A real estate broker is a real estate professional who is licensed to own and run a real estate brokerage, and hire and manage other real estate agents. Real estate brokers have also taken education beyond the agent level as required by state laws and has passed a real estate broker’s license exam. Finally, real estate brokers can also represent clients who are buying or selling real estate.
Different Types of Real Estate Brokers
The three types of real estate broker are:
1. Designated Brokers
By law, every real estate agent (and every real estate agency) must be overseen and managed by a real estate broker. That broker, the designated broker, bears the legal responsibility for all the transactions that real estate agents working under them complete.
2. Managing Brokers
This broker manages a group of real estate agents or associate brokers in a brokerage. They take a very active role in the day-to-day management of the brokerage. While some designated brokers also work as managing brokers, others leave the management to someone else.
3. Associate Brokers
An associate broker is a real estate agent who has completed the training and work experience requirements and passed a state licensing test to become a real estate broker. Even though the law allows them to work independently or own their own brokerage, they have chosen to work under the license of another real estate broker.
What Is the Difference Between a Real Estate Broker and a Real Estate Agent?
A real estate agent is anyone who has earned a real estate license. A real estate broker is a real estate agent who has also passed their broker license exam. The difference between a real estate broker and real estate agent is that only a broker can own a real estate firm or hire and manage real estate agents. If you’re an agent, you’ll need to work under a designated broker.
What Are the Duties of a Real Estate Broker?
The duties of a real estate broker depend on which type of real estate broker they are. Associate Brokers, along with real estate agents, are in charge of the following functions:
- Managing transactions
- Marketing homes for sale
- Negotiating pricing
- Open houses
- Prospecting buyer leads
- Prospecting seller leads
- Renting residential & commercial units
- Representing buyers
- Representing sellers
- Showing homes
On the other hand, Designated Brokers and Managing Brokers focus on high-level management and supervisory functions such as:
- Contract review
- Distributing leads to agents
- Establishing escrow accounts
- Liaison for government and professional associations
- Managing agents
- Managing brokerage office & staff
- Managing compliance
- Managing relationships with vendors
- Marketing the brokerage
- Property management
- Record keeping
- Recruiting new agents
- Resolving conflicts
- Training agents
What Are the Advantages of Being a Real Estate Broker?
There are many advantages of being a real estate broker. First, you can own and manage your own real estate brokerage. Second, as an associate broker, you can usually command a higher commission split than most real estate agents. Third, you can get a great additional revenue stream or a new career option through property management. Finally, you can leverage your experience and education to convince more clients to work with you.
How Much Money Do Real Estate Brokers Make?
This varies widely depending on whether you run your own brokerage and the size of that firm. Although there’s a pretty wide income range for real estate brokers, in general they make a lot more than real estate agents. According to the National Association of Realtors (NAR), the median gross income for real estate agents in 2015 was $27,260. In contrast, the median real estate broker salary in 2015 was $66,670. That’s more than double the median income for agents. If you want to learn even more about how brokers earn money, check out our article on real estate broker salary.
What Are the Requirements to Become a Real Estate Broker?
To become a broker, you’ll have to meet educational and experience requirements set by your state’s division of licensing. For example, in order to become a real estate broker in New York, an agent needs to have worked as a real estate agent for two years and successfully completed a certain number of real estate transactions based on a point system.
Assuming a real estate agent has completed the real estate pre-licensing course to get their real estate agent’s license and accrued the necessary experience required in their state, they then need to take an additional real estate broker’s licensing course, and pass their state’s broker’s licensing exam.
The broker’s licensing course is about as long as the real estate agent’s pre-licensing course and covers very similar topics. However, the broker’s licensing course goes into more detail and covers advanced topics such as how to run a real estate office, construction and development, business law, and property management.
The Bottom Line
Real estate brokers are the only real estate professionals who can own and manage their own brokerage, or represent buyers or sellers without the supervision of another real estate broker. Whether designated brokers, managing brokers, or associate brokers, all real estate brokers have more specialized training and experience and make more money than real estate agents.