Difference between a Real Estate Broker and an Agent
Is there much difference between a real estate agent and a real estate broker? While using these terms interchangeably has become common practice, each title comes with a different set of roles along with some similarities. Let’s dive further into this topic to see the difference between real estate agents and brokers.
What is a Real Estate Broker?
Brokers in the real estate field play a part that’s similar to agents, but their licensure differs from that of an agent. While they can assist in the buying or selling process, like an agent, they can also employ agents, work independently, and oversee the legal aspects of real estate transactions. Hence, becoming a licensed broker can be considered a promotion from working as an agent.
What does a Broker do?
Getting more into the specific duties, a broker closely supervises their agents’ real estate transactions to ensure compliance with all professional ethical standards and legal mandates. In other words, brokers make sure that all documents related to a real estate sale are in proper order and contain all necessary information. Plus, they check to see if all monies are in escrow and ready for the transaction to take place. So, while the agent usually works directly with sellers or buyers, the brokers are working in the background to make sure everything follows through in a legal manner and all requirements are met.
Another interesting, yet important aspect about this field is that when clients sign a contract, it’s not directly with the agents themselves but rather with the broker (or brokerage firm). Thus, an agent can leave a real estate agency, but the clients are legally bound by the contract to continue working with the brokerage until the expiration of the agreement. Consequently, the broker chooses a replacement. If there is also a dispute between an agent and client or between buyers and sellers, a broker can mediate the conflict before any of the parties can file a petition in court.
How do real estate brokers get paid?
Real estate brokers earn a percentage of their agents’ commissions once a sale is made, or if they facilitated the process on their own, then they get the entire commission which is usually three to six percent of the property’s sales price. The first step in the payment process involves the transfer of funds from the buyer’s financial institution which are then divided up by the closing attorney between the brokers who played a role in the sale. After paying all applicable fees, the broker then gives the agent their share of the commission through direct deposit or check.
What is a Real Estate Agent?
Also a licensed professional, a real estate agent represents either the buyers or sellers in the sale of a property. Many specialize in one specific niche, such as residential or commercial properties, while others may specialize in both. In some situations, real estate agents also work as rental property managers, depending on the brokerage firm in which they’re employed.
What does an Agent do?
Agents deal more with the front end of a sale than the brokers (although they have that option, as mentioned). They act as listing agents who work on behalf of the sellers, advising them about pricing, staging and photographing the property along with suggesting improvements that can boost their chances of selling the home or building. And of course, they work on all marketing aspects of getting a property sold–from listings and showings to advertising and networking.
Additionally, they can assist the buyers with locating properties that meet their expectations and fit within their budgets. Plus, they research the values of nearby properties that are comparable to the one that’s up for sale. This ensures that buyers give a fair bid. In turn, they also carry on communication between buyers and sellers in relation to offers, counteroffers, and their acceptance or rejection, which involves a nominal amount of paperwork until the two parties finally get to closing the deal.
Another role for real estate agents involves representing both the seller and the buyer, which is called a dual agency. In this case, the agent has to notify both parties of the dual agency so as to avoid any conflicts of interest. However, some states prohibit the practice of dual agency.
How do real estate Agents get paid?
Just like brokers, real estate agents are paid on commission. On average, agents will earn 6% of the property’s sales price although some percentages can be as low as 1%, and others are as high as 10%. As mentioned, the brokers also get a cut of the sales price, and then they pass on the rest of the shares to the listing agent and the buying agent via direct deposit or a check.
In some cases, more experienced agents can pay what’s called “desk rent” to the brokers they work for and earn 100% of the commission from a sale. In another instance, some agents are also licensed as brokers and as result work in both capacities. Again, this allows them to earn all the commission.
Is it Better to Use a Real Estate Broker or Real Estate Agent?
When it comes to real estate agents vs brokers as a career choice, that would naturally depend on preference. If you’re contemplating taking on a supervisory role and even owning your own business, then getting a license to become a broker is the way to go. On the other hand, as an agent, you won’t have to take on as much of the legal aspect of making a real estate deal regarding the documents or mediations. Plus, you’re not in charge of hiring and terminating agents. Nonetheless, both jobs can be quite rewarding since there’s a great earning potential, and you’re helping people out with buying or selling their properties to achieve their financial goals.
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