Texas Real Estate Terms for New Agents: A Plain-English Glossary
Short answer. This glossary explains the terms a new Texas real estate agent hears in the first months, in plain words, with sources. It covers licensing (TREC, REALM, sponsoring broker, inactive license), money (split, desk fee, referral fee) and the deal (listing agreement, option period, earnest money).
Licensing
- TREC. The Texas Real Estate Commission, the state agency that licenses real estate agents and brokers.
- REALM portal. TREC's online portal where license holders manage their license and sponsorship.
- Sales agent. A licensed person who works under a sponsoring broker.
- Broker. A licensed person who can run a brokerage and sponsor sales agents.
- Sponsoring broker. The broker your license is placed under.
- Hang your license. Agent slang for being sponsored by a broker. See how to hang your license.
- Inactive license. A license without a sponsoring broker. You cannot do brokerage work. See inactive license.
- Active license. A license with a sponsoring broker.
- IABS. Information About Brokerage Services, the form that explains an agent's role to clients. Texas law requires a written notice like it at the first substantive communication about specific property, with some exceptions.
- Sales Apprentice Education (SAE). Courses new Texas sales agents complete before the first renewal. TREC lists 270 total qualifying hours plus Legal Update I and II.
- Continuing education (CE). Courses license holders take to renew. TREC lists 18 hours per two-year renewal period.
- Independent contractor agreement (ICA). The contract between an agent and a brokerage. Read every page.
Money
- Commission. The pay a broker earns under a written agreement, often when a deal closes.
- Split. The share of a commission that goes to the agent and the brokerage.
- Desk fee. An industry term, not a TREC term. It usually means a regular charge for being with a brokerage, and each brokerage defines its own. See what no desk fee means.
- Transaction fee. An industry term for a charge a brokerage may add to each closed deal. Check each fee schedule.
- Referral fee. A payment for sending a client to another broker. In Texas, a license holder generally may not pay part of a commission or fee to an unlicensed person, and a sales agent is paid through the sponsoring broker.
- E&O insurance. Errors and omissions insurance, which protects against claims of professional mistakes.
The deal
- Listing agreement. The contract between a property owner and a broker to sell the property.
- Buyer representation agreement. The contract between a buyer and a broker.
- MLS. The multiple listing service, a shared database of listings.
- CMA. A comparative market analysis, a price opinion based on similar sales. It is not an appraisal.
- Earnest money. A deposit a buyer delivers to the escrow agent. In the TREC resale contract it is due within 3 days after the Effective Date, unless the form says otherwise.
- Option period. A period set in the TREC resale contract when the buyer may terminate for any reason. The buyer pays an option fee, which the seller keeps if the buyer terminates in time.
- Title company. A company that issues title insurance and often acts as the escrow agent that holds earnest money and handles closing.
- Closing. The final step where ownership transfers.
Leads and follow-up
- Lead. A person who may want to buy or sell.
- Sphere of influence. The people you already know.
- CRM. Software that tracks contacts and follow-up.
- Speed to lead. How fast you respond to a new inquiry. See speed to lead.
- Answer rate. How often you pick up when a lead calls. See answer rate.
- Open house. A scheduled time when a listing is open to visitors.
More terms: licensing and the law
These terms come from the Texas Occupations Code, TREC rules and TREC pages. The last column names the source so you can read the original. Statutes and forms change, so check the current version.
