What is a Real Estate Broker

Written by: Mary Gerardine

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What is a Real Estate Broker

Becoming a real estate broker is a necessary step towards advancing your career in real estate. If you’re a real estate salesperson looking to obtain a broker’s license, you have to understand that being a broker requires additional licensing steps and education before getting a license.

Real estate brokers have a higher level of education and work experience. By maintaining further training, they can hire real estate agents or open their own brokerage firm to oversee the negotiations, contracts, and marketing of real estate transactions.

In this article, we define the roles and functions of a real estate broker, the steps and requirements to getting a broker license, and everything in between.

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Real Estate Agent vs. Broker

Typically, the terms “salesperson” (or sales agent) and “broker” are used interchangeably. Each of these real estate roles require different responsibilities, functions, and skill sets to work in the real estate industry.

In real estate, a salesperson is licensed to sell property in their state under the sponsorship and supervision of a broker. A broker is licensed to conduct real estate transactions, either by managing or owning their brokerage firms. Brokers have a team of real estate salespeople working for them.

If you’re working towards your salesperson license in your state, check out our real estate salesperson license page.

What Does a Real Estate Broker Do?

Brokers have upgraded their real estate career beyond the agent level. They have a lot more flexibility at work since they can choose whether to work independently, run a brokerage business, or work for a firm and manage a team of real estate salespeople.

They usually facilitate, negotiate, and plan real estate transactions, including consulting, writing contracts, and handling the purchase and sales activities of properties. Brokers ensure that all transactions must be legally compliant with state laws and regulations.

To become a broker, you need further education and must pass a separate state licensing exam for brokers. Since brokers have higher standards of education than other types of real estate professionals, they are subjected to long and continuous licensing education and exam requirements.

How to Become a Real Estate Broker

To become a licensed real estate broker, you must first become a licensed real estate salesperson. As a major prerequisite, a salesperson must gain experience in the field for two to four years before pursuing a broker’s license.

For example, in Texas, you are required to have at least four years of experience as a licensed real estate salesperson. In comparison, California requires a minimum of two years of being a full-time licensed salesperson.

Getting your broker’s license requires going through an extensive broker pre-licensing education course, which can last between 60 and 900 classroom hours depending on your state. After completing your pre-licensing course, you can apply to take the broker licensing exam.

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Below is a quick version of the five common steps on how to become a licensed real estate broker:

  1. Complete a broker pre-licensing course
  2. Submit a license application
  3. Get a fingerprint-based background check
  4. Pass the real estate broker exam
  5. Wait for your application to be reviewed


These steps represent the common path to obtaining your broker’s license in most states. The steps, fees, and requirements may vary depending on your state’s Real Estate Commission or similar authority.

How Much is a Real Estate Broker License?

The cost of getting a real estate license varies in each state. Below is a breakdown of the cost requirements of getting a broker’s license.

  • Pre-license education – Taking a broker’s pre-licensing course will cost around $209-$399
  • State broker exam – The cost for the state broker exam varies by state. The range for the exam fees can cost between $50-$200 per test based on your state
  • Fingerprinting or background check – States will either require fingerprinting or a background check to prove your eligibility. The cost will be around $30-$100 for both fingerprinting and background checks
  • Application fees – The cost for your broker’s license application depends on your state. They usually range between $50-$486

Please check with your state authority so that you can determine the actual costs you will pay to get your real estate broker license.

Types of Real Estate Brokers

There are three main types of real estate brokers, where they have different duties and functions.

Principal Broker

principal broker (also called a designated broker) is a licensed real estate broker that manages and supervises a team of salespeople and other brokers. Brokerage firms typically have principal brokers who are legally authorized to sign agency contracts with buyers and sellers. Principal brokers are usually licensed by members of the National Association of Realtors and follow a strict code of ethics in all real estate endeavors.

Managing broker

managing broker is a licensed real estate broker who manages the daily operations of a brokerage company. Managing brokers can hire and train staff, manage a team of salespeople as well as create company policies.

Associate Broker

An associate broker is a licensed real estate broker that chooses not to work independently. Instead, they work under a brokerage or another broker. Typically, an associate broker does not oversee other real estate salespeople.

What is a Real Estate Brokerage Firm?

Real estate brokerage firms are businesses owned and managed by licensed real estate brokers (usually principal brokers). These firms represent both buyers and sellers of real estate.

These brokerages employ a team of salespeople and brokers who work under the direction of the principal broker. Usually, the business entity a brokerage company operates under should be affiliated with the principal broker’s license.

How Does a Real Estate Broker Get Paid?

Below are some of the multiple ways on how real estate brokers get paid.

  • Sales commission: The seller pays a commission whenever a broker sells a property. The commission ranges between 5%-6% of the asking sales price
  • Split commissions: When a broker hires a salesperson to work for them, they agree on a percentage or a flat fee that comes out of the salesperson’s earnings at every closed deal
  • Real estate broker salary: Some real estate brokers who are employed by brokerage firms are paid with a salary every month
  • Leasing commissions: Real estate brokers can earn a commission when they have successfully leased out residential or commercial properties. This commission is often negotiated with the property owner and is usually a percentage of the total rent payment
  • Buyer transactions: Real estate brokers may also work as a licensed real estate salesperson, where they are free to deal with buyers and sellers like salespeople do. This way, brokers can get paid more since they don’t split their earnings with anyone

Real Estate Broker FAQ

How much does a real estate broker make?

According to the US Bureau of Labor Statistics, the average real estate broker salary in the US is $86,940 annually. In some states, like Nebraska (which is a top paying state for real estate brokers), has an annual mean wage of $148,820. Real estate industry is location-dependent and sales can also vary by time of year (usually the summer months gain more sales compared to the winter season). See our How Much Does a Real Estate Broker Make page for full details on how real estate brokers make their earnings.

Is being a real estate broker a good career?

Yes. Becoming a real estate broker is the best way to improve your real estate knowledge and skills. Brokers require extra training, so you learn how the real estate industry operates and how to launch and manage a brokerage business. The real estate industry is a lucrative business and you will have lots of earning potential along the way.

How do I pass the real estate broker exam?

Passing the real estate broker exam requires planning, which includes taking pre-licensing education courses as well as creating a good study plan. Exam prep courses can also help with your study sessions so that you become more familiar with your exam.

Can a real estate broker work from home?

Yes. Real estate brokers can work from the comfort of their own homes. Usually, these real estate brokers choose to work independently and own their businesses. As a real estate broker, you can work as much or as little as you want and choose the location where you want to work (home or office). Real estate brokers have the flexibility to work at their own pace.

Can I get a real estate broker license with a criminal history?

Yes. However, you will need to go through an exhaustive review process and provide documents before applying for a broker’s license. Once you submit to the required background check, the state will review your record and will let you know if you are approved to continue your license application. Make sure to check your eligibility before you pay for and complete your pre-licensing classes and application.

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