Anyone who is unfamiliar with the real estate industry might be a little bit confused in regards to its verbiage and its many professional titles. Like any professional field, there’s a wide range of unique terms to understand in order to communicate and understand transactions effectively. In particular, there is a significant distinction between a real estate broker and a real estate agent. They each have different educational requirements and perform different roles as real estate professionals. Let’s take a look at the specific nuances of each title.
Real Estate Agent
A real estate agent is someone who has earned a real estate license. A real estate agent can only give advice and work professionally with a license. The requirements for a real estate agent license differ by state, but those who want to obtain it will have to take classes, complete a specific number of classroom hours and pass an exam with both state and national sections. The term “real estate salesperson” is another moniker for a real estate agent. Anyone who wants to become a real estate agent will have to be at least 18 years old though individual states have their specific requirements.
Real estate agents must work for brokers and are not allowed to work independently. They receive “after expense commissions” from real estate brokers which means that they are paid part of a transaction fee after some or all of the costs of doing business are subtracted. The public is more likely to work directly with a real estate agent than with a real estate broker though sometimes a real estate broker will step in to handle complex matters and transactions with an elevated importance.
Real Estate Broker
A real estate broker is someone who has earned an education in excess of that of a real estate agent. Real estate brokers have also passed their broker’s license exam as well. Aside from having more education than real estate agents, real estate brokers also have more experience working as an actual real estate agent. They must complete a specific number of hours of broker specific classes, pass an exam with state and national sections and have worked as a real estate agent for a specific number of months. The number of classroom hours and the time worked as a real estate agent differs by state.
A real estate broker can work solo, or he can hire a team of real estate agents. Those who choose to hire a real estate agent or several of them will act as a manager in multiple regards. They’ll supervise and coordinate the agents, and directly handle transactions if any problems pop up. They are also responsible for almost all of the actions of their agents. A real estate broker assumes liability for business transactions, executes them and pays for business expenses, such as, legal support and insurance. They also take care of earnest money deposits and set up escrow accounts. While real estate agents typically work one on one with the public more often than brokers, some brokers will work directly with clients.