Real Estate Agent vs Broker: What Is the Difference?
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This article is part of a larger series on How to Become a Real Estate Agent.
A real estate agent is anyone who has earned a real estate license, but this license must be linked to a sponsoring brokerage. A broker holds an additional license, which allows them to work independently or hire agents to work for them if they so desire. There are some additional differences between being a real estate vs broker, so read more to learn what could be the best choice for you.
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. | $40,000 |
Broker | Brokers negotiate, arrange, and oversee real estate transactions. They may also own/run brokerages. | $93,800 - $121,400 |
(Source: National Association of Realtors 2020 Member Profile)
Did you know? A Realtor is not another type of real estate professional, but instead is a designation that indicates a person is associated with the National Association of Realtors (NAR). This means that a real estate agent or a broker can also be a Realtor. They are expected to operate per the NAR’s code of ethics in addition to state laws. While NAR does impose additional requirements on professionals, this distinction builds trust and can increase the earning potential for agents. For example, on average, Realtors make $49,700 per year.
For more on this topic, and the benefits of membership, check our article on what is a Realtor.
Types of Real Estate Agents
There are several types of real estate agents—each with unique responsibilities and specializations. Although you can specialize as a listing agent or buyer’s agent, it’s not necessary. In most cases, a real estate agent can work with buyers and sellers, so they will have opportunities to be a buyer’s agent, listing agent, dual agent, or transaction agent multiple times throughout their career.
The four major types of real estate agents are:
- Listing agent: A listing agent represents a homeowner during the sale of their home and negotiates to get the maximum value.
- Buyer’s agent: Buyer’s agents represent homebuyers in their search for a new home, guiding them through to get the best home at the most ideal price.
- Dual agent: A dual agent represents both the buyer and seller in a single real estate transaction.
- Transaction agent: When a buyer does not work with a real estate agent, the listing agent can act as a transaction agent to write the offer for them.
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: This is the person who bears all legal responsibility for the transactions conducted by the agents working under them. They can also be called broker-owners.
- Managing real estate brokers: This is the person who takes care of the day-to-day operations at a brokerage firm.
- Associate real estate brokers: These are individuals who have upgraded their real estate license, but have not taken on additional managerial or operational responsibilities.
Responsibilities of Real Estate Agents vs 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 work under a sponsoring broker and focus on your work with buyers and sellers. Brokers can do the same tasks, but also handle contracts, marketing, property management, and training.
Benefits of Being a Real Estate Broker vs an Agent
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.
The five primary benefits of being a real estate broker 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, so it’s 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 2020 Member Profile, Realtors make $49,700 per year on average, while broker-owners make between $93,800 and $121,400 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
Type of Real Estate Agent | Median Salary |
|---|---|
Sales Agent (Real Estate Agent) | $40,000 |
NAR-designated Realtors | $49,700 |
Broker-Owner (Designated Broker) Without Selling | $121,400 |
Broker-Owner (Designated Broker) With Selling | $93,800 |
Associate Broker | $65,000 |
Manager (Managing Broker) Without Selling | $91,000 |
Manager (Managing Broker) With Selling | $100,000 |
(Source: National Association of Realtors 2020 Member Profile)
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 probably won’t have additional responsibilities at the brokerage beyond those of an agent, your licensure and expertise may enable you to command a higher commission split.
Knowing where you stand, what your options are, and what salary and commission you can command will give you an advantage in any career path. 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, read the in-depth guide on 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.
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. If investment properties are currently hot in your market, property management can be a great additional revenue stream or a new career option.
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.
Benefits of Being a Real Estate Agent vs a Broker
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. At that point, they can start representing clients.
Brokers, on the other hand, are required to complete many more hours of coursework and complete an even more difficult exam. For this 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
Agents are responsible for representing homebuyers and sellers in the transfer of real estate. In contrast, 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 administrative duties, and recruiting and onboarding agents. Many agents prefer to keep their focus on clients instead of on administration and management.
How to Become a Real Estate Agent or Broker
In order to become a real estate agent, you must meet licensing requirements by taking the required number of prelicensing courses. Then, you need to pass your state’s real estate exam and choose a brokerage. Be sure to check with your real estate commission for the most up-to-date requirements in your state.
The process for becoming a broker is tougher and takes longer. In addition, in most states you’ll also need to gain some experience as an agent and then attend more classes before you can apply for your broker’s license. For more details about this process, read how to become a real estate broker.
Here are some examples of how real estate agent versus broker licensing requirements vary by state:
State | Real Estate Agent Licensing Requirements | Real Estate Broker Licensing Requirements | ||||
|---|---|---|---|---|---|---|
Age | Prelicensing Courses | Experience | Age | Prelicensing Courses | Experience | |
California | 18 | 135 hours real estate prelicensing courses | N/A | 18 | 360 hours broker prelicensing courses | 2 years as a real estate agent or 4-year degree with major or minor in real estate |
Florida | 18 | 63 hours real estate prelicensing courses | N/A | 18 | 72 hours broker prelicensing courses | 2 years' experience as a real estate agent |
New York | 18 | 70 hours real estate prelicensing courses | N/A | 20 or older | 120 hours broker prelicensing courses | 2 years' experience as a real estate agent or 3,500 points of experience |
Texas | 18 | 180 hours real estate prelicensing courses | N/A | 18 | 900 hours broker prelicensing courses | 4 years' experience as a real estate agent or 3,600 points of experience |
Bottom Line
Real estate brokers have more experience, undergo more training, and make more money than real estate agents. They are also the only real estate professionals who can open their own brokerage or property management firm. However, agents have fewer licensing requirements and don’t have financial responsibility for other agents. Consider upgrading to a broker’s license if you want to start your own brokerage, make more money, or manage properties.
Whether you’re just starting your real estate career or are ready to advance to a broker’s license, an online real estate school like McKissock Learning makes getting and upgrading your real estate agent license simple. It offers directly relevant and easy-to-understand licensing courses for both real estate agents and real estate brokers that are designed to help you generate better income and work more efficiently. Click below to get started.
