Real Estate Agent vs Broker - What’s The Difference?

Real Estate Agent vs Broker - What’s The Difference?

by The CE Shop Team

Agents, Brokers, & REALTORS®: Understanding Real Estate Titles

Have you ever thought about what makes a real estate agent vs. a real estate Broker? If so, you're definitely not alone. The terms "real estate agent", "real estate Broker" and "REALTOR®", are often used interchangeably, but they all mean very different things. 

In fact, they're even different from a legal standpoint. Real estate agents are required to have a real estate license, whereas real estate Brokers are required to have a Broker License. 

As a real estate professional, it's important to know the difference between these terms, not just from a licensing standpoint, but so you can advertise yourself correctly and deliver on clients' expectations. This guide will give you the insight you need to start your new real estate career with confidence. 

What Is a Real Estate Agent?

In the real estate industry, most start their careers as real estate agents. A real estate agent is an individual licensed to assist people in selling, purchasing, or renting property, and their licensing requirements vary from state to state. Real estate agents are Salespeople; they aren’t Brokers, and in fact, must work under a Broker to practice real estate. This difference distinguishes a real estate Broker from a Salesperson. A real estate Salesperson’s income is based on commissions from the sales that they facilitate. The commissions, which are a percentage of the property's sale price, are agreed upon by the agency and clients.

There are no national real estate laws that one has to meet to become a real estate agent. Instead, each state maintains its own set of requirements. The first step is to take the required Pre-Licensing courses and pass your licensing exam.

Real Estate Agent Responsibilities

As a licensed agent, your number one priority is to represent and safeguard your clients' interests. Depending on whether they are buying or selling, you will help them find suitable properties or clients and negotiate prices on their behalf.

To ensure the best possible results for clients, there are many tasks that real estate agents perform. Depending on whether your client is a buyer or a seller, the tasks you perform on their behalf will vary significantly.

The key responsibilities of a buyer's agent include:

  • Helping with mortgage pre-approval as well as recommending lenders
  • Advising on all aspects of homebuying
  • Advising on a suitable offer to make and negotiate with the seller's representative
  • Organizing a home inspection
  • Negotiating repairs as needed
  • Ensuring that the buyer's financing is progressing as planned

As a seller's agent, key responsibilities include:

  • Performing thorough market research to price the house accurately
  • Marketing the property via online and offline channels, including open houses
  • Negotiating the price with potential buyers
  • Attending home inspections
  • Supporting the appraisal process to provide the required information

There are different types of real estate agents, such as:

Listing Agents

Listing agents are real estate agents who represent homeowners who are selling property. Along with the services above, they also advise their clients on improvements that they can make to increase their property's value or marketability.

Buyer's Agent

Buyer's agents are real estate agents who guide and assist homebuyers through the buying process.

Rental Agent

It's not always about buying and selling property. In some cases, clients may need to find somewhere suitable to rent for residential or commercial use. Once rental agents find a suitable property for the client, they help them understand its lease requirements.

Dual Agent

Dual agency allows one person to be both the buyer's and seller's agent.

Did You Know?

The National Association of REALTORS® (NAR) was established on May 13, 1908. NAR now boasts over 1.4 million members.

What Is a Real Estate Broker?

One of the main differences when it comes to a real estate Broker vs. agent is their level of education and experience. Real estate agents who want to advance further in this industry can often take and pass additional state-mandated courses to earn a Broker License.

When pursuing a Broker License, students must learn about contracts, Ethics, insurance, and taxes in greater depth. Therefore, real estate Brokers have a more comprehensive knowledge base on real estate matters than real estate agents. Before you can become a real estate Broker, you must have been licensed as a real estate agent for at least three years.

There are different types of real estate Brokers based on the roles they perform.

  • Principal/Designated Broker - All real estate brokerages must have a Principal (or Designated) Broker. Their role is to oversee and ensure the licensed real estate agents under them observe state and national real estate regulations. As a Designated Broker, you will earn a commission from the sales that your agents complete. However, it is also common for these Brokers to earn a base annual salary.
  • Managing Broker - In some setups, Principal Brokers also perform the functions of a Managing Broker. These Brokers do more than just hire agents. They also oversee operations and transactions, train agents, and managing administrative personnel.
  • Associate Broker - This role is also referred to as a Broker Associate, Affiliate Broker, or Broker-Salesperson. Though they have a Broker License, they work under the Managing Broker and do not have a supervisory role over agents.

Real Estate Broker Responsibilities

Brokers are not only more qualified than agents, but they generally have a few more years of experience. As such, those with a Broker License handle higher-level aspects of real estate transactions, including addressing the legal requirements of a deal and overseeing their agents.

Real estate Broker key responsibilities include:

  • Overseeing the real estate firm
  • Managing real estate agents
  • Property management
  • Recruiting and hiring agents
  • Reviewing contracts
  • Distributing listings and leads to agents

Real Estate Broker vs. Salesperson

Becoming a real estate Broker is an optional step forward in this industry. Therefore, if you enjoy the art of selling and dealing directly with clients, you can work as a real estate agent forever. On the other hand, if you want a more managerial or business-like approach to your career, the Broker route may be more suitable.

Real estate agents work under Brokers, but they are not their employees per se. Their arrangements see agents work more like independent contractors. As such, when it comes to matters of income taxes, agents file them independently. The Brokers' role in this relationship is to ensure that all their agents comply with real estate laws.

Other notable differences between the two roles that may help settle the real estate agent vs. Broker debate include:

1. Ownership of Listings

When a transaction is taking place, real estate agents are the ones who deal directly with the client most of the time. However, in actuality, it is the Broker who owns the listing. Should there be a dispute in the contract, it will be between the client and the Broker.

2. Structure of Commissions

Both Brokers and agents earn commissions from the sales. It is often assumed that the real estate agent receives the commission from which the Broker gets a cut. However, the Broker receives the commission and then splits it with the agent directly involved in the transaction. Experienced agents can receive higher commissions from their Brokers.

What Is a REALTOR®?

For those considering a real estate career, one of the biggest questions is what is the difference between a licensed Broker and REALTOR®. It is important to note that both real estate agents and Brokers can be REALTORS®.

A REALTOR® is any licensed real estate professional who becomes a member of the National Association of REALTORS®. In doing so, they subscribe to the high standards and Code of Ethics that each of the trade association's members is expected to uphold.

Any real estate professional can elect to join NAR. Other professionals who may join the association include:

  • Property managers
  • Salespeople
  • Appraisers

Of the 1.4 million members, 65% are sales agents, whereas 22% are Brokers. Holding the title of REALTOR® comes with a lot of respect and gives real estate professionals access to transaction management services, data on the real estate market, and other benefits. In turn, REALTORS® are expected to run their operation honestly and transparently.