There are many careers in the real estate industry. Many of them have core similarities. Of course, all real estate careers involve selling or purchasing a property. Every role in the industry approaches this process differently or helps to facilitate a specific part of the process.
Real estate brokers and real estate agents have very similar jobs in the sense that people often work directly with either a broker or an agent when buying or selling a property. To the average person seeking the assistance of a real estate professional, the distinction between a real estate broker v.s a real estate agent would be insignificant.
When working in real estate, there’s a huge difference between being a real estate broker and an agent. Responsibilities, required experience, and salary can vary drastically between the two.
Here’s what you need to know about the different types of real estate agents if you’re planning a career in real estate.
What Is a Real Estate Agent?
A real estate agent is a licensed professional who is qualified to help people buy, sell, lease, or rent properties. These real estate professionals list and advertise properties for sale and show those properties to potential buyers. They also accompany clients to showings of properties they may be interested in buying.
Buyers and sellers will often both have real estate agents. The listing agent and the buyer’s agent work together to facilitate a deal where everyone is happy. This process usually involves a lot of polite but firm negotiation. In some cases, a homeowner and buyer will have a dual agent/dual agency (the same agent represents both individuals).
Real estate agents are generally busy people, although they don’t generally have too many clients at one given time. The responsibilities they fulfill for the handful of clients they do have will occupy a significant portion of their day-to-day operation.
How Do You Become a Real Estate Agent?
Every state has different requirements for becoming a real estate agent, but the skeleton of the process is generally the same. In order to work as a real estate agent, you must first pass your state’s required real estate agent course. Some states require around a minimum of 60 hours of coursework, while other states require over 180 hours of coursework.
In the course, you’ll learn your state’s real estate laws as well as national real estate laws. Upon completion of your course, you’ll need to pass two exams given on the same day. One part of the licensing exam is for state-specific knowledge, and the other is for national real estate knowledge.
After you pass your exams, you’ll formally apply for a license and usually complete a background check. Your state’s regulatory board will approve you and send you a copy of your real estate license.
Once you have your license, you can begin to work at a real estate brokerage firm.
How Much Money Do Real Estate Agents Make?
The amount of money real estate agents make can vary widely. Real estate agents don’t make an hourly wage. Instead, they get a portion of the commission made on every property they sell as they work under the supervision of a broker.
In general, the commission is based on the sale price of a property. However, it is important to note that these fees can fluctuate wildly; the same percentage is never guaranteed.
The real estate agent will split their commission with the other agent involved in the deal (provided there is one) and then give a percentage of their earnings to their brokerage firm. This percentage can vary. Brokerage firms typically take between 25% and 60% of a real estate agent’s commission, but again, this number varies in nearly all real estate transactions.
How much a real estate agent makes will largely depend on splits and the number of properties they sell every year. Real estate agents who sell luxury properties or commercial properties are likely to make more than real estate agents who sell condos or modest single-family homes.
What Is a Real Estate Broker?
A real estate broker is a type of real estate professional who is legally allowed to self-manage or to employ real estate agents. Brokers can help clients buy and sell properties independently. They don’t have any authority to report to. In essence, a real estate broker is a real estate agent with more autonomy and greater responsibilities.
Real estate brokers will sometimes work completely independently. They don’t take on other agents or open firms. They simply act as solo agents.
Other real estate brokers open brokerage firms. They hire other agents and oversee them in their first years working in the real estate industry. Brokers ensure that their agents follow a strict code of ethics and compliance with all local and federal laws.
How Do You Become a Real Estate Broker?
To become a real estate broker, you’ll first need to become a real estate agent. After working as a real estate agent for several years and building a decent track record, you can continue your career by taking real estate broker courses. When you complete your courses and pass your broker’s exam, you become a broker.
At this point, you can go back to business as usual, or you can open your own brokerage firm. Many new real estate brokers prefer to take their time making that decision. There’s no rush.
Most brokers will tell you that staying with their current brokerage firm and working as an associate broker is an invaluable learning experience that prepares them for their potential independence.
Three Types of Real Estate Brokers
There are three types of real estate brokers. An associate real estate broker is a lot like being a real estate agent, but at a higher level. It would be almost like being a senior real estate agent if real estate brokerages used corporate hierarchy.
Above the associate real estate brokers are managing brokers. Managing brokers act like managers of a brokerage firm. They’re responsible for managing the everyday tasks and overseeing their designated real estate agents.
Above all three is the principal broker or designated broker. This broker is the leader of the brokerage firm. Everything that everyone does within the firm technically falls under the realm of this person’s responsibility. Although these brokers delegate tasks, they still have the heaviest crown to wear.
How Much Money Do Real Estate Brokers Make?
Real estate brokers often make substantially more money than real estate agents, no matter how they choose to go about their careers. When you open a brokerage firm and take on other agents, your firm gets a percentage of everything those agents make. If you were the head of a large brokerage firm, you would theoretically be exponentially outearning your agents.
Even if you chose not to go that route, you’d still make more money. Since you wouldn’t have to break off a broker, you’d be able to keep more of your commission.
Is It Better To Be a Real Estate Agent or a Real Estate Broker?
After comparing salaries and understanding how commissions are broken up, it almost seems like it’s a no-brainer to become a real estate broker. That’s why so many successful agents choose to take things to the next level and get their broker license.
While you do significantly raise the ceiling on your earning potential by becoming a real estate broker, you also take on substantially more responsibility. Real estate agents are already very busy people with complicated and nuanced jobs.
Their brokerage firms handle a lot for them. If you become a real estate broker, it’s your job to handle your own responsibilities as well as the responsibilities you inherit on behalf of the agents who work at your brokerage.
If work-life balance is very important to you, consider the responsibilities that come with being a real estate broker vs. a real estate agent. You won’t have nearly as much flexibility or freedom if you open your own brokerage. Sure, your paycheck will be nice and fluffy, but it’s not free money. You’re going to have to work for it.
There’s also the option where you take the middle road. You can become an independent broker and not hire any agents. This is a sweet spot for most people in real estate. You’re earning more, but your responsibilities won’t escalate to the point where they become difficult to keep track of.
Being the Best Real Estate Agent You Can Be
The best way to make money in the real estate industry is to learn everything you can and continue to evolve. Real estate is competitive, whether you’re a broker or an agent. It’s up to you to maximize your earnings by utilizing the best strategies and staying one step ahead of your competitors.
Listen to a real estate podcast. Read real estate books. Make it a part of your daily life to know what’s going on in your local area, as well as on the national stage. The more you know, the faster you can move to meet your clients where they need to be met.
Harris Real Estate University offers a comprehensive learning library of market-tested strategies and invaluable lessons that span every aspect of the real estate industry. Our one-on-one coaching programs will allow you to identify your strong and weak areas, helping you to fortify your knowledge base, recognize your blind spots, and play to your strengths.
Schedule a free call to learn how real estate coaching can empower you to succeed.