How to Become a Real Estate Broker
You’ve been in the real estate business for a few years now. You have the freedom you desired and the income you craved. Most importantly, you’ve gained experience. You feel you know the real estate industry inside and out. But you want more. You feel stagnant and need a new challenge. In most cases, the next step is to get your real estate Broker License. As a way to help you take that next step, this is a guide on how to become a broker and secure a Broker License. We also outline the typical real estate broker requirements.
Before we go any further, it’s imperative to know the usage of the term real estate “broker” is from a general, national perspective. Each state uses different terms, and in some places, you start out as a “broker”. Make sure to know the rules and terms for your state. Now that we got that out of the way, if you’re interested in taking the next step of your real estate career, you may be wondering how to be a broker.
But what is a real estate broker?
In simple terms, a real estate broker has more experience, undergoes more training, and ultimately makes more money than someone just starting out in the industry. Brokers are also allowed to open their own brokerage or property management firm. Here’s another way to look at it: Real estate agents are like professional athletes on their first contract. They learn the profession and how to do their job. They’re still considered professionals, but they’re green. Real estate brokers are the veterans who have been around the block. They’ve had more extensive training and have gone through the ups and downs of the real estate industry.
Real Estate Broker Requirements
The first step to get your real estate Broker License is to make sure you meet the following real estate broker requirements. Again, the rules will vary by state on how to become a real estate broker, but these general guidelines can start you off on the right foot. To become a real estate broker, you must:
- Be 18 year old or older
- Hold a high school diploma or its equivalent
- Have a valid real estate license
- Have 2-4 years of experience as an agent
- Take the required broker education
- Pass the broker licensing exam
- Complete your application and pay the related fees
Did You Know?
The average annual wage of a real estate agent in America is $62,060, while the average wage for a real estate broker is $81,450.
What Does a Real Estate Broker Do?
Now that you know the general real estate broker requirements, what does a broker do? It all depends on the type of broker you are.
- Broker-Owner: When you become a managing or principal real estate broker (also called a “broker-owner”), your primary tasks carry more weight. In other words, the duties and responsibilities are more high-level management and supervisory when you hit this level. To revisit our sports reference: Look at a broker-owner as the head coach. They aren’t precluded from managing or principal brokers from actively helping people sell or buy homes, but broker-owners have more on their plate and will likely focus their attention on their primary tasks instead. After all, they’re legally responsible for all of the transactions undertaken by their brokerage.
Here’s a general list of the primary tasks for a broker-owner:
- Manage agents
- Recruit agents
- Train agents
- Distribute leads among team members
- Market the brokerage
- Establish escrow accounts
- Work with government and professional associations
- Handle compliance issues
- Review contracts
- Associate Broker: An associate broker has different duties and responsibilities than a managing or principal broker. These brokers can focus less on management and training compared to broker-owners. To bring that sports analogy back, an associate broker is like the player/coach: They do a little bit of everything. In fact, an associate broker is similar to a real estate agent; the broker just has more freedom to take on more primary tasks.
Here’s a general list of the primary tasks for an associate real estate broker:
- Manage transactions
- Market homes for sale
- Negotiate pricing
- Hold open houses
- Show homes
- Prospect buyer and seller leads
- Represent buyers and sellers in transactions
Reasons to Get Your Real Estate Broker License
Real estate brokers are the veterans of the industry. They have been an agent before, so they have the experience, took the additional required classes, and passed the necessary tests to become a broker. With that comes the flexibility to do what they want. If a broker wants to continue to help people achieve the dream of buying a home, they can. If a broker wants to open a real estate brokerage in the town in which they reside, they can do that as well. If a broker wants to dabble in a little bit of everything, they can do that, too. Here are some of the reasons to get a real estate broker license:
- Higher Commissions - As is the case with real estate agents, brokers make their money through commission. A commission is the payment made directly to real estate brokers for services rendered, such as in the sale or purchase of a home. Because brokers don’t have to split their commission, they typically earn more than an average agent. Brokers can have agents who work under them, allowing the broker to cash in on their commissions too. The most important factor in determining a broker’s salary is the number of transactions they’re involved in. The more houses the broker sells, the more commission they make, thus the more cash they bring in.
- Work-Life Flexibility: The biggest difference between real estate agents and brokers is that a broker is free to work independently. Brokers can also hire real estate agents to work for them. All real estate commissions must be paid directly to a broker, then the broker splits that commission with the other agents involved in the transaction. In other words, a real estate broker has the freedom to work how and when they choose. While brokers have more responsibilities than agents, they also enjoy greater rewards, such as making a schedule that best suits their needs. That’s one of the main reasons that real estate professionals want to get their real estate Broker License.
- Marketability: At this point in the game, you’re a veteran of the industry. People in your market probably know who you are, what you bring to the table, and trust your industry knowledge. That’s true for potential customers and also agencies or brokerages that may want to hire you. But you may also have the marketability to start your own brokerage in the town in which you practice real estate. A broker license gives you the freedom to do that if you choose to do so.
- Property Management: Property management is another path that real estate brokers can take. You may have heard that people are renting more and more these days. That means rents are rising around the U.S., so investors are jumping on the opportunity. Typically, most investors don’t have the required skills to manage the rental properties in which they invest, meaning they need to enlist property managers to assist. In order to start a property management firm, these investors will need a licensed real estate broker - and that could be you!