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Real Estate Agent VS Broker: What’s The (Legal) difference?

In 2018, the National Association of Realtors had a total of 1.36 million active members. That’s an increase of 50,000 members from the previous year!

California alone is home to almost 205,000 real estate agents. The state also has more than 95,000 active brokers in operation.

As a home buyer or seller, you’re likely thinking of hiring one of these professionals. This is a wise idea, especially since tricky and complex laws govern real estate transactions.

But first, you need to know the difference between a real estate agent vs broker. Not only are these titles not interchangeable — the responsibilities themselves differ, also. What’s more, there are legalities involved in who can claim each title.

Don’t worry though, as this post covers the most important differences between the two. Keep reading so you know which real estate agent professional to hire and team with.

Real Estate Agent vs Broker: Who’s the Boss

So, what is the difference between a real estate agent and a broker?

Some real estate agents are also brokers, but not all real estate agents can work as brokers. Brokers can work as agents, but most of the time, they have other agents working for them. Under law though, all real estate agents need to work for a broker.

That said, even if you hire a real estate agent, you’re pretty much working with a broker too. For real estate agents to be legal real estate professionals, they should report to a broker.

In short, brokers are the boss of real estate agents, and they can also be their own boss. Many brokers run their own independent firms, or they hire other licensed agents.

Breaking It Down Further: Who Real Estate Agents Are

A real estate agent is a real estate salesperson with a license. The law requires them to work for a real estate broker. That means they can’t work alone or as an independent party.

What It Takes to Become One

There are strict educational requirements before one can become a real estate agent. Most states require applicants to complete real estate pre-licensing courses. The number of hours for these required courses also vary from state to state.

Some states also need applicants to have finished real estate college-level courses. California, for example, requires applicants to have finished three of these courses. In Illinois, an applicant needs to at least have a GED or finished high school.

Only after meeting these requirements can applicants take the real estate licensing exam. Once they pass the test, then they can get their license and start offering their services. 

What They Do

Most home buyers and sellers have more direct contact with real estate agents. That’s because these salespersons represent buyers and sellers, working on their behalf. They deal with price negotiations, transaction management, and even marketing for home sellers.

Agents are also the real estate experts who give buyers a tour of homes for sale. For selling clients, their role involves generating prospects and buyer leads. They handle open houses and answer general inquiries about properties for sale.

Real estate salespersons should also have some knowledge of legal matters surrounding properties. But when it comes to dealing with actual documents and agreements, you need a real estate lawyer.

The Boss is Here: The Lowdown on Real Estate Brokers

We’ve established that the key difference between a broker vs agent is that the former is the boss of the latter. Or in some cases, a broker can legally serve as your real estate agent too.

But, that’s not all. Brokers have often undergone more extensive real estate education and training. In fact, this is a legal requirement in some states, including California, Florida, and New York.

Greater Level of Education and Training

Let’s use California as an example again.

Real estate agents there should have completed 135 hours of the pre-licensing courses, whereas brokers should have finished 360 hours of these courses. That’s more than twice the amount of education and training.

Also, before someone can become a broker, they should have worked as a real estate agent first. How long depends on the state they operate in. In CA, FL, and NY, they should have worked as agents for at least two years before they can take the broker exam.

Speaking of which, broker applicants need to pass two exams. First, the real estate licensing exam, and then the broker exam. The broker exam is also more difficult than the licensing exam for real estate agents.

The Duties of a Broker

Brokers can also do the same things as agents, but they have more on their plate, especially if they run their own broker firm.

Brokers manage all agents under them, maintaining ethical and legal practices. They train agents and resolve issues between them and clients. They provide leads to their agents, carry out marketing for the firm itself, and keep records.

Reputable real estate brokers also often maintain a network of legal contacts. If you need help finding a closing attorney, a broker can recommend or refer you to one. They can also help you establish an escrow account and even manage your properties for you.

For a more detailed list of broker duties, you may want to check this article by BrokerBreakUp. It can help you further understand what exactly brokers can bring to the table.

Hire a Real Estate Agent or Broker?

One of the biggest advantages of hiring a broker is their more in-depth knowledge. They often got more experience under their belt, which is a plus if you’re facing a complex real estate case. For instance, having a lien on a property you want to sell or dealing with a foreclosure.

But this doesn’t mean they’re always the best choice, especially if they run a brokerage firm. Because brokers have other agents to manage, that may limit the time they work with you in person. And since they’ve got more training (and two licenses), they often charge higher.

If you want a more personal home buying or selling experience, you may want to go with an agent. Do the same if you’re worried about the higher broker fees.

But also consider how a broker can sell your home for a much higher price. They may ask for a bigger commission than an agent, but it may be small compared to what they can sell your house for.

Choose Who You’re More Comfortable With

Now that you know the real estate agent vs broker difference, it’s up to you who to hire. Explore your options and make sure you choose someone you’re comfortable with.

Remember, home buying and selling can take weeks, even months. Selling alone can take up to 65 days on average. So, you want to work with a real estate professional you can stick with for that long.

Looking for more property-related advice? Then be sure to check out our Real Estate section for more guides and tips!

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