By Buying or selling property usually involves working with a real estate professional, such as an agent or broker. Interestingly, most people use the terms synonymously, thinking that they are the same.
However, while real estate agents and brokers share certain responsibilities and characteristics, they are distinctly different. Notably, the differences between a broker and an agent can impact your property sale or purchase in various ways. To this end, understanding the differences is essential to making informed decisions on which professional to work with.
So, what is the difference between a real estate agent and a real estate broker? Here is an overview of their responsibilities, qualifications, and differences.
What is a Real Estate Agent?
A real estate agent is a professional trained and licensed to help people buy, sell, rent, or lease out property. To this end, an agent must complete their state’s pre-licensing class and pass a license exam. Moreover, they must satisfy other requirements, such as age and background checks, which vary from state to state. Notably, a real estate agent must work on behalf of another agent or a real estate broker.
Types & Responsibilities of a Real Estate Agent
Real estate agents can be categorized into the following three types, depending on their responsibilities:
- Listing Agent – Agents that represent sellers in a real estate transaction.
- Buyer’s Agent – Agents that represent buyers in a real estate transaction.
- Dual Agent – Agents that represent both buyers and sellers in a real estate transaction.
Overall, real estate agents handle most of the logistics involved in a real estate transaction, including the following:
- Providing buyers with sellers about suitable properties that meet their needs and preferences.
- Listing properties scheduled for sale via the Multiple Listing Service (MLS) on behalf of sellers.
- Connecting sellers with qualified buyers.
- Relaying offers and counter-offers between buyers and sellers.
- Determining and setting listing prices on behalf of sellers.
- Negotiating selling prices on behalf of buyers and sellers.
- Recommending and negotiating repairs and renovations.
- Staging and marketing properties.
- Planning and facilitating appraisals, home inspections, and other legal requirements.
- Helping buyers and sellers fill out the extensive paperwork required when finalizing transactions.
Real estate agents are paid on commission, which averages about 5%-6% of the closing price and may be negotiable. However, they must split the commissions with their brokerage companies and the other party’s corresponding agents. Notably, agents’ responsibilities may vary based on the scope of your needs and the terms of their services.
What is a Real Estate Broker?
A real estate broker is essentially an agent with better qualifications and an advanced license. Brokers take advanced real estate classes to further their education and pass advanced licensing exams. Notably, a broker’s license is advanced and authorizes them to operate independently or sponsor and hire real estate agents.
Types & Responsibilities of a Real Estate Broker
Real estate brokers are categorized into the following three types based on the scope of their responsibilities and operations:
- Associate Brokers – Licensed brokers who choose to work under other real estate brokers. Notably, associate brokers cannot supervise real estate agents.
- Managing Brokers – Brokers who hire or sponsor and manage real estate agents, including overseeing their transactions.
- Principal/Designated Brokers – Brokers who supervise real estate agents and ensure that they comply with state and national real estate laws and regulations. Notably, each real estate office must have at least one principal broker.
Overall, brokers handle the same roles as real estate agents, in addition to managing and overseeing licensed agents. To this end, they generally help buyers and sellers with logistics such as marketing properties, negotiating prices, and filling out the paperwork.
Differences Between a Real Estate Agent & Broker
Overall, there are two main differences between a real estate agent and a broker. First, real estate agents cannot operate independently – they must be hired or sponsored by a real estate broker. Second, agents must split their commission fees with their brokerage firms, while brokers can pocket the entire amount if there are no third parties involved in the transaction.
Conclusion
Real estate agents are distinctly different from real estate brokers. On the one hand, brokers are more qualified than agents and hold advanced licenses, enabling them to operate independently and hire licensed agents. On the other hand, agents are licensed but must operate under a broker’s supervision. Overall, understanding the differences between a broker and agent is crucial when buying and selling property or training as a real estate professional.
