Brokerage is at the heart of the real estate profession and real estate brokers have their fingers on the pulse of local markets. Despite their omnipresence, the term "real estate broker" is often misused and misunderstood. Brokers are interchangeably, and sometimes mistakenly, called: Real Estate Agents, Realtors, Listing Agents, Selling Agents, Agent Broker, and Buyers Broker.
In our comprehensive guide, we lay out all the essential facts about real estate brokers to help you become a wiser real estate entrepreneur.
So, let's dive right in! Feel free to use this menu to jump to your topic of choice:
A real estate broker is a state-licensed real estate professional who may transact with buyers, sellers, and renters of various types of real property. Real estate brokers are highly educated and possess in-depth knowledge of the industry. Brokers may work independently, or opt to be leaders and employ real estate salespersons to work under them.
Real estate brokers are highly regulated and are required to pass a licensing exam before they can get brokers' licenses to run their businesses legally. There are educational and experience requirements that one is required to meet before taking a real estate broker licensing exam. Nonetheless, these requirements vary from state to state.
For instance, you may qualify for this exam in California as long as you have a four-year college degree, two years of experience as a real estate agent, and have finished eight college-level real estate courses.
Brokers generally have higher standards of knowledge than other types of real estate professionals; hence they are subjected to long and challenging licensing tests.
Ready to jumpstart your real estate career? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!
Real estate brokers work for themselves or manage teams of real estate agents whose work is to buy, sell, and rent property. A good real estate broker should be able to execute various real estate transactions and should have the right skills to coach other real estate professionals to excel in different aspects of the industry.
There are a host of other jobs associated with real estate brokers. They include:
The real estate broker works to negotiate and plan real estate transactions. There are some additional duties that they undertake, including writing contracts and overseeing various transactions for purchasing and sales activities on commercial properties, homes, and land.
Basically, a real estate broker is an agent, a leader, and a coach at the same time.
A real estate brokerage firm is a company owned and operated by a licensed real estate broker who represents buyers and sellers of real estate. It is often owned and operated by a principal broker, who then hires other real estate brokers and agents to work under him.
The business entity a real estate brokerage firm operates under should also be licensed or affiliated with the principal broker's license.
A commercial real estate broker is a licensed professional who helps clients sell, buy, or lease properties to be used for commercial purposes, such as office buildings, hotels, retail shopping centers, and restaurants. Essentially, they act as mediators between buyers and sellers of commercial property.
There are commercial brokers who focus exclusively on the leasing of commercial property, working for landlords, business tenants, or both. Then there are commercial real estate brokers that focus on representing buyers, and sellers, or even working as dual agents representing both sides.
While a high-school diploma and college degree are recommended, they are not prerequisites to success as a commercial real estate broker. The trade can be learned, so finding a successful mentor is essential.
Many strive to become commercial real estate brokers because of the large commissions that can be earned in commercial real estate. Imagine earning a 2% commission on a large office building that sells for $20,000,000. That's a $400,000 commission in your pocket!
Real estate brokers and real estate salespersons all help people buy and sell property. Nonetheless, their roles differ in the operations of the real estate business.
Watch this short, educational animation below titled "What's The Difference Between A Real Estate Agent and A Real Estate Broker?"
Below are some differences between real estate brokers and real estate salespersons:
The law requires both brokers and salespersons to attend periodic continuing education programs to stay abreast of changes in regulation.
A real estate broker license is an official permit awarded to an individual that allows them to legally practice real estate in the capacity of a real estate broker. It is a tier above a real estate agent license, as it requires more thorough education, experience, and responsibility.
What a real estate broker license allows is greater freedom to transact with buyers, sellers, and renters of real property, as well as the ability to operate independently from another broker.
Each state has an official authority that grants qualified individuals this permit to practice real estate within their jurisdiction.
Such state authorities include:
The cost of a real estate license varies dramatically from state to state. Below is a breakdown of the costs you will incur to get your real estate broker license:
You can talk to your local authorities so that you can determine the actual amount of money you will spend to get your real estate broker license.
