There are more than 106,000 real estate brokerage firms in the United States. Each one of these firms has one or more brokers running the show which tells us that there are at least 106,000 brokers in the United States as well.
Each one of these individuals went under rigorous real estate training. With this, they have learned about real estate law and housing regulations.
But, what does a real estate broker do? What responsibilities do these people have and why are they so important to the world of real estate?
If you’re curious, just keep reading.
What Is a Real Estate Broker?
A real estate broker is like a senior real estate agent. Like a real estate agent, real estate brokers can help families and individuals sell and buy properties.
But, real estate brokers take it a step further.
They’ve had more training. And, as a result, they can own their own firms.
Real estate brokers are licensed professionals who interact with buyers, sellers, renters, and more. Their education and experience help them navigate the real estate industry.
Before taking over firms or managing their own, real estate brokers have to go through vigorous real estate training. Each state regulates its real estate brokers. This means that each of these professionals has to attend the proper classes then pass a state-specific licensing exam.
This is the only way that a broker can practice legally.
Between their education and experience, real estate brokers are one of the most trained groups of real estate professionals. It doesn’t matter which state a real estate broker practices in. Each state has rigorous educational requirements.
Real Estate Broker vs Real Estate Agent vs Real Estate Salesperson
There are several kinds of professionals in real estate: brokers, agents, salespersons, and more. To understand what a broker does, you have to be able to differentiate brokers from other kinds of real estate professionals.
The majority of these real estate professionals help people buy and sell properties. But, there are a few differences to consider.
First are the business responsibilities. Brokers have the ability to own and/or manage their own brokerages. They control everything from business policy to finances.
And, brokers can hire real estate agents to work under them.
Real estate agents are professionals that work under a broker. Depending on the brokerage that they work for, these professionals may be more dependent or independent. It truly depends on how the brokerage is set up.
Agents also tend to focus on front-line sales. This means that they’re handling licensing requirements, open houses, and marketing.
Real estate salespersons are independent real estate professionals. They don’t supervise others, but they don’t work under a superior.
Both brokers and salespersons have to have state licenses for the state that they’re practicing in. Brokers have to complete heavier coursework and a more difficult exam. Because they have the ability to supervise other real estate professionals, they must know more information.
Likewise, brokers need more experience than other real estate professionals. Although, the amount of education and experience varies from state to state.
What Does a Real Estate Broker Do?
Real estate brokers are significant because they have the ability to work for themselves. Unlike brokers, agents have to work under a superior. Brokers can manage their real estate company with their own team of real estate agents.
Real estate brokers have the ability to take care of real estate transactions of all kinds. And, because they manage their own companies, they should be able to teach other real estate professionals these skills.
Here are some of the most common responsibilities for real estate brokers:
- Develop a marketing plan for the brokerage that they own/manage
- Set goals for themselves and those real estate agents practicing under them
- Manage risk in the brokerage
- Keep accurate records for the brokerage
- Teach and mentor real estate agents
- Work with various real estate transactions
- Employ and manage real estate agents
- Train new real estate agents
- Hire additional employees such as administrative staff
- Lease brokerage office space as needed
- Manage properties that your brokerage oversees
The list goes on and on.
But, in the end, a broker’s job depends on what that broker wants to do. If the lead real estate broker doesn’t want to do something, it’s likely that they can delegate the job.
Some real estate brokers play administrative roles within their brokerage while others are more hands-on. It’s mostly up to the individual broker’s discretion.
Types of Real Estate Brokers
A real estate broker’s responsibilities also depend on the kind of real estate broker he/she is. There are seven kinds of brokers:
- Buyer’s agent
- Seller’s agent
- Transaction broker
- Associate broker
- Dual agent
- Principal broker
- Managing broker
Let’s look at what each of these brokers does.
1. Buyer’s Agent
Buyers’ agents work for clients who are buying houses. By doing this, they are agreeing to act in the buyer’s best interest. So, they are the real estate professional that guides buyers through each step of a home transaction.
This includes helping buyers find their ideal home and negotiating for the home that they want.
2. Seller’s Agent
Sellers’ agents work in the best interest of the people who are selling their homes. So, they’re helping sellers prepare their homes as well as negotiate with buyers.
A seller’s agent would also help with showing the home to potential buyers.
3. Transaction Broker
As the name implies, transaction brokers offer transactional services. In this role, the broker is a neutral third party. They do not have a responsibility to either side of a sale.
Transaction brokers negotiate with other agents, draw up the paperwork, and meet contractual deadlines.
4. Associate Broker
Associate brokers (also known as affiliate brokers) work under another broker. Rather than opting to own their own firm, they’ve opted to work under an already-existing firm. This is a common move for new brokers.
As an associate, these brokers perform responsibilities as agreed upon with the lead broker. These responsibilities are going to depend on the wants and needs of the brokerage.
5. Dual Agent
A dual agent represents both the buyer and the seller in a deal. They have a contract with both sides, meaning that they must work for the best interest of both parties.
Because they represent both sides, dual agents have a higher earning potential.
In order to be a dual agent, you have to disclose your role to both parties. Upon disclosure, either or both parties can withdraw from the contract.
6. Principal Broker
The principal broker is the main owner of the brokerage. They likely have their name on the building or its front door.
Thus, they are the one that takes all of the liability for the company.
The principal broker is the one who signs agency contracts, supervises working agents, and conducts business activities. Principal brokers are licensed by the National Association of Realtors. Thus, each principal broker is held to a set of high moral standards per the code of ethics.
7. Managing Broker
The managing broker is an administrative real estate broker career. This individual focuses on managing the agency or office that they’re working in.
These brokers focus on hiring, firing, training, and managing. They may have reign over the policies and rules of the brokerage as well.
It’s important to note that the principal broker and the managing broker can be the same person. In fact, many of these roles can overlap.
How Do Real Estate Broker Jobs Make Money?
Making money in real estate isn’t straightforward. In fact, it can be confusing especially if you haven’t learned about commission payments before.
However, because of their many jobs, brokers can make money in several different ways:
- Sales commission – money that the broker makes when a house sells successfully
- Agents’ commission – money that the broker makes from each real estate agent that works under him/her
- Real estate broker salary – some real estate brokers offer themselves a yearly salary through their business to make income more predictable
- Desk fees – money that brokers charge for agents that work under them
- Buyer transactions – money from helping clients buy, sell, and rent properties
- Affiliations – money from real estate investments that the brokerage may have
- Leasing commissions – money that brokers can make from leasing out commercial or residential properties
- Referral fees – money that brokers may make from referring clients to other brokers or agents
By taking advantage of all of these streams of income, a real estate broker could make passive and active income at the same time. The financial potential is one of the largest advantages to undergoing all of the extra training that it takes to become a broker.
Real Estate Broker Careers
If you’re interested in becoming a real estate broker, you should look up the licensing requirements in your state. If you’re interested in hiring a real estate broker, you should make sure that they’re licensed in your state.
And, for more real estate knowledge, you can check out the rest of our blog. Whether you’re looking for a job or a professional, we’re here with all the information you need.
