Placing a real estate license on hold can be a smart move when you need a break from listings, showings, and daily production. You stay licensed, you reduce overhead, and you can often earn referral income through a holding or referral brokerage where permitted. Still, small missteps can cost time, money, and credibility. This guide covers the most common mistakes brokers and agents make when they keep a real estate license on hold, plus simple fixes to keep you compliant and ready to reactivate.
Confusing “on hold” with inactive status
The phrase real estate license on hold is an industry term. In many states, it means you place your license with a referral or license-holding brokerage and stop practicing. Inactive status, by contrast, usually means you are not affiliated with a broker at all. If you go inactive, you usually cannot earn referral fees until you reactivate and affiliate. Know which path you picked and what it allows.
How to avoid it: Confirm your state status in the regulator’s database and keep a copy of your broker affiliation letter or screen. If you meant to earn referrals, make sure your license sits with a holding or referral brokerage, not inactive.
Accepting referral fees outside the broker channel
Referral compensation must flow sponsoring broker to sponsoring broker. The receiving broker pays your holding or sponsoring broker, and your broker pays you. Taking a check from a consumer, a title company, or another agent invites compliance problems and payment delays and could open you up to costly fines.
How to avoid it: Use a written referral agreement between the brokers before the client signs a listing agreement or buyer representation agreement. Confirm that the closing office has the agreement and your sponsoring broker’s W-9 well before funding.
Letting CE or renewal deadlines slide
Many professionals assume a real estate license on hold has no education or renewal duty. That assumption can trigger late fees, rush courses, or even lapses that make reactivation harder.
How to avoid it: Put all renewal and CE dates in a simple calendar with reminders 60, 30, and 7 days out. If your state allows reduced CE while non-practicing, note what changes upon reactivation so you can plan.
Staying in the MLS when you stop practicing
If you plan to hold your license and stop production, MLS membership and lockbox access can become wasted spend. Worse, some MLS rules expect production activity from members, which can create avoidable compliance tasks.
How to avoid it: If your plan is referrals only, resign MLS membership and any add-on services you no longer need. Keep copies of confirmations for your records.
Marketing yourself like an active producer
Once your real estate license is on hold, you must stop advertising that implies you list and sell. Old ads, website pages, yard signs, or social bios can mislead consumers and invite complaints.
How to avoid it: Audit your website, social pages, email signature, and profiles on portals. Remove MLS logos and active-agent claims. Replace them with a plain statement that you connect clients with trusted local agents and handle referrals through your brokerage.
Sending the referral agreement after the client signs
A late referral agreement can lead to reduced fees or no fee at all. Many brokers will not pay a referral that arrives after the listing or buyer agreement is in place.
How to avoid it: Make sure to submit your referral information to your sponsoring broker before sending over the referral information. Most sponsoring brokers have a process for submitting your referrals. You can look at ours for an example.
Referring to the wrong fit
Referrals that ignore price point, location, or service style can erode trust. A poor match creates extra work for the receiving broker and a weak experience for the client.
How to avoid it: Build a small bench of receiving brokers by niche and geography. Ask about service model, response times, and preferred price ranges. Track results and rotate if service slips.
Overpromising service while on hold
You are not practicing when your real estate license is on hold. You should not write offers, show property, or negotiate. Stepping beyond referrals can create liability and confuse the client and the receiving broker.
How to avoid it: Set clear expectations. Tell the client you will introduce them to a vetted professional and stay available for quick check-ins. Let the receiving broker handle advice and negotiations.
Ignoring taxes and paperwork
Referral income is business income. Missing documents and messy records slow year-end reporting and can trigger follow-ups from brokers or tax pros.
How to avoid it: Save signed referral agreements, confirmation emails, and year-end 1099s from your brokerage. Keep a simple spreadsheet to log each referral, fee, and date paid.
A quick checklist for keeping a real estate license on hold
- Verify your status and broker affiliation in the state database
- Leave MLS membership if you stop production
- Update all marketing and profiles to reflect referral-only activity
- Use a written broker-to-broker referral agreement before client engagement
- Track CE, renewals, and key dates with calendar reminders
- Keep a small, vetted bench of receiving brokers by niche and area
- Save all paperwork for tax and compliance records
Bottom line
Keeping a real estate license on hold works well when you want a pause from production and a path to a return. Most problems come from unclear status, late paperwork, and weak tracking. Keep payments inside the broker channel, meet renewal and CE duties, tidy up your marketing, and use a simple system to track referrals. With these steps, you protect your license, serve your clients, and keep your options open.