Real Estate Agent vs Broker: At a Glance
Responsibilities
|
Median Annual Salary (National)
| |
|---|---|---|
Agent
|
Real estate agents rent, buy, or sell property on behalf of clients.
|
$33,750
|
Broker
|
Brokers negotiate, arrange, and oversee real estate transactions. They may also own/run brokerages.
|
$54,670 to $96,150
|
Realtor
|
A Realtor is an agent or broker who has earned the NAR’s Realtor designation.
|
$42,500
|
5 Types of Real Estate Agents
There are several types of real estate agents—each with unique responsibilities and specializations. These include listing agents who sell homes, buyer’s agents who help people purchase real estate, and dual agents who act as the listing agent and buyer’s agent. Additionally, a listing agent may become a transaction agent when writing an offer for an unrepresented buyer. Agents may also join the National Association of Realtors to earn the Realtor designation.
The five major types of real estate agents are:
Listing Agent
A listing agent is an agent who represents a homeowner in the sale of their home. Listing agents, therefore, have a duty to represent their seller’s best interests and get them the best possible contract terms. In cases where the buyer does not have their own agent, a listing agent can become a dual agent or, in some states, a transactional agent. See below for more information on these roles.
Buyer’s Agent
In contrast to a listing agent, a buyer’s agent represents homebuyers in their search for and purchase of a home. For that reason, buyer’s agents are invested in their client’s interest throughout the entire buying process; they must put the buyer’s priorities ahead of the seller’s. As part of this responsibility, a buyer’s agent helps purchasers negotiate the best possible price for real estate and assists them through due diligence and closing.
Dual Agent
A dual agent is one who represents both the buyer and the seller in a real estate transaction. Dual agency can also arise when the listing agent and the buyer’s agent work for the same real estate broker; this is because it is the broker who defines the agent relationship to the client. However, dual agency is not legal in all states and can cause conflicts of interest. For that reason, many homebuyers and sellers use an exclusive agent who will represent only their interests.
Transaction Agent
When a buyer is not represented by their own exclusive agent, the listing agent may have to write an offer for them. In states where dual agency is not legal, a listing agent can elect to become a transaction agent. Under these circumstances, the agent doesn’t represent the buyer or the seller and, instead, acts as an impartial facilitator throughout the transaction.
Realtor
Real estate agents and brokers can earn the Realtor designation by joining the National Association of Realtors (NAR). Generally, this requires agreeing to and abiding by the NAR’s Code of Ethics and paying annual dues. As part of their NAR membership, Realtors gain access to discounts, educational materials, and other career development resources. However, they do not have any legal privileges or rights beyond those of a licensed agent.
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3 Types of Real Estate Brokers
Real estate brokers have varying responsibilities and titles depending on the career path they decide to take. Regardless, going from real estate agent to broker opens up a number of possibilities. Depending on your needs and ambitions, consider becoming a designated, managing, or associate broker.
The three major types of real estate brokers are:
Designated Real Estate Brokers
By law, every real estate agent and every real estate agency must be overseen and managed by a real estate broker. Legally speaking, that broker is called the designated broker, and bears the legal responsibility for all transactions that agents working under them complete. Designated brokers who own the brokerage for which they are the designated broker are sometimes called broker-owners as well.
Though designated brokers are legally responsible for a real estate brokerage, their participation in day-to-day brokerage operations can vary. Some designated brokers take a more hands-off approach and let others handle the daily operation of the brokerage. Others take a much more active role in hiring and training agents, managing staff, and even working with clients who are buying or selling homes.
Managing Real Estate Brokers
A managing broker manages a group of real estate agents or real estate associate brokers. Some designated brokers also work as the managing brokers at their agency, while others take a more hands-off approach to running the agency by hiring another managing broker. In general, managing brokers take a very active, hands-on role in running the day-to-day operations of the brokerage.
Associate Real Estate Brokers
Associate real estate brokers, also referred to as broker associates, are real estate agents who have met state requirements to become a licensed real estate broker. In general, this includes completing coursework and work experience requirements; licensed agents must also pass a state broker licensing exam.
