Are you an aspiring real estate professional or someone interested in buying, selling, or renting real estate? If your answer to our question is yes, then this article is for you.
Knowing the differences between real estate brokers and agents helps you prepare for your possible real estate career or know whose services you need. We’re here to teach you just that.
If you’re ready to learn the distinctions between a real estate broker vs. agent, read on!
An Introduction to Real Estate Brokers and Agents
- A real estate broker negotiates, arranges, and oversees real estate transactions.
- As for real estate agents, they buy, sell, or rent property on their clients’ behalf. Think of them as representatives who take care of you throughout the process.
These basic definitions are quite simple, but we’ll further elaborate on what they do next.
What Else Do Real Estate Agents and Brokers Do?
It actually varies based on their employment, role, or state. We’ll give you a brief look at how these real estate professionals operate.
In terms of employment, a licensed real estate broker can:
- Work independently
- Work under a real estate brokerage firm with agents under them
As for real estate agents, they can have two setups:
- They can work part-time early in their careers or after retiring.
- The typical setup, however, is to work full-time under a real estate brokerage.
Tasks and Responsibilities
Their tasks and responsibilities are determined by their respective roles. Here’s a short overview of what brokers do:
- If working for a brokerage, they manage the office and staff
- They even recruit, train, and manage real estate agents
- A broker also writes real estate contracts
- They supervise real estate transactions too
- They also keep in touch with government and professional associations
A real estate agent’s duties, on the other hand, VARY by state. Here’s a look at what an agent typically does:
- A licensed agent provides guidance for the client throughout the process of buying, selling, and renting property.
- The agent also organizes and submits the client’s paperwork from pre-approval to final closing.
- An agent also facilitates contract negotiations and helps the client achieve the best outcome.
Are There Various Types of Real Estate Brokers?
Yes, there are!
It’s been mentioned that real estate brokers have varying license requirements based on what state they work in. Their specializations, meanwhile, depend on the career paths they choose.
We’ll cover them in this section. Here are the three major types of real estate brokers, along with their responsibilities.
1. Designated Real Estate Broker
The designated broker bears all the legal responsibility in a brokerage.
Also known as a principal broker, he/she ensures that every real estate agent in the firm working under him/her complies with local and national real estate law.
It’s necessary for each real estate firm to have a designated broker for every state they’re licensed to operate in. Why?
It’s because their designated broker also holds the license for the firm! However, he/she can also supervise more than one state.
Designated Broker Fact: A designated broker can also be called a broker-owner. They can even earn a salary instead of being paid in commissions!
2. Managing Real Estate Broker
A managing broker, as the title implies, takes on a managerial role in the firm. Also known as brokers-in-charge, they look after the day-to-day operations of their respective real estate firms.
Typically, managing brokers work directly UNDER designated brokers. Here’s a list of your typical managing broker responsibilities:
- A managing broker hires and trains real estate agents
- Managing brokers oversee their respective firms’ administrative staff
- A managing broker also ensures compliance with regulations
- He/she even manages the firm’s recordkeeping
- Managing brokers also maintain healthy vendor relationships
3. Associate Real Estate Broker
An associate broker is a real estate professional who’s upgraded his/her real estate license. In terms of responsibilities, it’s pretty similar to a real estate agent.
A broker associate represents his/her client in buyer and seller transactions. He/she also doesn’t have responsibilities concerning a firm’s management and operation.
What also differentiates an associate broker is he/she can represent the client in a real estate transaction WITHOUT supervision. Because of that, larger commission percentages are possible!
What Are the Different Types of Real Estate Agents?
First off, there are several types of real estate agents. Second, each type has his/her own specialization and responsibilities associated with it.
We’ll be covering each type for you. This should make it easier for you to decide which type of agent you want to be or has the services you need.
1. Listing Agent
A listing agent represents a client who wants to sell property that the client owns. Also called a seller’s agent, he/she guides the client through the selling process and negotiates so the client obtains the best value.
