If you’re just starting your real estate career and are looking for answers on some of the basics, such as the difference between a real estate agent and a broker, we’ve got the answers for you.
The terms real estate agent and real estate broker are often used interchangeably; though they have some similar functions, they are different roles.
In general terms, a real estate agent is someone who works under a broker’s license. A broker can be an agent, but not every agent is a broker.
Before diving into the primary differences between the two, let’s take a moment to define a real estate agent and a real estate broker.
What Is A Real Estate Agent
A real estate agent is a person who is licensed by a state regulatory body, member in good standing with a local real estate board, and works under a sponsoring broker or brokerage firm. The objective of a real estate agent is to help people rent, buy, or sell real estate in the area they hold their license.
To qualify to become a real estate agent, you need to check with your state’s regulating body, as each state has different criteria. In general, though, to become a real estate agent, you must;
- Be at least 18 years old
- A legal resident in the United States
- Take a state-accredited pre-license course
- Take and pass your state’s regulatory examination for licensing
- Complete an FBI background check
- Join your local real estate board
- “Hang” your license with a licensed real estate brokerage
- Take continuing education classes as required by your state’s governing board to maintain your license
What Does A Real Estate Agent Do?
A real estate agent acts as a fiduciary for their clients, meaning you have a legal obligation to fulfill the best financial obligation in every deal.
Real estate agents also organize and bring together buyers and sellers, conducting transactions, negotiations, offers, and counter offers between the two parties. As a fiduciary, it is incumbent on agents to present all factual information as soon as possible to the client and convey all paperwork and any other conditions outlined in a real estate transaction.
Agents that represent the selling side of a transaction are known as a listing agent.
A listing agent’s role is to advise on pricing, organize marketing, suggest home updates to increase the home's value, present all offers to the seller, negotiate sales prices and terms such as closing costs and repair requests, and submit and file all necessary documentation.
Typically, agents are paid from the commission of the sale or rental of a property, depending on the arrangement of the agreement between the agent and the client. In addition, they pay a pre-agreed amount to the broker for representation and fees.
An agent’s primary duty is to their client. For example, finding the best deal for the client in a transaction and providing guidance with negotiating, offering, and accepting the terms of a deal.
The responsibilities of a real estate agent are simple;
- Find matches to a client’s needs. For buyer’s agents, it's to find a home that fits the buyer’s interests and needs, write and submit an offer, and help walk the client through every facet of the transaction to fulfill the obligation and finalize the deal.
For a seller’s agent, the responsibilities include providing detailed information about the market conditions of comparable homes, providing pricing advice, marketing the home, assisting with scheduling, presenting all offers, and securing the best deal and terms for the client. - Negotiate and submit offers. Every real estate transaction is different, but what is similar in every deal is that there is a period of negotiation and counter offers to secure the best deal possible for the client.
- Finalize the deal. Both sides of the transaction have different stakes and obligations that need to be met, as outlined in the contract's language. Real estate agents are responsible for guiding their clients through the transaction and finalizing the deal.
The agents’ responsibilities include assisting with all paperwork, inspections, appraisals, request for repairs, and navigating the close of the sale.
Realtors®
The terms real estate agent and Realtor® are often intermixed, but they are very different.
A Realtor® is a licensed real estate agent member of the National Association of Realtors® (NAR), an organization with a strict Code of Ethics.
A real estate agent can operate without being a Realtor®, but a Realtor® must be a licensed real estate agent that has joined and agreed to the membership requirements of NAR.
In general, to be a Realtor® requires the agent to take a rigorous approach toward their business dealings, providing excellent service but within ethical boundaries.
Becoming a Realtor® is an obligation to abide by all laws and regulations and to perform at the highest level of ethical conduct in all real estate transactions.
Real estate agents don’t need to join NAR and become a Realtor®; it’s a professional designation that you operate with strict ethical boundaries with every transaction and deal you participate with and work on.
What Is A Real Estate Broker
A broker is a real estate agent who has completed additional training and licensing requirements. The difference between a real estate agent and a broker is that an agent must work under a broker, while a broker has the right to work independently or hire agents to work for them.
What Does A Real Estate Broker Do?
Real estate brokers perform many of the same tasks as real estate agents, from marketing to working with clients. However, there are three distinctions between brokers and the functions they perform.
Associate Brokers: These individuals have a broker license but work under another broker and generally don’t manage or supervise other agents.
Managing Brokers: A managing broker is someone who will oversee transactions and daily operations to maintain the office and compliance obligations. A managing broker represents the Principal Broker’s interest, including hiring new agents, providing training, and managing office and administrative staff.
Principal Brokers: A principal broker is also the designated broker and is the individual(s) in charge of the brokerage. They ensure that all transactions and agents working under their license comply with local, state, and federal regulations and laws. Each real estate office must have one designated broker.
The role of a brokerage is to facilitate the transactions of a real estate deal between two parties, typically a buyer’s agent and a seller’s agent. A broker employs and supervises agents that work under the broker’s license and is primarily responsible for the actions of individual agents.
There are added liabilities to becoming a broker, so the licensing requirements are more strict than for agents.
A broker can perform all the actions of a real estate agent and is empowered to supervise, educate, and guide other agents.
In other words, a broker is a real estate agent, but a real estate agent is not always a broker.
What’s Better, An Agent Or Broker?
The answer to the question of what is better, being an agent or a broker, comes down to personal choice.
It depends on whether you want to be your own boss but also employ others (broker) or simply work within the guidelines of whichever broker you choose to align your business (agent).
On the commission side, a broker makes a small percentage of every transaction that each agent beneath them performs. So it can be very lucrative, but you need a team to maximize the opportunity.
Becoming a broker is the most advisable for people who want to work independently of any particular office or some other entity's rules.
However, if being an active agent with a lower liability risk stems from a third-party mistake, then becoming a real estate agent is the ideal choice.
The primary difference between a broker and an agent is that a broker is entitled to own a brokerage and hire agents to work under their license. However, a real estate agent doesn’t have the same authority and must join a designated brokerage to perform.
A good portion of new agents changes careers within 5-years of licensing. The ease of entry into a real estate career is only one factor for this, while most brokers are former agents who have decided that real estate is a good career path and want to move on from the day-to-day of being an agent.
Whether starting as a new agent or an experienced broker, finding help to transform your business and accomplish your goals takes a lot of discipline and strategic planning. Sometimes it will also take a little luck, but that is something you can’t control.
You have control over the amount of time you put into your education and develop a steady stream of leads you can nurture as they become ready to become clients.
For some agents and brokers, office assistants and transaction coordinators are needed to help with all the aspects of marketing, nurturing leads, and staying compliant during deals.
For others, having a mentor or real estate coach is a way to become more efficient and disciplined. But ultimately, it all comes down to recognizing goals and setting systems to pursue them effectively.
It takes more time to become a broker than an agent, and in some states, one of the stipulations is that you must have real-world experience over a set time frame to be eligible to become a broker.
