A real estate broker is a professional who’s licensed to own and operate a brokerage, hire, and manage real estate agents, and represent buyers and sellers in realty transactions. Brokers earn an average annual salary of $69,640 and must meet educational and experiential requirements beyond those of agents and pass the broker licensing exam.
These additional education requirements can be time-consuming, but online course providers like McKissock Learning simplify the process. The platform offers individual or packaged prelicensing classes for licensed agents who want to upgrade to a broker’s license. Agents can also take continuing education courses. Click here to see the courses available in your state.
Difference Between Real Estate Brokers & Agents
There are a few key differences when comparing agents vs brokers. Agents can represent buyers and sellers in real estate transactions but must work under the supervision of a broker. A broker, on the other hand, is someone who holds both an agent’s and broker’s license, allowing them to own a real estate company and hire managers or agents. To upgrade to a broker license, agents must meet additional education requirements and pass the broker licensing exam.
Types of Real Estate Brokers
In addition to the high-level differences between real estate brokers and agents, there are multiple types of real estate brokers, including associate, managing, and designated brokers. Each type of broker is required to meet different licensing requirements and can perform different roles and responsibilities as part of real estate transactions.
By law, every real estate agent ― and every real estate agency ― must be overseen and managed by a real estate broker. That broker, called the designated broker, bears the legal responsibility for all the transactions that real estate agents working under them complete. However, designated brokers cannot manage groups of agents or other brokers.
Managing brokers can manage a group of real estate agents or associate brokers in a brokerage. These brokers 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 a separate managing broker.
An associate broker is a real estate agent who has completed the basic training and work experience required to upgrade from an agent license to a broker’s license; they have also passed the real estate broker licensing exam. 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.
Duties of a Real Estate Broker
The duties of a real estate broker depend on which type of real estate broker you are. Associate brokers, like real estate agents, can manage transactions, market homes for sale, and negotiate pricing. Associate brokers and agents can also hold open houses, show homes, prospect buyer and seller leads, and represent buyers and sellers in transactions. Finally, these types of real estate professionals can rent residential and commercial units, however, you may have to become a commercial real estate broker first.
Designated brokers and managing brokers focus on high-level management and supervisory functions like reviewing contracts, distributing leads, establishing escrow accounts, and liaising with government and professional associations. Designated and managing brokers can also manage agents, handle compliance issues and recordkeeping, market the brokerage, recruit agents, resolve conflicts, and train agents. They may also engage in property management.
Average Real Estate Broker Earnings
Real estate broker salaries vary widely depending on whether or not you run your own brokerage, the size of the brokerage you work for/own, and the geographic location of your brokerage. Although there’s a wide income range for real estate brokers, they generally make more than real estate agents. In fact, NAR reports that the median real estate broker salary in 2016 was $69,640 — more than twice the median income for agents.
Median Annual Income of Brokers in 2016
|Type of Broker||Median Salary|
|Designated Broker (Without Sales)||$54,670|
|Designated Broker (With Sales)||$90,910|
|Managing Broker (Without Sales)||$82,500|
|Managing Broker (With Sales)||$96,150|
Pros & Cons of Being a Real Estate Broker
There are several pros and cons to earning your real estate broker license rather than remaining an agent. In addition to earning higher commissions and having more independence than agents, brokers can act as property managers. However, real estate professionals must meet additional licensing requirements and face greater liability than agents.
Pros of Being a Real Estate Broker
- Independence: Brokers can own and manage their own real estate brokerage rather than having to work under the supervision of another real estate professional
- Higher commissions: As a broker, you can usually command a higher commission split than most real estate agents
- Property management: As a designated or managing broker, you can engage in property management for an additional revenue stream or as a new career option
- Improved networking: Brokers can leverage their experience and education to convince more clients to work with their teams
Cons of Being a Real Estate Broker
- Additional licensing requirements: Aspiring real estate brokers must have experience as licensed real estate agents, meet additional education requirements, and pass the real estate broker exam
- Increased liability & responsibility: Brokers are responsible for the actions of their agents and have additional responsibilities, including overseeing licensing requirements for their agents, providing training resources, and handling compliance matters
- Higher operating costs: Because brokers can own their own brokerage and hire and manage agents, their operating costs are higher than those of individual agents
How to Become a Real Estate Broker in 4 Steps
To become a real estate broker, you must first become a licensed agent. Agents must then work as a real estate professional for a state-specific period of time and meet additional educational requirements set by your state’s division of licensing. Finally, licensees must pass the broker licensing exam and maintain continuing education requirements.
To become a real estate broker, follow these four steps.
1. Complete Agent Prelicensing Courses
To become a real estate broker, you must first become a licensed real estate agent or salesperson. Agent licensing requirements vary by state but generally include completing a variety of prelicensing courses covering national and state-specific subjects. Real estate professionals must also gain a certain amount of experience as a licensed real estate agent before they can upgrade to a real estate broker’s license.
