You’re looking to buy a home, but not sure where to start. You research local real estate firms in your area, finally landing on one, but there are so many different titles that you don’t know who to choose. Real estate professionals go by many different names, often used interchangeably, which can make it hard to understand what their role is.
In the state of Indiana, for example, the state licensing board has labeled the initial real estate agent title as a “broker”. The next level above that in terms of hierarchy is the “managing broker”. In most other states, this is not the case. In most states, the initial licensee in the real estate industry will start out their career as a licensed “real estate salesperson” (commonly referred to as a real estate agent).
Typically, the difference between a real estate agent and a broker is that a broker can own a real estate firm and hire agents to work for them. Below we’ll break down the differences between an agent and a broker.
What is a Real Estate Agent?
A real estate agent has a license to help people buy or sell houses and real estate, and works for a broker. To get that license, states require individuals to take pre-licensing courses, but the number of pre-licensing hours varies from state to state. For example, Kansas requires 30 hours of pre-license training, while Arizona requires 90 hours.
Once the pre-licensing courses are completed, the hopeful agent can sit for the state licensing exam. The exam is typically divided into two portions: state, focusing on state-specific laws, and national, focusing on national real estate laws and general principles.
Once the exam has been passed, the agent will be able to apply for their real estate license and begin practicing as a salesperson. Some states require that you work with a broker before sitting for the state exam, while other states allow you to start working for a broker after passing the state exam.
Some of the day-to-day responsibilities of a real estate agent include:
- Hosting open houses
- Showing homes
- Researching property listings
- Negotiating sale prices
- Drawing up contracts
- Coordinating closings
- Meeting with buyers and sellers
What are the Benefits of Becoming a Real Estate Agent?
One of the big differences between an agent and a broker is that real estate agents have fewer licensing requirements. Agents have to take pre-licensing courses and pass a state licensing exam. Brokers, on the other hand, must take all the steps to become an agent, then gain experience, take additional broker education, and pass a broker’s exam.
Real estate agents also have fewer management responsibilities. While brokers are responsible for daily operations of the brokerage and managing their team of salespersons, agents are really only responsible for representing buyers and sellers in real estate transactions.
Depending on the brokerage, some agents are allowed to keep 100% of their commission while paying the brokerage a desk fee, and some agents split their commission with the brokerage.
What is a Real Estate Broker?
A real estate broker is someone who has gone a step further by taking additional education and passing a broker’s license exam.
The broker education and exam requirements vary from state to state, but are more in-depth than what a salesperson can expect.
Some of the day-to-day responsibilities of a real estate broker include:
- Managing agents
- Reviewing contracts
- Marketing the brokerage
- Recruiting agents
- Managing real estate transactions
A real estate broker can work independently or hire real estate agents to work under them.
There are three types of real estate brokers:
- Designated broker/Broker owner: This person oversees all of the real estate agents at the firm, and is legally responsible for the transactions of the agents working under them. If you want to take a more hands-off approach, you can hire a managing broker to handle the daily operations for you.
- Managing broker: This person manages a group of agents or associate brokers, and has a very hands-on role in managing the daily operations of the brokerage.
- Associate broker: This person has a license allowing them to open their own brokerage, but has chosen to work under another real estate broker. They have the same roles and responsibilities as a real estate agent, but have more experience and education.
What are the Benefits of Becoming a Real Estate Broker?
The biggest difference between an agent and a broker is that as a broker, you can own and operate your own brokerage. You can work alone, keeping 100% of the commission, or hire other real estate agents or associate brokers to work under you, splitting their commissions. Most agents choose to become real estate brokers because they can make more money.
The Bottom Line
Real estate brokers complete more education, have more experience, and make more money than real estate agents. Agents have fewer licensing requirements and aren’t financial responsible for other agents.
Whether you’re ready to start your career as a real estate agent, or you’re continuing your education as a licensed agent, PDH Real Estate offers easy-to-use, comprehensive education courses. Feel free to reach out at 888-572-7324 Ext. 107 or firstname.lastname@example.org to get started today.