Real Estate Broker Vs. Agent: Differences Explained

Whether you’re buying or selling a home – or you’re interested in joining the real estate industry – it’s important to understand the differences between the types of real estate professionals, including a real estate agent and a real estate broker.

While real estate agent and real estate broker both refer to a licensed real estate professional who can assist both sellers and buyers, you should be aware of some key differences as you embark on the home buying journey.

What’s The Difference Between A Real Estate Agent And Broker?

The main differentiating factor between an agent and broker is the number of responsibilities they have. A broker can do everything an agent can do, but they have the additional job of making sure all real estate transactions are lawful, all paperwork is accurately completed and all finances are accounted for.

What Is A Real Estate Agent?

A real estate agent is a licensed professional who organizes and assists with real estate transactions. Real estate agents are usually paid on commission and work on behalf of another agent or brokerage.

To become a licensed real estate agent, you’ll need to take a prelicensing course and a licensing exam. You’ll then need to activate your real estate license and join a brokerage.

What Real Estate Agents Do

A real estate agent can be a significant source of help when buying or selling a house. Some of their responsibilities include:

• Providing buyers with information about property values, schools and neighborhoods
• Connecting sellers with qualified home buyers
• Sharing listings with home buyers via the multiple listing service (MLS)
• Connecting home buyers with mortgage lenders to get preapproved for a loan
• Negotiating repairs and replacements that home inspectors or appraisers request
• Assisting buyers and sellers with paperwork and the closing process

The responsibilities of your real estate agent will depend on whether you’re buying or selling, which is why it’s important to understand the different types of agents and how they can help you.

Types Of Real Estate Agents

Here are the main types of real estate agents and how they differ:

• Listing agent: Also known as a “seller’s agent,” the listing agent represents the seller during the sale.
• Buyer’s agent: A buyer’s agent represents the home buyer during a real estate transaction.
• Dual agent: A dual agent is a real estate agent who works as both the listing agent and buyer’s agent in the same real estate transaction.

How Real Estate Agents Get Paid

Real estate agents are almost always paid on commission (also called REALTOR^® fees) instead of earning a salary, meaning the agent will receive a percentage of the sale proceeds when they help someone buy or sell a property.

What Is A Real Estate Broker?

A real estate broker is an agent who passed their broker license exam. If you’re working with a broker, it’s important to know that they formerly worked as an agent and gained their experience working under a broker.

In addition to the responsibilities of a real estate agent, a broker can manage their own firm and oversee real estate transactions that their agents conduct.

If you want to become a broker, you’ll need to gain experience as an agent and then take a state-approved real estate broker course before passing the broker exam.

What Real Estate Brokers Do

Again, brokers can do everything a real estate agent can do. But thanks to their broker license, they can also:

• Move money in and out of an escrow account
• Mediate conflict in a legal dispute
• Hire real estate agents to work under them

Types Of Real Estate Brokers

The responsibilities of a broker will depend on the type of broker they are.

• Principal/designated broker: A type of broker responsible for all of the operations and transactions that take place within the brokerage firm
• Managing broker: A type of licensed broker responsible for handling the day-to-day operations of the brokerage
• Associate broker: A type of broker more commonly hired by larger brokerages to help with the workload

How Real Estate Brokers Get Paid

A real estate broker has two ways of earning money – through a percentage of the commission earned by the agents they sponsor, and by keeping 100% of the commission they earn from their own deals.

The seller pays the commission, which is typically around 6% of the sales price. The listing agent or broker will offer a commission split with the buyer’s agent, which is normally 50/50.

While a real estate agent and a broker are both primarily paid on commission, a broker will typically make more money each year since they receive commission on the deals made by the agents they sponsor as well as their own deals.

With that said, the National Association of REALTORS^® (NAR) recently reached a settlement with groups of home sellers that makes agent compensation fully negotiable.

How Does A REALTOR^® Differ From A Real Estate Agent And A Broker?

The term “REALTOR^®" is often used interchangeably with “real estate agent,” but that’s a bit misleading. An agent, a broker, an appraiser, a salesperson and a property manager can all become a REALTOR^® by joining the NAR. Any of these professionals can become a member by adhering to the NAR’s code of ethics.

As a REALTOR^®, you’ll have access to certain discounts and educational resources created to better your practice and potentially increase your earnings.

The Bottom Line

The difference between a real estate agent and a broker hinges on what they can and can’t do for clients. A real estate broker can do everything an agent can do but also run their own brokerage firm and oversee agents working under them. A real estate agent can work their way up to becoming a broker once they have the necessary experience and pass the broker license exam.

Now that you know the difference between these well-known real estate professionals, you can feel more confident moving forward with the home selling or home buying process. Get a head start and start an application for a mortgage with the Home Loan Experts at Rocket Mortgage^®.