Don’t worry, just because the title says, Agent vs. Broker, this is not a fight club, boxing match, or another brutal event. Instead, this post will visit the ins and outs of each position to help readers distinguish the similarities and differences between the two. Real estate professionals go by the same title, broker, in some places. Also, people commonly use the names agent, broker, and realtor to mean one in the same. Not only does this confuse a person trying to hire the right person to do a job, but it is also not fair to the specialists that have worked long and hard to distinguish themselves from others. So, read further to learn some of the key things that make the positions different from one another.
Broker-associates, real estate agents, managing brokers, and more can become realtors. The label is given to licensed individuals that choose to join the National Association of REALTORS®. They do the same tasks as other real estate professionals, but these folks are also held to a higher standard. All people in the industry must be trustworthy and honest. The governing bodies assure consumers of these things by enforcing laws and regulations. The Realtor Code of Ethics takes things a step further with 17 articles that the realtor must obey. However, the main difference is that these men and women belong to the NAR, so even though they are not getting called out by name in this agent vs. broker topic, they are included in the discussion as well.
Real estate brokers are thought of as a step above agents. They typically, but not always, have more education than the latter. In most states, a salesperson has to work under a broker’s license to buy, sell, or rent properties. Brokers are allowed to hire salespeople and other brokers. They can go out into the field to show listings, but the individuals are usually in the office scheduling and lining out everyone else’s day. Brokers are responsible for the actions of the people working for them. If violations occur, they can be punished along with the agents. Penalties can include but are not limited to citations, revoked or suspended licenses, and criminal charges.
Perhaps there has never been a better time than now to get into the real estate business. Research from the Labor of Bureau Statistics shows that there were 444,100 jobs in the sector in 2016 alone. However, that number is expected to grow 6% higher between 2016 and 2026, which means there will be another 24,900 employment opportunities. One thing to keep in mind before choosing this new career path is that brokers and agents work irregular hours. So, if you are seeking a regular 9 to 5 position, these might not be the perfect choices. Additionally, pay is not always easy to come by either.
Brokers and agents make their money through commissions. While it is not entirely unheard of for these individuals to receive a salary, most of them don’t, and even if they do, it is not typically very high. Instead, the brokerage firm gets a percentage of each sale. The amount varies, but the national industry standard is between 5 and 6-percent. So, if a home or commercial property sells for $210,000, the fee due is $12,600. Hold your horses before getting too excited as this money is usually split evenly among the buyer’s agent and the seller’s agent. So, the new amount that each party receives is $6,300. While this sounds like good money, one should not forget that brokers have expenses such as insurance, advertising, and paying salespeople.
The amount that the real estate agent brings home depends on the arrangement that they have with the broker. These contracts can be fair, but they can also be lopsided to benefit one side more than the other. For instance, it may be worded to benefit the broker more while only calling for the agent to get 1% of each sale. Luckily, most people aren’t looking to get something over on someone though. When everyone does their part, the endeavor can be very profitable for all parties. Still, make sure the percentages are disclosed ahead of time to prevent surprises from arising after a sale finalizes.
It is worthy of mentioning that the fee does not get added to the total of the sale. Rather, the money comes directly from it. Don’t forget to let the seller in on this tidbit to prevent headaches and problems from arising. With the example above, instead of receiving the full $210,000, the person will only get $197,400. This may not seem like too big of a deal, but $12,600 is a lot of money, so make sure that all parties have a clear understanding of what to expect. Unfortunately, it is impossible to let them know the exact price because there is no telling what the final closing cost will be.
Requirements vary from state to state, but applicants need to be at least 18 years old and have a high school diploma or equivalent degree in most places. They must also take state-approved pre-licensing courses and pass an exam. To become a broker, salespeople usually have to have between 1 and 3 years of experience. Some similarities for the agent vs. broker discussion are that both licenses have an expiration date and will need to be renewed. Agents and brokers alike must take continuing education classes and pay fees to keep their credentials valid. The 2017 median pay for these folks was $47,880 per year. So, don’t delay any longer and think about making a change today.
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