If you’re exploring a career in the real estate industry, you’ve likely had questions about the differences between a real estate broker vs agent. Here, we’re sharing intel about these two types of real estate professionals, including each role’s requirements, responsibilities, and benefits.
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What does a real estate broker do?
From a client’s perspective, a broker does many of the same things an agent might do. Brokers can help clients buy and sell property, negotiate sales prices, and sign contracts.
However, brokers also go through additional training, gaining in-depth knowledge about real estate taxes, laws, and finance. Brokers may work independently and can start their own real estate firms, or brokerages, where they can hire additional real estate agents.
What are the different types of real estate brokers?
A designated broker is the owner of a real estate brokerage. They oversee business operations, including hiring real estate agents, setting sales goals, and establishing commissions. They’re also responsible for ensuring everyone in the brokerage adheres to state and federal laws regarding real estate transactions. This role may also be called a broker-owner.
The managing broker reports to the designated broker. They typically hire staff, including administrative staff and real estate agents. They may manage the day-to-day operations within the brokerage and deliver reports to the designated broker. Some managing brokers continue working with clients while others choose to focus on managing a team of real estate agents.
Associate brokers have their broker license but choose to work for another broker instead of starting their own firm. They usually don’t manage any staff within the brokerage and instead focus on working with clients. Associate brokers may also be called affiliate brokers or broker salespersons.
How do real estate brokers get paid?
A broker can earn money in two ways:
- Through their own commissions. Many brokers continue to work with clients who want to buy or sell real estate. When the broker acts as the client’s agent, they earn 100% of the commission from that transaction.
- Through a percentage of their agents’ commissions. Real estate agents are required to work for a sponsoring broker. Part of their commission goes to the broker when they complete a sale. How much commission a broker gets will depend on the pay structure established when the agent is hired.
The better their real estate agents perform, the more money a broker can make.
Reasons to become a licensed real estate broker
Should you get your real estate broker license? There are a few reasons to consider it:
- You can earn more money. Not only do brokers make money on their own sales transactions, but as mentioned above, they also earn a percentage of their agents’ transactions. This can dramatically increase your income potential.
- You get to be your own boss. Agents must work for sponsoring brokers, following the brokerage rules and reporting to a boss. A broker license means you have the ability to work independently and be your own boss.
- You get more control over your career. When you work for a broker, they can determine what listings you get, which clients you work with, and how much commission you make. Being a broker means you can pick and choose your listings, allowing you to position yourself strategically within the industry.
How to become a real estate broker
To become a real estate broker, you must first obtain your real estate agent’s license. Once you’ve done that, you can take the next step of getting your broker license. Each state has its own rules and regulations regarding the licensure process, so you’ll want to see what the requirements are in your state. In California, for example, you must have two years of experience as a real estate agent before applying to become a broker. You must also complete 360 hours of broker education, including finance, appraisal, and accounting courses.
Once you complete the pre-licensure courses, you’ll take your state’s licensing exam, which requires a 75% or higher score to pass. Once you pass, you’ll fill out the licensing form and submit your fees. After those are processed, you’ll be able to access your licensing information online.
What does a real estate agent do?
A real estate agent works with clients who want to buy or sell a property. Agents help negotiate prices, market properties and prepare paperwork for the final sale. All agents work for a sponsoring broker, who oversees their work as an agent and ensures they are following state and federal real estate laws and regulations. While most agents work full-time, it’s possible to be a part-time real estate agent.
What are the different types of real estate agents?
A buyer’s agent is a real estate agent that represents the buyer in a real estate transaction. They work with their buyer’s best interests in mind, guiding them through the process of purchasing a home. Buyer’s agents help clients find the right home, make an offer, negotiate, and more.
A listing agent is a real estate agent who represents the seller. They work with their client to establish a selling price, then list the property for sale, actively market it, and help negotiate the highest possible price.
Dual or transactional agent
A transactional agent is an agent that represents both the buyer and seller in the real estate deal. They work to find a price that meets the needs of both parties. Because they are working for both the buyer and the seller, they get 100% of the commission.
A referral agent is a licensed real estate agent who connects a client with another active agent. They sometimes connect a buyer with a listing agent with a great property that meets their needs. Or they may connect a seller with an agent specializing in marketing that property type. The referring agent will get a portion of the commission in exchange for the referral.
How do real estate agents get paid?
The most common way that real estate agents get paid is through commission. A typical commission structure is 3% of the sale price for the listing agent and 3% for the buyer’s agent. Dual agents who represent both parties would get the full 6% commission. However, the commission is always negotiable. For example, some agents may reduce their commission if they represent both the buyer and seller.
A few real estate agents may get paid a salary from their brokerage. Some may get a sales bonus for closing a certain number of deals on top of their salary, though this is far less common than a commission structure.
What is a Realtor?
A Realtor and a real estate agent do very similar jobs. They both work with clients and can assist with buying or selling a property. However, a Realtor is a licensed real estate agent and a National Association of Realtors (NAR) member.
To become a NAR member, you must have a real estate license, an excellent reputation, and a great record with clients. Realtors must follow a strict Code of Ethics enforced by state governing boards. The NAR is highly esteemed, which can help Realtors attract potential clients.
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Whether you’re a real estate agent, Realtor, or broker, the real estate industry can be competitive. The Association of Real Estate License Law Officials (ARELLO) estimates that there are over 3 million active real estate licensees in the United States. Unfortunately, most real estate agents fail in their first year because they can’t find clients, don’t know how to effectively market properties, and aren’t following up on prospects.
If a successful career in real estate is what you’re after, Luxury Presence can set you up for success. Our award-winning website designs and expert marketing solutions help you attract clients, beautifully market your listings, and stand out from the competition. Reach out to our team and let’s talk about how we can help you build your personal brand online and start reaching more clients.
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