate a growing family, or any other reason.
Another reason for background investigation checks is to make sure that all agents have similarities in order to ensure harmony within the agency.  Many agents will have similar work ethics, personal morals, or stringent consciences. 

Background Investigation for Real Estate License Can Deny Application

There are several things that can be found in a background investigation for real estate license that could prevent an applicant from obtaining their license.  Felonies instantaneously disqualify applicants, while each state varies on which level of misdemeanor will disqualify a potential real estate broker.  Typically, any general lawsuit, civil action or misdemeanor relating to theft in any form will disqualify an applicant from becoming a real estate agent.  Open judgments and pending lawsuits can generally prohibit an applicant from obtaining a real estate license because, as the old adage says, it is better safe than sorry, and that is truer when it comes to protecting a multitude of people.

If an individual is applying for a real estate license, a background investigation is required.  An applicant can begin the background check at any time during the application process, but the individual should keep in mind that the background investigation for real estate license application is time sensitive and does have an expiration date.  If an item in the background investigation causes a denial of license application, it is possible to appeal within thirty days.
Sometimes, an individual has committed certain criminal activities while he or she was a minor.  Juvenile adjudication is not reported in a background investigation for real estate license applications, but if the minor was charged as an adult and convicted, this information is disclosed. 

There are several things that can show up on a background investigation for real estate license applications that could cause an applicant to be denied.  One is providing false information, and another is withholding information.  The best idea for disclosing information that may be found during a background investigation for real estate license applications is to disclose any information an individual is unsure about for disclosure purposes.

Information gathered by a background investigation for real estate license applications can be used to screen individuals based on past experiences.  This is to protect the brokerage, the sellers, the buyers and the community.  This can also increase harmony and decrease conflict within the agency.  Most people who have little or no criminal activity, and have similar work history as well as credit history are more likely to have similar personal traits, such as strict work ethics, rigorous personal morals and stringent consciences.  Many agree that using background investigation for real estate license applications is a wonderful way to ensure safety for all those involved.



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