Embarking on a career as a real estate broker can be both rewarding and lucrative. This profession opens up a multitude of opportunities and allows you to guide clients through significant property transactions. If you're interested in becoming a real estate broker, it's important to understand the steps involved.
Here is a comprehensive, step-by-step guide to help you navigate the process and set you on the path to success as a real estate broker:
The three basic requirements that you must meet to attain a real estate broker license are:
You must be at least 18 years of age
You must be a resident of the state you want to start your business in, although you can still apply if you are a non-resident after submitting a Consent Service of Process Form.
You must display high levels of honesty. Therefore, you shouldn't have any criminal record and should have an admirable character. You might be denied an application if you fail to disclose information.
Before becoming a real estate broker, you must gain some real estate experience. Generally, you need to have two years of full-time experience as a real estate agent prior to becoming a real estate broker.
Other ways to gain experience are:
When applying for the broker exam, you need to document this information for consideration. Also, you need to submit an Equivalent Experience Verification, which comprehensively explains the type of work you have been doing. This form must be signed by two referees.
If you are a full-time agent, you need to submit an Employment Verification form signed by the broker you work for.
You will need to complete eight college-level broker courses before applying for the broker exam. However, you don’t need to do this if you have been admitted to the California State Bar. Check with your state's Department of Real Estate for additional exemptions.
The courses include:
Broker courses can be undertaken in private real estate schools and accredited institutions of higher learning. Depending on where you take them, these courses can be 45 hours, three-semester units, or four-quarter units in length.
As soon as you complete your exam, ensure you get course completion certificates and official copies of your transcripts. These are crucial documents that you are academically capable of undertaking all the responsibilities of a real estate broker.
If you are getting a license for the first time, the law requires that you get fingerprinted in a live service scan location. In case you are a real estate agent, you can forego this process because you have undergone it before.
The fingerprinting process helps authorities do a thorough background check on applicants before they can be approved. You will need to carry the Live Scan Service Request form along so that the provider can fill out a portion.
There is a fingerprint card processing fee involved, which varies from state to state. Also, based on your state's requirements, there could be a service fee needed.
Now that you have gone through the last four steps, it’s now time to apply for your license exam. Fill out the Combined Broker Examination and License application, attach the required documents, pay the exam and license fees, and mail your application.
Instead of submitting your broker exam application on its own, it’s more convenient to submit both the license and the Combined Broker Examination applications. However, note that you will pay the license fee upfront, which cannot be reimbursed if you don’t pass the exam within two years.
In your application, you will be required to choose whether to have the Department of Real Estate (DRE) schedule your exam, or you want a self-schedule. In case you chose the former, you will be given an Examination Schedule Notice, which contains the date, time, and location.
If you choose the latter, you will be given authorization prompting you to select a test time.
From the time of application, you will have 24 months (2 years) to pass the real estate broker exam. For verification purposes, carry a photo Identity (ID) Card with you whenever you are taking an exam.
In the exam, you will have five hours split into two sessions to complete 200 multiple questions. The questions fall into seven distinct categories which are:
Unlike in the past, real estate broker exams are taken digitally, which ensures that test takers get their results in real-time. If you don't get immediate results, you can use the eLicensing platform to access them within five days.
If you don’t pass the test the first time, you will receive a notification to reschedule the exam. You can take the test as many times as you need within the two years stipulated by law.
Once you pass this exam, focus on everything else as you wait for your license to be processed.
Real estate brokers get paid in a number of scenarios. These are the primary ways how real estate brokers get paid:
Read Also: 11 Highest Paying Real Estate Jobs In 2023
According to ZipRecruiter, the average earnings of a real estate broker in the United States is $91,873 annually as of July 2023 with a top $132,000 in the 90th percentile. The amount of money a real estate broker makes depends on the volume of work they do. There are those who make nothing, and there are those who make millions of bucks every year.