Here’s a look at some typical tasks listing agents do:
- Make sales price and home improvement recommendations
- A listing agent finds interested buyers for the client
- Take photos and videos of the property
- Listing agents also promote the property for sale on real estate sites, social media, and ads
- Having the property staged and hosting tours, open houses, etc.
- Having a home inspector look through the property
2. Buyer’s Agent
The name speaks for itself.
This type of real estate agent exists to represent buyers. A buyer’s agent guides buyers through the process of searching and purchasing the best property at the best price.
Here’s a short list of what buyer’s agents typically do:
- Buyer’s agents help iron out the details of an offer
- They also identify new homes or properties you may like
- A buyer’s agent also offers contractor, home inspector, or mortgage lender recommendations
- Your buyer’s agent also accompanies you through property walkthroughs
- Buyer’s agents even help you decide whether a home or property fits you
3. Dual Agent
To give it to you straight, a dual agent actually represents BOTH the buyer and seller. Think of a dual agent as the facilitator of the real estate transaction.
There’s something you have to be aware of though. In some states, being a dual agent is illegal. Do your research on your state’s laws to make sure that you don’t do anything that can get you in trouble!
4. Transaction Agent
A transaction agent can exist situationally. It can be one and the same as a dual agent since they both act as facilitators.
Another example is when a buyer doesn’t work with a real estate agent. Let’s say the buyer works with a listing agent. That agent can write the offer for them, effectively working as a transaction agent!
5. Referral Agent
Referral agents take care of, well, referrals.
They find leads and send them to licensed real estate agents. If their leads result in closed sales, referral agents get paid a referral fee.
That’s pretty much the limit of what they can do though. They’re not licensed real estate agents, so they can’t sell or manage property. They can’t even handle real estate transactions!
Real Estate Agent Vs. Broker: Key Differences
Now that you have a general idea about real estate brokers, and agents, and their specialties, let’s compare their differences.
Employment Situation of a Real Estate Broker vs. Agent
It boils down to one key difference.
Real estate brokers can work independently and real estate agents can’t. In fact, a real estate agent has to work under a sponsoring broker or work for a brokerage!
Responsibilities of a Real Estate Agent vs. Broker
Let’s first talk about how different the responsibilities of real estate brokers and agents are.
1.) A Real Estate Broker Can Own and Run a Brokerage Firm
The biggest DIFFERENCE between the two is that a real estate broker can open a firm to represent real estate buyers and sellers.
Real estate brokers can also hire agents or associate brokers to form a brokerage team that works under them. They can even work independently!
If opening your own brokerage doesn’t appeal to you, however, becoming a managing broker is an option. You’ll get to mentor and manage agents, even oversee a brokerage’s operations!
2.) A Real Estate Agent Has Less Managerial Responsibilities
- As real estate brokers, running or owning their brokerages means added management responsibilities.
- Agents, on the other hand, are mainly responsible for representing property buyers and sellers in real estate transactions.
Typically, that’s their focus and many agents also prefer it that way. They’d rather center their activities around taking care of clients.
As a result, agents have less responsibility concerning the administration and management of a brokerage.
3.) A Real Estate Broker Can Run a Property Management Company
If you’re pursuing a real estate career, this is another advantage of getting a broker’s license. What is a property management company though?
Think of it as a middleman between rental property owners and their tenants. They take care of leasing, collecting rent, etc.
They’re also activities that must actually be conducted under a broker’s license. If you’re wondering why, it’s because they’re considered to be real estate activities!
This is also why property management firms are required, by law, to have a licensed broker on their staff.
4.) A Real Estate Agent Has Less Legal and Financial Liability
It’s been mentioned that real estate brokers bear legal and financial responsibilities for their brokerage.
Unlike them, a real estate agent CAN’T open their own real estate brokerage or manage other agents.