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Although this license allows them to open their own brokerage as a designated agent and manage other agents as a managing broker, associate brokers instead choose to work under another real estate broker. That means they have the exact same roles and responsibilities at a real estate agency that real estate agents do, but they have more experience and are better educated than their real estate agent peers.
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Responsibilities of Real Estate Agents & Brokers
The main difference between real estate agents and brokers is that only a broker can own real estate firms or manage agents. If you’re an agent, you’ll need to work under a sponsoring broker. This creates differences in day-to-day responsibilities, as agents do not have the ability to manage other agents, handle compliance and recordkeeping activities for a brokerage, or otherwise operate a brokerage.
Common responsibilities of real estate agents and associate brokers include:
- Representing buyers and sellers
- Marketing homes for sale
- Negotiating prices and managing transactions
- Prospecting buyer and seller leads
- Holding open houses and showing homes
- Renting residential and commercial units
- Recruiting, training, and managing agents
- Resolving internal brokerage conflicts
- Reviewing contracts
- Establishing escrow accounts
- Marketing and lead distribution
- Property management
- Managing the brokerage office and staff
- Communicating with governments and professional associations
- Managing compliance, recordkeeping, and vendor relationships
5 Benefits of Being a Real Estate Broker
Being a real estate broker—instead of an agent—has significant benefits. Though there is a lot of hard work involved and more education requirements, being a broker allows you to scale your career in ways that remaining a real estate agent cannot. This is because brokers have the ability to run their own brokerage or property management company. Brokers also have a higher earning potential because of higher incomes and more advantageous commission splits.
The five benefits of being a real estate broker versus agent are:
1. Real Estate Brokers Can Run Their Own Brokerage
Unlike real estate agents, licensed brokers can open their own real estate brokerage to represent buyers and sellers of real estate. Brokers can work alone (and keep 100% of their commissions) or hire other real estate agents or associate brokers to work under their license (and split their commissions). Alternatively, you can start a firm where agents earn a 100% commission but pay desk fees and other fees you designate.
If you prefer not to open your own brokerage but are interested in mentoring and managing agents, you may be interested in a managing broker position. A managing broker oversees other agents and brokers within an existing brokerage and is a great position for those with many years of experience to offer.
2. Real Estate Brokers Earn a Higher Income
While having additional career options and responsibilities is great, most agents choose to become real estate brokers because they can make more money. According to the NAR 2017 Member Profile, Realtors make $42,500 per year on average, while broker-owners make between $54,670 and $90,910 annually, depending on whether or not they are actively selling property.
Here’s a quick summary of the differences in income for real estate agents and brokers:
Median Annual Income of Real Estate Agents vs Brokers: 2016
Type of Real Estate Agent
|
Median Salary (2016)
|
|---|---|
Sales Agent (Real Estate Agent)
|
$33,750
|
NAR-designated Realtors
|
$42,500
|
Broker-Owner (Designated Broker)
Without Selling |
$54,670
|
Broker-Owner (Designated Broker)
With Selling |
$90,910
|
Associate Broker
|
$55,360
|
Manager (Managing Broker)
Without Selling |
$82,500
|
Manager (Managing Broker)
With Selling |
$96,150
|
3. Real Estate Brokers Have Better Commission Splits
If you don’t have an entrepreneurial streak or prefer the safety of working under another broker, you can always work as an associate broker. While you more than likely won’t have any additional responsibilities at the brokerage beyond those of an agent, your heightened licensure and expertise will enable you to command a higher commission split from the managing broker than most real estate agents.
Knowing where you stand, what your options are, and what salary and commission you can command will give you a leg up in your path ahead. For that reason, being well-versed on commission splits as you enter the market and pursue your goals is important. If you need a refresher, we offer a comprehensive guide to how real estate commission splits work.
4. Real Estate Brokers Can Run Property Management Companies
The ability to run a property management company is another reason to get your broker’s license. Property management companies act as a middleman between the owner of a rental property and the tenants who occupy it. If investment properties are currently hot in your market, property management can be a great additional revenue stream or a new career option.