While most of these figures are averages and means, the elite brokers who own large brokerages with many agents working under them can make those annual figures in one month!
Top real estate brokers make a lot more, while agents who sell a few properties in a year make less. Therefore, it can be confidently stated that the amount of effort a real estate broker puts into marketing, systems, and other aspects of her brokerage business determines the amount of money he or she makes.
According to Indeed, the average salary for a real estate salesperson or real estate agent is $96,665 per year. On average, a real estate broker makes $76,585 per year plus an additional $43,500 in commission.
While base salaries are sometimes paid, most brokers and agents today operate on 100% commissions. This allows for less stability in exchange for higher earnings potential.
Another reason why brokers make more money than agents is that the former generally work for more hours than the latter. You'll find many real estate agents work part-time, while it’s uncommon to find a real estate broker who doesn’t treat real estate transactions as their full-time job. They, therefore, get more repeat and referral business than agents.
Finally, brokers usually keep a percentage of the sales commission that agents working under them earn. Therefore, a real estate broker with a large team of agents can make significantly more than a single agent working under them
With all that said, real estate agents and brokers can still earn more than the other depending on a number of factors including the number of sales, gross transaction (sales) volume, commission percentage earned, agent broker commission split, and average transaction size.
Yes, real estate brokers can work from home. In fact, there are many brokers who make a lot of money from the comfort of their own homes. However, this is largely a question of resources and preference since there are those who prefer to operate from an office. Since most real estate brokers own their own businesses, they can work as much or as little as they want. They can choose the place to work in, and the flexibility of working from home is always at the top of their lists.
Besides touring and showing properties to clients, the majority of a broker's business can be conducted at their own homes, in their client's homes, and in public venues.
Those brokers who prefer working in brick-and-mortar locations are listing agents who need a place where they can have prolonged conversations with their prospects, and reassure them that they are the best in the real estate industry.
We cannot shun away the fact that perception is a vital variable in real estate, and businesses with offices are considered more legitimate. However, we the fact that the world is becoming more technology-driven, such that most people prefer to buy goods and services, including properties online. Therefore, the value placed on brick-and-mortar locations is fading fast, and real estate brokers are now more than ever inclined to work from home.
Truthfully, you don’t need a real estate broker to buy a house. However, this professional is an indispensable partner who can bring a host of benefits to the table including:
Buying a house is exciting, but it can be stressful if you choose to go solo. Unless you know how to find and purchase houses on your own, allow a professional broker to do all the work, and you will doubtlessly find the home of your dreams in no time!
As a real estate broker, you have the option of creating your own brand, starting from scratch, and building an empire. However, if you prefer to join an established brokerage, there are countless real estate brokerages that you can join, each with its own reputation and brand identity.
Most regions have several top real estate brokerages that are doing most of the business. Whiles the big ones are worthy of exploring, you may prefer working with a smaller, boutique-style brokerage with a niche of its own. It comes down to finding people you can see yourself working with and a brand that you can identify with.
Below are some of the best real estate brokerages you should consider joining:
We've covered in detail what is a real estate broker, as well as how to become one. A real estate broker is a powerful and important participant in the real estate industry. This is a professional who is taken with high regard; thus, he should not only be authoritative in what he does, but should also be a strong leader, mentor, and ambitious goal-setter.
Remember, being a real estate broker is not for everyone. It comes with great responsibility, hard work, attention to detail, persistence, and continued education, among other things. Ensure you take your time and determine whether you want to make a commitment before you get a license. Becoming a real estate broker is a huge accomplishment and something that you should strive to achieve if you want to own and operate a lucrative real estate business.
While being a broker is a rewarding challenge, it can be a difficult and exhausting start for beginners to get into the real estate industry. That's why we at Real Estate Skills want to help beginners in getting their first taste of a rewarding real estate deal! We invite you to join our FREE training course to get into the real estate industry right away. Sign up today!
Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.