What is a real estate broker?

Whether you are buying or selling a home, you are likely to encounter many different conditions for the parties involved in a real estate transaction. If you’re new to the lingo, these can be confusing: Realtors, real estate agents, real estate brokers, mortgage brokers – what’s the difference? Here we define exactly what a real estate broker is and what makes it different from other similar sounding titles.

What is a real estate broker?

Realtors are licensed professionals who are similar to real estate agents in many ways and have the same training. Both can help with many aspects of buying and selling a home. But a broker has additional licensing and training, beyond what it takes to become an agent. In other words, a broker can do everything an agent can do, and more.

Real estate brokers can work independently, while agents generally must work under the direction of a broker or brokerage firm. An agent works with a broker to finalize a real estate transaction, but it’s the broker who does the work to make sure it complies with all the laws — they literally “court” the transaction. This includes ensuring documents are filed correctly, money is transferred, and records are completed and reported to the proper authorities. Brokerages often earn a share of their agents’ commissions.

Become a broker

To become a licensed real estate broker, you must first become a licensed real estate agent. Often an agent will gain experience in the field over several years before pursuing the certification required to become a broker. Many states have a two-year requirement before you can apply for broker status.

Obtaining a broker’s license requires following a training process established by the licensing state. The course typically takes several weeks to complete and covers issues of real estate law, finance, agency operations, contract law, and other related topics.

After completing the course, you can apply to take the broker license exam. If you pass the exam, you qualify for a license and can become a practicing real estate broker.

What does a real estate broker do?

Real estate brokers typically perform many of the same tasks as a real estate agent, including working with buyers to find properties, preparing and submitting offers, and managing the closing process. However, real estate brokers are also involved in the legal and financial detail of a real estate transaction. A broker can, for example, move money in and out of an escrow account and arbitrate contract disputes.

Leslie Singer, a licensed broker with Brown Harris Stevens in New York, explains: An agent has “skills to educate you about the market, guide you to a home that matches what you’re looking for, coordinate other professionals who will be needed, and negotiate for your benefit,” Singer says. While a broker can also “help you navigate titles, zoning, or legal issues, which may seem like another language.”

Types of real estate brokers

There are three main levels of real estate brokers:

  • Director: A senior real estate broker oversees a brokerage’s agents and other brokers, supervising them as they work to sell or buy a property and ensuring they follow all applicable laws. throughout the process. Brokerage houses usually have a designated broker who performs this role, signing off on every trade made by the company.
  • Manager: A broker manager is involved in overseeing the day-to-day operations of a brokerage. They are able to hire agents and train staff, as well as operate independently as a broker or agent.
  • Associated: An associate broker has a broker’s license but chooses not to work independently. Instead, they work under another broker or brokerage. Generally, an associate broker does not supervise other agents.

Real estate brokers vs mortgage brokers

Although they both contain the word “broker” and both are involved in real estate transactions, real estate brokers and mortgage brokers are not the same thing. Mortgage brokers deal exclusively with the financing of the purchase.

“A mortgage broker is essentially an intermediary between the borrower or homeowner and the bank or mortgage lender,” says Singer. “Licensed Mortgage Brokers work directly with the consumer and the bank to help consumers qualify for a mortgage, whether it’s a purchase or a refinance.”

Mortgage brokers are especially helpful for people who have unique financial circumstances or requirements, who could benefit from being matched with an expert who can handle that situation.

Why should I hire a real estate broker?

Real estate brokers offer many advantages to potential buyers. The benefits of working with a broker include:

  • Win time: A real estate broker is like a one stop shop because they can act as an agent as well as help with the details. A real estate agent will eventually work with a broker to finalize the transaction, so working directly with a broker can simplify the process.
  • Provide additional labor: A broker can also hire additional agents to work under them on a trade, if necessary, which is useful for very large trades or in very busy markets where many clients are vying for attention.
  • Assistance with sensitive legal issues: Defining the details of a real estate transaction can be tricky, especially if there are unusual circumstances surrounding the transaction. Brokers have additional knowledge and training that can help guide the process to ensure everything goes smoothly.

A broker’s commission

Like agents, real estate brokers work on commission, which means they earn a percentage of the selling price of the home. Hiring a broker will not necessarily cost you more money. When a broker has an agent working under them, that broker usually receives a portion of the agent’s commission. When a broker works independently on a trade, they don’t have to share the commission with the brokerage or anyone else. Be sure to discuss commission rates with agents and brokers before signing a contract to work with them, so the amount doesn’t surprise you.

Real Estate Broker vs Agent or Realtor

  • Realtors are licensed professionals who work with individuals to buy or sell a home.
  • Real estate brokers are agents who have additional training and licensing. They can act as agents and are also authorized to handle certain financial and legal details. (They are not real estate lawyers, however.)
  • Realtors are agents or brokers who are members of the National Association of Realtors.

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