That’s why a real estate agent isn’t legally or financially responsible for his fellow agents’ actions. That also leads to reduced liabilities, which can be an advantage!
Earning as a Real Estate Broker vs. Agent
Up next is a topic for those who want to start a real estate business or work in the real estate industry. We’ll be covering how earning as a real estate agent vs. broker can be different.
1.) A Real Estate Broker Earns More
The ability to work independently allows a real estate broker to keep 100% of their commissions. A broker can even hire other real estate agents or associates and split their commissions!
That’s mainly how a broker earns so much income. There’s an alternative though.
For example, a broker can start a firm where he/she lets agents earn 100% from commissions. However, agents have to pay desk fees and other fees designated by the broker.
2.) A Real Estate Agent Earns Mostly From Commissions
Any real estate agent earns most of their income from commissions they earn while representing clients. These can come from closing deals for buyers or sellers.
Acting as a dual agent can earn you more too. Representing both the buyer and seller in a sale can earn you the entire commission!
Commission Fact: Your commission as a dual agent is typically 5-6% of the final sale’s price. Representing only the buyer or seller nets you half. Remember though, dual agency is illegal in some states!
Becoming a Real Estate Broker vs. Agent
We’ve nearly covered all the necessary information. Now it’s time to discuss how the process of becoming a real estate agent or broker can be different.
1.) Becoming a Licensed Real Estate Agent Has Fewer Requirements
The main difference between becoming a licensed real estate agent and a licensed real estate broker boils down to requirements. To earn your real estate agent license, you need only do the following:
- Meet administrative requirements
- Take pre-licensing courses (Courses you need to take vary by state)
- Pass the real estate license exam
Once you’re done with the above, you can represent clients. It doesn’t even require a college degree or a business background!
2.) Before Becoming a Broker, You Must Have Experience as an Agent
This is the heftiest requirement that makes becoming licensed brokers challenging. The years of experience required also vary depending on the state!
Not only that, but you must also complete more hours of coursework and take a tougher broker’s exam. This is the primary reason why a lot of real estate professionals choose to remain as agents!
Bonus: Requirements for Earning Your License
This will surely interest anyone who wants a career in real estate. As for prospective buyers, sellers, or tenants, at least you’ll know whether or not the agent/broker you’re dealing with is legitimate.
Earning Your Real Estate License
Here are the basic requirements aspiring real estate agents should meet to be eligible for a license:
- You must be at least 18 years of age
- You should also be legally allowed to work in the U.S.
- Having no pending criminal indictments against you is also required
- You should have no criminal convictions too (For any violent crime or home-invasion-related offenses)
As for pre-licensing class requirements, here are some examples according to state:
Trivia: Did you know that Illinois considers all real estate professionals as brokers? The total required pre-license hours for real estate agents and brokers are one and the same!
Once you’re done with your real estate classes, all that’s left is to pass the licensing exam. After that, you can start representing clients!
Earning Your Broker’s License
The first requirement to earn your broker’s license is experience as a real estate agent. As mentioned before, the amount of experience varies from state to state.
Here are a few examples of the required experience for five states:
- California: 2 full years within the last 5 years
- Texas: 4 full years in the last 5 years
- Florida: 2 full years within the last 5 years
- New York: 2 years + a minimum of 14 transactions
- Michigan: 3 years
As you can see, it differs in such a way that a state like New York requires some transactional experience to be eligible for a broker’s license. The same applies to pre-license class requirements:
- California: 45 hours
- Texas: 270 hours
- Florida: 72 hours
- New York:45 hours
- Michigan: 90 hours
After meeting the above requirements, what’s left is passing your broker’s license exam and turning in your application for approval. Once your state issues your license, you’re officially a licensed real estate broker!
Did Our Article Help You?
Real estate agents and brokers have many distinctions. Knowing them can help you find your perfect property or aid you in pursuing your career in the real estate industry.
We hope you learned a lot from our post. If you have any questions, just leave a comment below!