Your real estate agent is a trusty teammate who can guide you through the homebuying process. However, they might not be your real estate broker, who can play a different role. A real estate broker is a real estate agent who has an additional license that lets them employ other agents and supervise transactions.
What Does a Broker Do?
It’s the broker’s job to make sure the real estate transaction is conducted legally, escrow funds are recorded correctly, and all paperwork is complete and accurate.
What sets a real estate broker apart from an agent is that a broker can:
- Transfer money in or out of an escrow account.
- Hire agents to work under them.
- Mediate a legal dispute.
A broker also can assist you with buying or selling a property.
All real estate agents are required by law to work under a broker’s supervision. When you sign a buyer-broker agreement, you’re signing a contract with your real estate agent’s supervising broker.
A broker either can work for a company or be part of a firm, or they may operate their own brokerage as a broker-owner.
A real estate broker is not to be confused with a mortgage broker, who connects homebuyers with mortgage lenders.
Broker vs. Agent vs. Realtor
Here’s the difference between an agent, a Realtor, and a broker:
- A real estate agent is licensed to organize and assist in real estate transactions. This includes representing buyers or sellers in a real estate transaction.
- A Realtor is a real estate agent who is a member of the National Association of Realtors. Realtors adhere to the group’s code of ethics and have access to market data and other helpful resources.
- A real estate broker is a real estate agent who is licensed to oversee real estate transactions and supervise other agents.
Real estate agents and Realtors handle clients, listings, and negotiations, while brokers make sure that transactions are accurate and legal.
Types of Real Estate Brokers
There are three main types of real estate brokers: principal or designated brokers, managing brokers, and associate brokers.
Principal or designated broker
A real estate brokerage designates one broker as the principal broker, who is in charge of making sure that all of its transactions and operations are legal and accurate.
Managing broker
A managing broker oversees the day-to-day operations of a brokerage. While the principal broker handles transactions, the managing broker typically handles onboarding, licensing issues, and other internal operations.
Associate broker
Larger brokerages have associate brokers who assist with facilitating the volume of real estate transactions. Associate brokers work junior to the principal and managing brokers, and sometimes are known as broker-salespersons or affiliate brokers.
Who Can Be a Real Estate Broker?
In addition to a real estate agent license, a broker needs a broker license. Both are issued by state governments. While exact eligibility requirements vary by state, a broker typically needs to be at least 21 years old, live in the state they are applying for a license in, and have worked as a licensed real estate agent for a certain amount of time.
Licensing requirements
To get a broker’s license, you need to undergo a minimum number of hours of broker education, and pass a state licensing exam. You also usually need to pass a background check, and be free of any criminal convictions.
FAQ
Here are answers to some frequently asked questions about real estate brokers.