Some states like Arizona, Connecticut, and Delaware require aspiring agents to take prelicensing classes in-person. However, most states allow agents to take prelicensing courses through online platforms like Real Estate Express, which offers resources including video tutorials, interactive study tools, and robust customer support. Check out our guide to the top online real estate courses for more information on the best platform for your needs.
2. Pass the Real Estate Agent Licensing Exam
The real estate agent licensing exam varies by state but generally covers national and state-specific subjects like property ownership and land use regulations, agency law, and property valuation and financial analysis. To prepare for the licensing exam, consider signing up for an exam prep service that offers practice exams, flashcards, and other study tools. You can also access free practice questions online, but paid services offer more extensive resources.
3. Gain Real Estate Experience
Most states require real estate professionals to work as a licensed real estate agent for between two and five years before earning a real estate broker’s license. Other states require agents to complete a certain number of transactions before applying for a broker’s license. To learn more about local real estate experience requirements, contact your state’s licensing board.
4. Take Broker Licensing Courses & Pass Broker Exam
To become a real estate broker, agents must also take an additional real estate broker’s prelicensing course and pass their state’s broker’s licensing exam. This course is similar to the agent prelicensing course and covers similar topics. However, the broker’s licensing course covers advanced topics such as how to run a real estate office, construction and development, business law, and property management.
Use a platform like McKissock Learning to take broker licensing courses and prepare for the licensing exam. In addition to required coursework, McKissock offers students access to learning tools like real estate textbooks, the Real Estate Math Handbook, the McKissock Student Forum, and a live course Q&A. Click here to see the courses available in your state.
How to Choose a Real Estate Brokerage to Join
There are specific factors you should consider when choosing a brokerage. Identify brokerages with an office culture that’s consistent with your work style and that offer valuable tools and resources for agents. Then, make sure the brokerage has a good reputation, a strong market share, and a reasonable commission split. Also, be sure it fits your niche and boasts a track record of marketing success.
When choosing a brokerage, follow these tips.
Ask Current Agents About Brokerage Culture
When evaluating the best brokerage for your personality and work style, first consider whether you want to work for a brokerage franchise or a small, boutique brokerage. Then, evaluate things like the availability of mentorship opportunities, your preferred niche, and how many social events you want like company get-togethers and open house caravans. Speak with current and former brokerage agents to determine whether the company is a good fit.
Research the Brokerage’s Reputation & Market Share
A brokerage’s market share is the percentage of the market’s total sales earned by the brokerage over a period of time. Brokerages with a high market share and positive reputation are more likely to generate the leads you need to succeed. Conduct preliminary research on each brokerage’s reputation and market share. Then, ask each broker about how they perceive their current market share and reputation and the steps they’re taking to grow business.
Find a Brokerage That Fits Your Niche
According to a survey conducted by Real Estate Express, a real estate agent’s salary can triple if you join a brokerage that serves the niche in which you specialize. For that reason, it’s important to choose a brokerage that not only has a healthy market share but one that specializes in a real estate niche that is consistent with your interests and popular in your farm area.
Evaluate Marketing & Lead Generation Tools
A real estate agent’s success is linked to their ability to generate, nurture, and convert leads into listings and sales. Choose a brokerage that provides its agents access to marketing and lead generation tools like Real Geeks or Zillow Premier Agent. Also, consider whether the brokerage and its agents have a history of marketing listings successfully within the community by researching how quickly their listings sell.
Confirm There’s Sufficient Back Office Support
When interviewing brokers, ask about the types of software they provide their agents. Make sure the brokerage is using a high-quality customer relationship management (CRM) tool to assign leads to agents and find out how the broker and agents track and nurture leads. Also, consider whether the brokerage provides clerical or administrative assistants for its agents or if agents are responsible for hiring their own assistants.
Understand Commission Splits
Real estate agent commissions vary based on a number of factors like geographic area and the resources provided by the broker. Before interviewing brokers, familiarize yourself with the average commission split in your area so that you have a basis for comparison. Then, weigh the tools, administrative support, and other resources against the commission split to choose a brokerage that offers the best value for your needs.
Ask About Agents in the Brokerage
In addition to educating yourself about reputation, commission splits, and tools used by the brokerage, find out what your role with the brokerage will look like. Ask the managing broker what type of agents they typically prefer, what their goals are for growth, and what kind of obligations you’ll be expected to meet as part of their team.
Additional questions to ask a managing broker you’re considering include:
- What type of agent are you looking for?
- What kind of goals do you have for your brokerage?
- Is there a training plan in place for new agents?
- What would my obligations be to the brokerage as an employed agent?
Bottom Line ― What Is a Real Estate Broker?
Real estate brokers can represent buyers and sellers in real estate transactions, own and operate a real estate brokerage, and hire, manage, and otherwise oversee agents. To become a broker, obtain a real estate agent license, meet the experiential requirements established by your state, take additional coursework, and pass the licensing exam.
Meeting the prelicensing education requirements for brokers can be difficult but McKissock Learning, an online real estate school, can help you complete the additional coursework. As a student, you’ll have access to individual or packaged prelicensing classes and continuing education courses. Click here to see the courses available in your state.