What’s the Difference Between a Real Estate Broker and an Agent
This is actually a fairly common question. What is a real estate broker? What’s the difference between the real estate agent and broker? What does a real estate broker do? What’s the real estate broker definition?
Is having a real estate agent license the same as being a broker associate? You will find yourself asking these things if you ever need to sell your home, and want to know how to find a real estate agent. Let’s settle the real estate broker vs agent dilemma.
Some real estate brokers tend to add titles after their names, such as a salesperson, or realtor, or an associate. They’re all licensed to sell real estate. And, for example, a broker can work both in a real estate brokerage, and as an agent, but an agent must need a real estate broker license in order to work as one.
An agent who gives real estate advice must be in possession of a real estate license, and in many states, you can check the agent’s license number by his name, which lets you see any potential violations filed against him.
Let’s see some of the typical broker or agents you’ll run into, and settle the difference between realtor and real estate agent as well.
What is a broker?
A broker is one step above the real estate agent. Usually, they have more education than an agent, and for example, in California, you need a broker’s license to be able to work for yourself. If you’re an agent, you have to work for a broker, but if you’re a broker, you can run your own business. So, how to become a real estate broker? In California, there are three ways.
- If you have a four-year degree and have eight college-level real estate courses complete, you can take a broker’s real estate exam.
- Without the degree, you should either have two years of sales experience, or the real-estate courses mentioned above.
- If you’re a lawyer and belong to the bar, you don’t need the college-level courses, but you must pass the exam.
A broker can work by himself or herself, and they can hire salespeople. The broker’s exam is usually longer and more difficult than the exam for a salesperson, and brokers are commonly held to higher knowledge standards.
What’s a broker associate, then?
A broker associate is, in layman’s terms, a broker who works for another broker.
Sure, the broker could work for themselves, but they often choose to join a larger network. Some work for a percentage of each transaction, while others pay a flat fee to their broker employer.
What about a real estate agent, what is that?
A real estate agent is actually a licensed salesperson, not really a real estate broker. They must work for a broker and aren’t allowed to work independently. Brokers take responsibility for the actions of their real estate agents.
The specific requirements for a salesperson will vary from state to state, and in California, for example, you need at least three college-level courses and should be at least 18 years old.
Why would you want to become a real estate broker?
There’s undoubtedly plenty of hard work involved here, but being a real estate broker doesn’t come without its benefits. Let’s take a look at some of them.
You can become a manager, or run your own brokerage
If you want to mentor and manage agents, you have that as an option. You can oversee other agents and brokers, and be responsible for their work. Or, you could open your own brokerage.
There are two ways to run this. Either work alone, and keep all commissions, or recruit other real estate agents and associate brokers, for them to work under your license. This way, you will either have them split their commissions with you or pay desk fees if you’re running a high-split firm.
You’ll earn a fairly high income and get better commission splits
Sure, having additional options and responsibilities might sound great, but many agents choose to up their knowledge and license to a broker level because they will make much more money this way.
If you actually prefer the safety when you’re working with another broker, there’s always the option of working as an associate broker. You will most likely have no additional responsibilities at the brokerage, but you can have a higher commission split than most.
You can run a property management company
This also requires a broker’s license, because, by law, any such firm must have at least one licensed real estate broker within their staff. The investment market with rental properties is currently pretty hot, and this might not be just an additional stream of revenue, but a whole new career option.
More marketing opportunities
When you have a license, this tells potential clients that you have more experience and training than an agent. You can include what the difference between you and an agent is in your presentation, and give yourself a boost in front of potential new clients.
The first step towards becoming a broker is becoming an agent
If you do want to become a broker, you’re more than likely dreaming big. However, if you want to reach those dreams, you’ll need to start somewhere. That somewhere is as an agent. And yes, you’ll need to put in the hours before you can become a broker. You will need to achieve the experience to become a broker, but becoming an agent is a pretty good first step.
Work as a free agent
This means that technically, you work under a broker, but you can come and go whenever you want to. You do get the autonomy as a real estate agent, but your success will depend on your ability to find potential clients and deliver. If you’re a hustler, this is ideal for you.
Work as a listing agent
A listing agent, or a seller’s agent, represents the seller. They might be a broker or an agent, and they owe the seller a responsibility, which means they must protect the seller’s interest.
Work as a buyer’s agent
A buyer’s agent, or a selling agent (different than a seller’s agent – don’t confuse the two), doesn’t work for the seller. They commonly work with both sellers and buyers, but seldom in the same transaction. The buyer’s agent might require the buyer to sign a buyer’s broker agreement, but that depends on the local customs.
Other options: Dual agent and transaction agent
With a dual agency situation, the agent represents both the seller and buyer. Or, they might be two different agents, but work for the same broker. This is because the broker is the one who creates the dual agency. This system, however, isn’t legal in all 50 states.
A transaction agent is a listing agent who is in the position of needing to write an offer for the buyer, but in a state where dual agency isn’t permitted. This agent just facilitates the transaction without representing either party.
What kind of agent do you need for your specific purposes?
Well, this depends on what you want to do, and what the conditions on the market are, but you’ll either be buying or selling your home.
If you’re a buyer who is hunting in a seller’s market, where inventory is limited, you need an agent who is good with writing offers that often get accepted. They’ll also need to be connected to other agents, and you should have them be able to call the seller’s agent and use their name and relationship as leverage.
On the other hand, if you’re selling, you want someone who has a good track record of sales. Just Google them – and if you can’t find their history, that’s a red flag. If they’ve sold something, it will pop up somewhere. Do they use 3D virtual tour walkthroughs? Do they have professional photos? Would you trust them to do the same for you?
Ending thoughts on being a real estate broker
A real estate broker, regardless of whether they’re a managing broker, designated broker, or associate broker, has plenty of additional experience and training than an agent, and consequently, make more money. They are the only professionals who can legally open their own property management or brokerage firm.
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