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What Is a Real Estate Broker vs Real Estate Agentand Who Should You Hire?
What is a real estate broker? Many people think thatreal estate agentandreal estate brokerare interchangeable titles, but there are actually key differences. Heres what you need to know.
A real estate broker is someone who has taken education beyond the agent level as required by state laws and passed a brokers license exam, saysJennifer Baxter, a broker at Re/Max Regency in Suwanee, GA.
Each state sets its own education and exam requirements. The extra coursework covers topics such as ethics, contracts, taxes, and insuranceat a more in-depth level than whats taught in a real estate agent prelicensing course. Prospective brokers also learn about real estate legal issues and how the law applies to operating a brokerage, real estate investments, construction, and property management.
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To sit for the brokers exam and obtain licensure, real estate agents must have a certain level of experience under their belttypically, three years as a licensed real estate agent.
There are a few types of real estate brokers, each with subtle differences in the role they perform.
Principal/designated broker:Each real estate office has a principal/designated broker. This person oversees all licensed real estate agents at the firm and ensures that agents are operating in compliance with state and national real estate law. Consequently, this person is in charge of reviewing all real estate contracts.
Think of it as a similar safeguard to how stockbrokers must work at a licensed firm to trade stocks, rather than just winging it on their own.
A principal broker is also often tasked with resolving transaction disputes with other brokerages (say, adisagreement over a home inspection), says Baxter. Hence, oftentimes if an agent is having an issue with another agent in a transaction, it is common for the broker of that agent to reach out to the cooperating agents broker to discuss the issues and determine a resolution, says Baxter.
Like real estate agents, principal brokers get paid on commissiontaking a cut of the commissions of the sales agents they supervise (although many principal brokers receive an annual base salary). Consequently, their earnings can fluctuate from month to month, depending on the volume and types of transactions completed by the agents at the firm. However, broker-owners make on average $102,200 a year, while a real estate agent earns only about $30,000 a year, according to a National Association of Realtors® survey.
Managing broker:This person oversees the day-to-day operation of the office and typically takes a hands-on approach to hiring agents, training new agents, and managing administrative staff. (Note: Some principal/designated brokers also serve as managing brokers.)
Associate broker:This real estate professionalsometimes called a broker associate, broker-salesperson, or affiliate brokerhas a brokers license but is working under a managing broker. This person typically is not responsible for supervising other agents.
Generally, principal brokers dont work directly with clients, but managing and associate brokers do. One of the main benefits of working with a licensed broker instead of an agent is that youre typically working with someone who has more experience, saysPeggy Yee, a supervising broker at Frankly Realtors in Vienna, VA. That experience can come in handy if youre trying to navigate a more complex transaction, likebuying a foreclosureor selling your home as ashort sale. Real estate brokers are also typically very knowledgeable about real estate law.
Still, there are some drawbacks to using a real estate broker over an agent. If someone is a managing broker, the person might be busy overseeing other real estate agents and, in turn, not have as much time to spend with you as an agent would. Also, some real estate brokers spend a lot of time in the office, which can make them less intimately knowledgeable about the local housing market. And, because theyre more experienced than a lot of other agents, real estate brokers may be less likely to be flexible on their commissions. However, you have to consider what youre paying forif a broker can help you sell your home for significantly more money, it might be worth the extra cost.
Of course, not all real estate brokers are created equal. So, when youre interviewing a prospective broker, make sure you ask the same basic questions youd ask a prospective agent:
To review real estate agents and brokers in your area, you can go m.
Daniel Bortz has written for the New York Times, Washington Post, Money magazine, Consumer Reports, Entrepreneur magazine, and more. He is also a licensed Realtor in Virginia.
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