November 14, 2022

What Does a Real Estate Broker Do

Written by: Ethan Peyton

Two cartoon women holding a real estate sign and a laptop

    Even though people often refer to real estate brokers and agents interchangeably, they are not the same thing.

    While it is true that there is some degree of overlap between the two roles, there are also significant differences that you should keep in mind.

    In this What Does a Real Estate Broker Do articlewe break down what a real estate broker is, detail the differences between a real estate broker vs. agent, and explain what steps you will need to take in order to become licensed in your state.

     

    What is a Real Estate Broker

    Real estate brokers are licensed professionals who assist clients in the selling and purchasing of property. As such, they are responsible for handling a variety of issues related to all the stages of a real estate transaction.

    If you are interested in following a career in real estate, you should know that you will need to qualify as a real estate agent first, before attempting to become a real estate broker.

    After getting licensed as an agent, you will need to accumulate experience, obtain additional real estate education training, and then pass your state’s real estate broker exam.

    This is because real estate brokers have significantly more responsibilities than real estate agents. For example, they can supervise other real estate agents, work independently, and run their own real estate agency.

    Interested in Following a Career in Real Estate?

    We recommend having a look at our state-specific How to Become a Real Estate Agent guide.

    Types of Real Estate Brokers

    There are several different ways that brokers can operate within a real estate company:

    Managing Brokers

    These are brokers that operate their own real estate company. While they may facilitate transactions themselves, managing brokers are also in-charge of administrative tasks, as well as making sure that their employees operate in a way that is both legal and adheres to professional industry standards.

    As you can see below, managing brokers – also known as owner-brokers – occupy a largely managerial role, and are in charge of:

    • Personally assisting clients and bringing in agreements
    • Supervising transactions and other commercial operations within their company
    • Hiring employees within all departments and supervising their work
    • Mentoring new recruits
    • Appointing supervising brokers
    • Overseeing legal issues related to contracts and managing escrow accounts
    • Controlling all agreements that are negotiated by sponsored real estate agents and other brokers
    • Making real estate appraisals and setting marketing strategies

    Note: Due to brokers’ expertise in relation to taxation, zoning laws, and finance, some real estate companies expand their activities so as to also include real estate insurance and management services.

    Associate Brokers

    These are brokers that are employed by a real estate company.

    Although associate brokers are licensed to work independently, they operate similarly to real estate agents, and retain an increased degree of autonomy when it comes to making decisions and concluding commercial deals.

    Associate brokers can also have additional responsibilities, such as ensuring that commercial property contracts are legally valid (and thus enforceable).

    Other responsibilities of an associate broker include:

    • Negotiating agreements independently or on behalf of the owner-broker’s firm
    • Making real estate appraisals
    • Making sure that all transactions are concluded lawfully and all paperwork is complete
    • Mediating a conflict in a legal dispute

    Principal Brokers

    A principal broker’s main role is to mentor and supervise new recruits and real estate agents.

    While principal brokers may also help clients with the purchasing and selling of real estate, this is not their main task. Consequently, how often they do this will depend on both: their time availability, and their company’s organizational structure.

    As you can see below, principal brokers – also known as supervising brokers – are responsible for:

    • Controlling and revising agreements negotiated by the real estate agents they supervise
    • Ensuring that all contracts are legally valid and enforceable
    • Mentoring new recruits
    • Providing continuing education opportunities for agents and brokers

     

    Real Estate Broker vs. Agent

    Both real estate agents and brokers work in the same sector and guide clients through the process of a real estate transaction. So what’s the difference between them?

    To put it simply, a real estate broker is a more experienced, “upgraded” real estate agent who can handle real estate transactions without necessarily having to work for a real estate company.

    Once you get a broker’s license, you will continue doing the same work as before, but you will also be able to personally negotiate and finalize real estate agreements for your agency. This entails not only higher responsibility but also higher earnings.

    Getting licensed as a real estate broker will also enable you to work independently — rather than under a sponsoring real estate agency – as well as creating your own agency.