| Term | Plain-English meaning | Source |
|---|---|---|
| License holder | A broker or sales agent licensed under the Texas Real Estate License Act. | Texas Occupations Code 1101.002(4) |
| Real estate (legal meaning) | Any interest in real property, including a leasehold, in or outside Texas. An interest held only as security for a debt is not included. | Texas Occupations Code 1101.002(5) |
| Residential rental locator | A person who offers, for pay, to locate a unit in an apartment complex for a prospective tenant. The law requires a license for it. | Texas Occupations Code 1101.002(6) and 1101.351(a) |
| Subagent | A license holder who represents a principal through the cooperation and consent of the broker who represents that principal, and is not sponsored by that broker. | Texas Occupations Code 1101.002(8) |
| Fitness Determination | An optional review in which TREC says, before you apply, whether you meet its honesty, trustworthiness and integrity standards. | TREC Fitness Determination page |
| Qualifying education | The 180 hours of courses TREC requires before a sales agent license. They are six courses of 30 hours each. | TREC: Become a Real Estate Sales Agent |
| Legal Update I and II | Four-hour courses that TREC lists for the post-license Sales Apprentice Education and for each continuing education period. | TREC: Become a Real Estate Sales Agent |
| CE deferral | A fee-based option TREC lists that gives 60 more days to finish continuing education at renewal. | TREC: Become a Real Estate Sales Agent |
| Broker responsibility | The rule that makes a broker responsible for the authorized acts of sponsored sales agents and requires written notice to them of authorized activities. | 22 TAC 535.2 |
More terms: representation and disclosures
| Term | Plain-English meaning | Source |
|---|---|---|
| Intermediary | A broker who, with written consent from both sides, helps a buyer and a seller the broker represents. The broker may appoint license holders to advise each side. | Texas Occupations Code 1101.559; TREC FAQ on dual agents |
| Dual agency | Acting as full agent for both sides. TREC says Texas law does not permit it. If it arises by accident, the license holder must fix it right away. | TREC: May a broker act as a dual agent? |
| Appointed license holder | A sales agent an intermediary broker names to advise one party. Appointed agents may advise their own party. | TREC: May a broker act as a dual agent? |
| Listing broker and other broker | Labels on the TREC resale contract. The listing broker represents the seller, or both sides as an intermediary. The other broker represents the buyer, or the seller as the listing broker's subagent. | TREC Form 20-18, broker information page |
| Seller's disclosure notice | A written notice about the condition of the property that the seller completes. TREC adopts a form for it. | 22 TAC 537.62 |
| Lead-based paint addendum | A form for disclosing lead-based paint information that federal law requires. | TREC Form 20-18, paragraph 22; 22 TAC 537.63 |
| Special taxing district notice (MUD notice) | A written notice a seller gives a buyer when the property is in certain districts, such as many water and drainage districts. TREC publishes a form. | Texas Water Code 49.452; TREC notice form |
More terms: the TREC resale contract
The terms below come from TREC Form 20-18, the One to Four Family Residential Contract (Resale), in its 11-04-2024 edition. TREC may have issued a newer edition, so check TREC. TREC forms are meant for trained license holders, and TREC rules bar license holders from giving legal advice. Use these definitions to ask good questions, not to advise a client on a legal point.
| Term | Plain-English meaning | Source |
|---|---|---|
| Promulgated form | A contract form that TREC adopts by rule for license holders to use. | 22 TAC 537.11; TREC Form 20-18 |
| Effective Date | The date of final acceptance. Many deadlines count days from it. | TREC Form 20-18 |
| Escrow agent | The party named in paragraph 5 who receives the earnest money and option fee. The escrow agent is not a party to the contract. It is commonly a title company. | TREC Form 20-18, paragraphs 5 and 18 |
| Option fee | Money the buyer pays for the right to terminate during the option period. It is credited to the sales price at closing. If the buyer terminates in time, the seller keeps it and the earnest money is refunded to the buyer. | TREC Form 20-18, paragraph 5 |
| Additional earnest money | Extra earnest money the buyer delivers to the escrow agent within the number of days written into the contract. | TREC Form 20-18, paragraph 5A |
| Title commitment | A document the seller furnishes, per the form, within 20 days after the title company receives the contract. It lists exceptions to the title. | TREC Form 20-18, paragraph 6B |
| Title policy premium | Texas sets basic title insurance premiums by rule, so the basic premium is generally the same across title companies. Escrow, search and recording charges can differ. | Texas Department of Insurance |
| Survey and T-47 | A survey made by a registered professional land surveyor. The seller may instead furnish an existing survey plus a T-47 affidavit or T-47.1 declaration promulgated by the Texas Department of Insurance. | TREC Form 20-18, paragraph 6C |
| Default | If a buyer does not comply, the form lets the seller enforce the contract or end it and keep the earnest money. If the seller does not comply, the buyer has parallel choices. | TREC Form 20-18, paragraph 15 |
| Amendment | A written change to the contract. The form says it can be changed only by the parties' written agreement. | TREC Form 20-18, paragraph 22; 22 TAC 537.46 |
| Third Party Financing Addendum | The form for deals where a lender provides all or part of the money. TREC lists it as Form 40-11. | 22 TAC 537.47 |
| Property owners association addendum | TREC forms for property in a mandatory owners association. They include Form 36-10 and the Subdivision Information form, 37-5. | 22 TAC 537.43 and 537.44 |
| Buyer's notice of termination | TREC's form for a buyer to give notice that the buyer is ending the contract. TREC lists it as Form 38-8. | 22 TAC 537.45 |
More terms: DFW and the contract page
| Term | Plain-English meaning | Source |
|---|---|---|
| NTREIS | The multiple listing service for North Texas, including Dallas and Fort Worth. NTREIS says you get its services through a broker who is an MLS participant. | NTREIS |
| Team name line | The contract's broker information page has a line for each associate's team name. | TREC Form 20-18 |
| Licensed supervisor line | The same page has a line for each associate's licensed supervisor, with a license number. | TREC Form 20-18 |
Terms that sound alike (original)
Mixing up near-twins is a common early mistake. This is an original table to keep them apart.