Activities like leasing and collecting rent are considered to be real estate activities and must be conducted under a broker’s license. Therefore, every property management firm is required by law to have a licensed real estate broker on staff. Property management can be a wonderful addition to your income, so if you’ve thought about owning an investment property, check out our tips for buying your first rental property.
5. Real Estate Brokers Can Leverage Their Experience in Marketing
In general, real estate brokers are more experienced in the real estate industry than many agents. What’s more, real estate brokers typically have completed more training and earned more specializations and real estate designations than many agents in their market. For that reason, clients looking for future representation to buy or sell a home are more likely to trust experienced local brokers than newer, less experienced agents.
As a broker, you can take advantage of your training and experience when marketing to new clients. For example, when meeting with prospective clients, leverage your experience by highlighting your broker credentials as part of your listing presentation.
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3 Benefits of Being a Real Estate Agent
Real estate agents cannot engage in as many real estate-related activities as brokers. However, this means that agents do not have as many prelicensing requirements as brokers. What’s more, agents have fewer administrative responsibilities than brokers and are not financially responsible for other agents like managing brokers.
The three main benefits of being a real estate agent instead of a broker are:
1. Agents Have Fewer Licensing Requirements
To earn a real estate agent license, aspiring real estate agents must meet administrative requirements, take state-specific prelicensing courses, and pass a licensing exam. In contrast, real estate brokers must first obtain an agent’s license, gain experience, and meet additional broker education and exam requirements. For that reason, many real estate professionals prefer to remain an agent rather than take the additional steps required to become a broker.
2. Agents Have Limited Financial Liability
Unlike managing brokers, real estate agents cannot open their own real estate brokerage or manage other real estate agents. For that reason, real estate agents cannot be financially or legally responsible for the actions of other agents. The reduced duties and responsibilities of real estate agents mean that they have fewer liabilities than real estate brokers.
3. Agents Have Fewer Management Responsibilities
Real estate brokers are generally responsible for a range of management activities related to the operation of a brokerage. These tasks typically include writing contracts, managing a back office and other administrative duties, and recruiting and onboarding agents. In contrast, agents are only responsible for representing homebuyers and sellers in the transfer of real estate.
How to Become a Real Estate Agent or Broker
Becoming an agent is similar to becoming a broker—and agent experience is required for broker licensing—so we’ve included both in a single set of steps. To begin the process, take real estate prelicensing courses and pass your state’s agent exam, then join a brokerage and gain industry experience. If you want to upgrade your license, complete broker prelicensing courses and pass the state broker exam.
The steps for becoming a real estate agent and upgrading to a broker’s license are:
1. Take Real Estate Prelicensing Courses
Regardless of whether you want to become an agent or broker, you will need to first secure your agent’s license. To do so, start by meeting your state’s real estate prelicensing education requirements, which typically include between 50 and 200 hours of coursework. Required courses cover general topics like property ownership and land use controls and regulations, agency law, and real estate contracts.
To meet your state’s prelicensing education requirements, consider taking courses from a platform like McKissock Learning. The school offers courses online so you can meet state-specific requirements on demand and from the convenience of your home or office. Click here to learn more about their course offerings in your state.
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2. Take & Pass Agent Licensing Exam
Each state has its own exam application and registration process, so visit your state licensing board’s website to determine the steps necessary to take the exam. However, licensing boards generally require aspiring agents to demonstrate they have met the state’s education requirements before they can register to take the exam.
Once you are registered, familiarize yourself with the structure of the real estate agent licensing exam and consider taking an exam prep course. While each state’s exam is different, it typically includes around 150 questions and covers national and state-specific topics. Check out our step-by-step guide to passing the real estate exam for helpful tips and tricks.
Once you have taken and passed the exam, you can submit an application for licensure to your state’s real estate board. Processing time varies, but generally takes four to six weeks. You should be notified by mail or email if your application is approved and you are granted a real estate license. To begin working, you will have to associate yourself with an established brokerage.
3. Find a Brokerage & Gain Experience
After acquiring a real estate agent license, you will need to associate yourself with a brokerage before representing buyers and sellers in property transactions. After finding an appropriate brokerage, you can remain an agent and work on building your farm area while also honing your specialty within the real estate industry, or you can work toward upgrading to a broker’s license.
