When you need a break from day-to-day production, you face a simple choice: place your license with a Real Estate License Holding Company or move your license to inactive status with your state regulator. Both paths reduce workload. They differ in income potential, compliance, and how fast you can return to sales. For more information on the differences we have put together this guide comparing placing your real estate license on hold vs going inactive.
Quick Definitions
- Real Estate License Holding Company (Referral Brokerage): A sponsoring broker holds your license and limits your activity to referrals. You do not join the MLS, show homes, or draft contracts. You send warm introductions to active brokers and receive a share of the referral fee when a deal closes.
- Inactive Status: Your license is placed on inactive with the state. You cannot practice or earn commissions or referral fees that require an active license. You may need to meet specific steps to reactivate later.
Rules vary by state. Always check your regulator’s terms for “active,” “inactive,” “sponsoring broker,” CE, and reactivation.
What You Can and Cannot Do
Holding Company
- You can make introductions and receive referral fees through your sponsoring broker.
- You cannot list, sell, write offers, or access the MLS as an agent of record.
- A managing broker supervises compliance, tracks referrals, and pays your split after closing.
Inactive Status
- You cannot engage in activities that require a license, including paid referrals that require license status.
- You may share general market opinions, but you cannot present yourself as an active licensee or expect commission income.
Income Potential
Holding Company:
Referral fees are common at 20%–35% of the commission received. Example: a $400,000 sale with a 2.5% buy-side commission yields $10,000 to the buyer’s agent. A 25% referral pays $2,500 to your sponsoring broker, which then pays your split per your agreement. With a modest network, a few warm introductions a quarter can cover fees and produce steady side income.
Inactive Status:
Expect $0 in real estate commission or referral income. If your network calls you, you can share a contact, but payment tied to a licensed referral is off the table.
Costs and Admin
Holding Company
- Usually no MLS dues, lockbox, or board fees.
- Annual or monthly company fees are typical.
- You keep up with continuing education (CE) and renewals to maintain active status.
- W-9 and payout setup ensure fast disbursement after closing.
Inactive Status
- Often no E&O or brokerage fees.
- You may still owe renewal fees to keep the license in inactive good standing, depending on your state. You may not be able to renew in certain jurisdictions, see your state rules for clarification.
- CE may be due either now or at reactivation, depending on state rules.
Risk and Compliance
Holding Company:
The brokerage provides policy manuals and record keeping You follow written referral procedures and log every introduction. Risk remains low because you do not handle transactions, but you must protect referrals with signed agreements (typically provided by your sponsoring broker) and proper disclosures.
Inactive Status:
Risk is minimal because you do not practice. The main risk is missing renewal or reactivation steps and losing time or money when you want to return.
Speed to Reactivate for Sales
Holding Company:
You are already active. If you want to sell again, you transfer to a traditional brokerage and join MLS and board. The jump is fast.
Inactive Status:
Reactivation can take longer. You may need CE catch-up, fees, new testing, and processing time. Plan for a delay before you can write offers.
Brand and Relationships
Holding Company:
You stay present in your sphere. You introduce clients to vetted producers and stay in the conversation. Clients still view you as a real estate professional who connects them to the right help.
Inactive Status:
Your role fades. You can share a name, but you cannot tie that to paid referrals. Staying top-of-mind is harder without a professional channel.
Which Path Fits You?
Choose a Real Estate License Holding Company if you:
- Want referral income with low overhead.
- Plan to return to production quickly.
- Value documented referrals, and brokerage support.
- Have a steady network that seeks your advice.
Choose Inactive Status if you:
- Need zero ongoing brokerage costs.
- Are stepping away for an extended period and most likely not returning.
- Do not expect to place paid referrals.
- Prefer minimal obligations until you reenter.
Bottom Line
If you want to keep your license working for you, a Real Estate License Holding Company offers a clean path to earn referral income, stay compliant, and reenter sales on short notice. If you want a full stop with the lowest ongoing cost and no commission activity, inactive status fits. Review your state’s rules, run a simple budget, and pick the option that matches your timeline, cash flow, and goals.