| Pair | How they differ |
|---|---|
| Earnest money and option fee | Earnest money is refunded to the buyer if the buyer terminates in the option period. The option fee is not. Both go to the escrow agent. |
| Intermediary and dual agency | An intermediary works with written consent from both sides and rules about confidential information. Dual agency is not permitted in Texas, says TREC. |
| Sales agent and broker | By statute a sales agent is sponsored by a licensed broker. The broker is responsible for the sponsored agent's authorized acts. |
| Active and inactive license | Only an active, sponsored license can be used for brokerage work. An inactive holder cannot conduct brokerage activity, says TREC. |
| Listing agreement and buyer representation agreement | One is with a seller. The other is with a buyer. Both are written agreements with a broker. |
Worksheet: where you will meet each term (original)
Use this original sheet during your first month. Fill the last column in with your broker.
| Term | Where you will see it | What to confirm with your broker |
|---|---|---|
| Effective Date | The last page of the resale contract | Who fills it in and how deadlines are tracked |
| Option period and option fee | Contract paragraph 5 | How you confirm a buyer's notice was delivered on time |
| Escrow agent | Contract paragraph 5 | Which title companies you normally work with |
| IABS | The first substantive talk about a specific property | Where the current form lives and how you record that it was given |
| Intermediary | Listing and representation agreements | The brokerage's written policy on it |
| MUD or special district notice | Listings in districts | Where to find the district's notice for a listing |
| Team name and supervisor lines | Contract broker information page | What to enter for your own name and your supervisor |
| MLS participant | Your MLS onboarding | Who bills your MLS dues and how |
Check before you rely on this
This guide reflects the sources named below, read in early October 2026. Fees, rules, forms and market numbers change, and some details here may already be out of date.
Confirm anything that affects your money, your license or a contract with the source itself, such as TREC, the National Association of Realtors, your local association or your sponsoring broker. If something looks different from what you find, trust the source and let us know. This guide is general information for licensed agents and people becoming agents. It is not legal, tax or financial advice.
How The Bauer Group fits
The Bauer Group is a Frisco, Texas brokerage welcoming licensed DFW agents. If a term here is new, ask us on your first call. We will explain it in plain words.
Common questions
What does hang your license mean?
It means a broker sponsors you so your license can become active.
What is IABS?
Information About Brokerage Services, the TREC form that explains an agent's role to clients.
What is an option period?
A period set in the TREC resale contract during which the buyer can terminate for any reason by paying an option fee.
Sources
- TREC: Become a Real Estate Sales Agent
- TREC: How to Change and Accept Sponsorship Requests
- TREC: What Every License Holder Needs to Know About Going Inactive
- Texas Occupations Code Chapter 1101 (Texas Real Estate License Act)
- TREC: May a broker act as a dual agent?
- TREC: Fitness Determination
- TREC Contract Form 20-18, One to Four Family Residential Contract (Resale)
- 22 TAC Chapter 537, Professional Agreements and Standard Contracts (Cornell LII)
- 22 TAC 535.2, Broker Responsibility (Cornell LII)
- Texas Water Code 49.452, notice to purchaser
- NTREIS: North Texas Real Estate Information Systems
- Texas Department of Insurance: title insurance rates
Education only. Not legal, tax or financial advice. Confirm licensing rules with the Texas Real Estate Commission. Results vary and depend on effort, market and lead performance.