Real estate brokers are agents who have gone through additional certifications.
Brokers perform the same duties as an agent in addition to managing an office or realty group.
Brokers usually get paid a commission of between 5%–6% of the sale price of a house.
In real estate lingo, people often throw the terms "broker" and "agent" around, sometimes interchangeably. But what exactly is a real estate broker, and what do they do?
Here's what you need to know before you hire a real estate broker.
What Are Real Estate Brokers?
A real estate broker is an agent who has gone through a more rigorous training process than a regular real estate agent. Since they’re similar, the titles are sometimes used interchangeably, but there is a separate licensing process that a real estate agent must pass to become a broker.
Brokers oversee real estate transactions and can hire agents and associate brokers to work under them. In addition to marketing homes, showing houses, writing up offers, and other general real estate agent duties, brokers have other responsibilities.
Here’s a look at a broker’s responsibilities:
Set Up Escrow Accounts
This happens once the seller and buyer have made a purchase agreement. A property broker involved with the transaction will open an escrow account through a third party, typically a title company. In the buying process, an escrow account is used to ensure a buyer’s “good faith” deposit goes to the right place.
Hire and Train Agents
Brokers use their experience and skill set to build their brokerage team. Often, it is in the property broker’s best interest to recruit and train the agents under them. Knowledgeable, well-trained agents help create a successful brokerage.
Oversee Office Operations and Compliance
Brokers manage the firm’s day-to-day operations, which can range from verifying their agents’ licenses and processing transactions to creating marketing resources for agents. However, a large part of a broker’s job is monitoring agents’ performance and legal compliance. A compliance mistake could be costly for both the agent and broker.
Perform Mediation If Conflicts Arise
The process of selling or buying a home can be complex. Sometimes, tensions rise. Property brokers put their additional education to use by helping their real estate agents navigate conflict. Brokers have the ability, and training, to mediate conflict in a legal dispute.
Types of Real Estate Brokers
There are several different areas in which real estate brokers can choose to specialize.
Principal brokers oversee all the operations and compliance in a real estate firm. Every firm must have a principal broker to ensure that agents follow applicable laws and that every transaction is financially and legally above board.
Managing brokers are considered the office managers and HR managers of a real estate office. They conduct agent onboarding, training, mentoring, and arranging for continuing education. Managing brokers ensure that all of the agents’ licensing is up to date, and they handle issues if they arise.
Larger brokerage firms usually bring on associate brokers to help with a large workload. They're licensed brokers and can do everything a broker does, but they're typically independent contractors the firms bring on in a pinch.
What Do Real Estate Brokers Do?
In order to hire the best realtor and team, it's essential to understand what brokers do on the sell side and the buy side of transactions.
When selling your home, you may opt to hire a broker to handle your sale. The broker functions as an agent with a kick, performing duties like:
Listing your home for sale on the multiple listing service (MLS), the database realtors use to share their listings with other real estate professionals
Marketing your property to buyer brokers
Advising you on how to prepare your home for showings
Supervising scheduled showings and open houses
Fielding offers from buyers for your property
Negotiating offers and preparing contracts once you accept an offer
Facilitating the sale, including walking you through documents and working with you to close the sale
Brokers also work with potential buyers who are house hunting. If you hire a broker to help you buy a home, you can expect them to:
Help you find homes for sale that meet your criteria and arrange visits
Draw up offers for potential homes
Negotiate with the seller's agent or broker
Coordinate document delivery and explain any documentation
Negotiate based on inspection and repair reports
Walk you through the closing process
Assist you in eventually taking possession of the home
Differences Between Agents and Brokers
In a nutshell, agents must work under brokers; brokers do not work under agents. Brokers can work independently, but agents have to have a licensed broker supervising them. Brokers and real estate agents have real estate licenses, but brokers also have a broker's license. In most states, to take the broker's exam, you must have a real estate license—i.e., be a real estate agent.
Essentially, real estate brokers are agents who’ve decided to further their education in the industry through additional training and by earning their real estate broker license. In most states, agents seeking a broker license are required to take a more intensive course. Brokers are held to a higher standard, so these courses delve deeper into topics ranging from contracts and ethics to insurance and taxes.
Exam requirements for a real estate broker license vary from state to state. Typically, real estate brokers will have a few years of experience as a real estate agent before taking this step. Holding a real estate broker license can provide an agent with additional income and career flexibility.
How Do Real Estate Brokers Get Paid?
Realtor's fees and commissions can be a tricky concept to wrap your head around, and brokers' fees can be equally complex. Agents and brokers get paid in two different ways.
For each property they sell, real estate agents earn a commission that is based on the property’s selling price. The commission is split between the listing and buyer’s agents’ firms.
Real estate agents work under brokers, who take a percentage of their brokerage agent’s commission. Real estate brokers can also earn commission from their own deals. The difference is that they don’t have to split their commission with the rest of the brokerage.
If both the buyer and seller have brokers, the brokers split the commission; you do not have to pay extra. Brokers usually charge around 5% to 6% of the final sale price of a home.
Should You Use an Agent or a Broker?
Deciding between hiring a real estate agent or property broker comes down to your personal preference. The truth is, there will not be much of a distinction between the two professionals when it comes to selling or buying a home.
While a real estate broker has more experience and education in the real estate industry, real estate agents are qualified and trained to meet your buying and selling needs. Plus, real estate brokers and agents sometimes end up working together on transactions, as brokers can assist with everything from the closing process to negotiating contracts.
The benefits of hiring a real estate broker can include:
Expanding your real estate investments: If you want to own real estate beyond your home, a property broker can help you acquire rental property or a commercial building. Brokers are a one-stop shop with their negotiation and mediation skills and experience with contracts and paperwork.
Access to a wider range of properties: If you’re working with an independent real estate broker, they may be able to see properties listed by various firms across your town or city.
Possibly paying less in fees: Brokers are self-sufficient in that they don’t have to work under a brokerage, which means they don’t have to share their commission with the firm. There might be some wiggle room for negotiation.