Broker vs. Agent: What's the Difference?
The real estate industry, like any other industry, has its own jargon and slang. It contains various terms and expressions that are used by people who work in the real estate field. For people outside of the industry, however, these words can often be confusing.
We often hear the words "broker" and "agent", sometimes used interchangeably. While they do have quite a few things in common, these titles don't really mean the same thing. They possess distinct skills and knowledge and function differently.
What do these terms mean exactly, then? We'll take a look at each job title. What they mean, what they do, and how they're different.
Agents
A real estate agent is what people would normally think of when talking about professionals in the industry. There are so many agents around the world, almost everyone has met at least one. Agents are mostly tasked to meet buyers, conduct open houses, or anything else related to selling houses and properties.
Agents usually make money through commission, or the percentage of the money earned by selling a property. Being an agent is usually the starting point of an individual beginning a career in real estate. It allows them to gain a lot of knowledge and experience in the industry before taking things to the next level.
For one to become a licensed agent, they must attend a series of classes and pass a final licensing exam which varies from state to state. Once they've received their license, they must now look for a broker and work for them. Agents cannot operate independently or work on their own.
What Does an Agent Do?
There are four types of agents in real estate:
Buyers' agents
Listing agents
Dual (or transactional) agents
Referral agents
Buyers' Agent
These agents help and assist clients who are looking to buy a home or a property. They guide clients through the entire home buying process. Their tasks include:
Helping a client in deciding whether a home or property fits their needs
Identifying and suggesting homes or properties that the client may like
Checking and looking at properties with the client
Helping the client look for mortgage lenders, contracts, etc.
Guiding the client in finalizing the details of a contract
Listing Agent
These agents help and assist clients who are looking to sell a home or a property. They guide the clients through the entire selling process. Their duties include:
Helping the client find the right buyer
Helping the client identify the right sale price
Taking pictures and videos of the home
Promoting the property on social media and other relevant websites
Arranging open houses and private house tours
Giving recommendations on home design and overall improvement
Referral Agent
A referral agent is someone who finds prospects and leads and gives them to brokers or agents who are licensed to assist buyers and sellers. These agents are not licensed to handle and manage real estate properties themselves. Whenever a potential buyer sent by a referral agent closes a deal with a licensed agent or a broker, they are paid a referral fee.
Dual or Transactional Agent
Sometimes, agents may serve as a representative to both the buyer and the seller, in which case they become a facilitator. This, however, is illegal in some states, while others require disclosure. Make sure to check if your state allows this before pursuing this as a career.
Brokers
A broker is a professional in the real estate industry who has taken their career to the next level. Obtaining a license to become a real estate broker is more difficult compared to obtaining a license to become an agent. In order to become a licensed broker, one must take a new series of classes and complete a separate licensing exam. Once they become a licensed broker, they can choose to operate independently or open a firm where they can hire real estate agents to work for them.
Being a real estate broker offers a lot more options and a gives a sense of stability in terms of selecting a career path. If they decide to work alone as an independent agent, this gives them control over their own time since they don't work for anyone. They can also choose to open their own firm and hire agents to work for them, which opens the door to a wide variety of opportunities.
What Does a Broker Do?
Generally, their tasks include:
Recruitment, handling, and training of real estate agents.
Overseeing deals and transactions with clients
Writing and signing contracts
Directing and managing the brokerage firm
Handling government-related affairs
However, there are also different types of real estate brokers. Their tasks and duties vary, depending on which state they belong to.
Designated Broker
A designated broker, also known as a principal broker, supervises and manages all licensed agents in a firm and sees to it that the operations within the firm are in accordance to real estate laws, both locally and nationally.
While agents are often paid through commissions from property sales, designated brokers can be paid a monthly salary. Each firm must have its own designated broker, but a designated broker can manage multiple firms in multiple states at once.
Managing Broker
These guys are in charge of overseeing the operations of the firm on a daily basis. They work directly under the designated broker. Their duties include:
Recruiting and training new agents
Overseeing and managing the administrative staff
Handling vendor relationships, compliance, and the management of records.
Associate Broker
Similar to an agent, an associate broker has the option to represent buyers and sellers. They can do this without any supervision by a broker. They also have the opportunity to earn a larger commission because of this.
So How Exactly are They Different?
To conclude, agents are simply real estate professionals who have attained a license and are now able to sell listings and properties on the market and represent buyers or sellers. To do this, however, they must operate under the supervision of a broker.
Brokers, on the other hand, are real estate agents who have completed additional trainings and licensing requirements. They are permitted to work independently and recruit agents to work for them.