    The benefit of this is that you will be able to receive the entire commission of any deals that you negotiate, as well as earn commission on all deals negotiated by your employees.

    Note: Regardless of whether you want to qualify as a real estate agent or broker, you will need to complete a real estate education course in order to get started.

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    How to Become a Real Estate Broker

    If you want to become a real estate broker, you will need to complete the following steps:

    • Complete a Pre-License Education Course
    • Submit your License Application and Schedule Your Exam
    • Get a Fingerprint-Based Background Check
    • Take and Pass Your State’s Real Estate Broker Exam

     

    Complete a Pre-License Education Course

    You will need to complete a real estate education course in order to become licensed. This is a requirement in every single state.

    Even though each pre-license education course comes with different benefits, they are all essential when it comes to operating as a real estate broker.

    This is because a pre-license course can help you:

    • Obtain a better understanding of property contracts
    • Understand basic broker concepts
    • Enhance your negotiation skills
    • Pass your state’s real estate broker exam

     

    Submit a License Application

    The next step is to submit your license application.

    The specific process you will have to follow – and the fees that you will need to pay –  in order to do this will vary from state to state.

    We recommend having a look at our state-specific How to Become a Real Estate Broker article for all of the information that you will need.

     

    Get a Fingerprint and Background Check

    States can require fingerprint and background checks, background checks only, or skip this requirement entirely and replace it with an Honesty or Good Character form.

    We recommend having a look at your state’s Real Estate Commission website for more information on the type of background check that you will need to get in order to become licensed.

     

    Pass Your State’s Real Estate Broker Exam

    You will need to take and pass your state’s real estate broker exam in order to become licensed as a real estate broker.

    The minimum percentage needed to pass, exam structure, and fees you will need to pay can all vary from state to state.

    Note: Real estate broker exams are usually administered through a third-party testing service, such as PSI or Pearson VUE.

     

    Wait for Your Application to be Reviewed

    Once you have submitted your application, you will need to wait for everything to be reviewed.

    This includes your exam results, fingerprint and background checks (if applicable), and pre-license education course certificate.




    What Does a Real Estate Broker Do FAQ

    What makes a good real estate broker?

    A good real estate broker will need to have up-to-date knowledge of the real estate market that they are operating in. They will also need to have excellent communication and management skills, and a solid understanding of the legal concepts that relate to the real estate market.

     

    How long does it take to become a real estate broker?

    The time needed to become a real estate agent can vary depending on the state that you are in. You will need to check your state’s Real Estate Commission or similar authority before filing your application.

    Alternatively, you can have a look at our How to Become a Real Estate Broker guide and select your state.

     

    How many years do you have to be a real estate agent before you can become a broker?

    The amount of time that you will need to operate as a real estate agent before becoming a real estate broker can vary from state to state. This means that you will need to check your state’s Real Estate Commission website in order to find out more.

    Generally speaking, aspiring real estate brokers are required to have between two and four years of experience as real estate agents before becoming licensed.

     

    Can I work part-time as a real estate broker?

    Yes, you can. As a real estate broker, you can choose to start working part-time until you accrue more experience. If you wish to, you can always switch to full-time in the future.

    Of course, this can also depend on where you end up working. Some companies may require you to work full-time.

     

    What is the job outlook for real estate agents and brokers?

    According to the Bureau of Labor Statistics (BLS), the number of real estate agent and broker jobs is expected to rise by 5% between the years 2021 and 2031.

     

    How do real estate brokers and agents make money?

    Similarly with real estate agents, real estate brokers earn money by successfully facilitating real estate transactions. Additionally, they can employ and/or supervise real estate agents.

     

    How much does a real estate broker make?

    According to the most recent national level BLS data, the average annual salary for a real estate broker is $86,490.

    The lowest paid 10 percent of brokers earn less than $30470 per annum, and the highest paid 10 percent can earn more than $176,080 per annum.

    For more information, we recommend having a look at our How Much Does a Real Estate Broker Make article.




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