Start by choosing a real estate company to work for. If you want to specialize in a certain area of real estate, like vacation homes or waterfront properties, find a broker who excels in that area. Likewise, if you intend to be a listing agent or exclusive buyer’s agent, work for a broker who can support those goals.
If you want to upgrade to a broker’s license, you will need to gain a specific amount of experience working for your chosen brokerage—typically, a set number of years. In lieu of experience, some states allow agents to earn a degree in real estate to meet broker licensing requirements. Be sure you check with your state’s real estate commission to determine the requirements you need to meet.
4. Complete Broker Licensing Courses & Exam
After earning an agent’s license and meeting state-specific experiential requirements, real estate agents who want to become brokers must take additional licensing courses and pass their state’s broker’s licensing exam. Broker licensing courses typically include between 75 and 150 credit hours—similar to the courses required for agents. However, broker courses cover more advanced topics like how to run a real estate office.
Real estate broker exams are often extremely state-specific. For that reason, it’s important to meet all of your state’s course requirements and take an exam prep course prior to registering for the test. Check out our ultimate guide to learn more about how to prepare for and pass the real estate broker’s exam.
5. Join a Brokerage or Start Your Own
Depending on the type of broker you want to be, you can work under the supervision of another broker—as an associate broker—or start your own brokerage. When searching for a real estate brokerage, consider factors like the company’s culture, reputation, and specializations. For example, if there’s an area of real estate you’re particularly interested or experienced in, make sure the brokerage will provide sufficient resources to expand your expertise in that area.
To start a brokerage, first decide whether you want to have an independent brokerage or work with a franchise. Next, choose whether you want a limited liability company (LLC) or other business structure, create a business plan, file the necessary regulatory documents, and determine your source of funding. When you’re ready to get off the ground, recruit agents and market your business on a platform like Real Geeks. Check out our guide to starting a real estate brokerage for more information.
Real Estate Agent vs Broker: Requirements by State
As mentioned above, the requirements for becoming both and agent and broker vary by state. However, almost all states require some combination of education, experience, and a passing score on a licensing exam. For sample requirements by state, review the tables below. Be sure to check with your real estate commission for the most up-to-date requirements in your state.
Here are some sample real estate agent versus broker requirements by state:
California Real Estate Agent vs Broker Requirements
Real Estate Agent Licensing Requirements
|
Real Estate Broker Licensing Requirements
| |
|---|---|---|
Age
|
18 or older
|
18 or older
|
Pre-licensing Courses
|
135 hours real estate pre-licensing courses
|
360 hours broker pre-licensing courses
|
Experience
|
NA
|
2 years as a real estate agent or 4-year degree with major or minor in real estate
|
Exam Requirement
|
✔
|
✔
|
Texas Real Estate Agent vs Broker Requirements
Real Estate Agent Licensing Requirements
|
Real Estate Broker Licensing Requirements
| |
|---|---|---|
Age
|
18 or older
|
18 or older
|
Pre-licensing Courses
|
180 hours real estate pre-licensing courses
|
900 hours broker pre-licensing courses
|
Experience
|
NA
|
4 years experience as a real estate agent or 3,600 points of experience
|
Exam Requirement
|
✔
|
✔
|
New York Real Estate Agent vs Broker Requirements
Real Estate Agent Licensing Requirements
|
Real Estate Broker Licensing Requirements
| |
|---|---|---|
Age
|
18 or older
|
20 or older
|
Pre-licensing Courses
|
70 hours real estate pre-licensing courses
|
120 hours broker pre-licensing courses
|
Experience
|
NA
|
2 years experience as a real estate agent or 3,500 points of experience
|
Exam Requirement
|
✔
|
✔
|
Florida Real Estate Agent vs Broker Requirements
Real Estate Agent Licensing Requirements
|
Real Estate Broker Licensing Requirements
| |
|---|---|---|
Age
|
18 or older
|
18 or older
|
Pre-licensing Courses
|
63 hours real estate pre-licensing courses
|
72 hours broker pre-licensing courses
|
Experience
|
NA
|
2 years experience as a real estate agent
|
Exam Requirement
|
✔
|
✔
|
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