What is the Difference Between a Real Estate Broker and a Real Estate Agent?

As articulated to me by my real estate teacher before I obtained my real estate salesperson license, “the agent is scum and the broker is god!” This is a very important lesson to learn. The problem that most aspiring licensees have is that they are under the false impression that once they receive a license, they have free reign to sell any property and represent any client that they see fit. The truth is, agents are nothing without their brokers. A licensee cannot sell any property or any timeshare, nor can he/she represent any client without the consent and involvement of the broker.

Educational requirements are another difference between an agent and a broker. In order to obtain a real estate salesperson license (depending on the state in which a license is obtained), a person usually need only show proof of having taken a specified number of hours of real estate classes and pass a test. However, the requirements to obtain a broker’s license are far stricter. First of all (once again, all states are different so check your local laws), brokers usually need to have completed a specified number of college credits in specified subjects. Additionally, to sit for the broker’s exam, a person usually needs to have worked full time as a real estate salesperson or real estate broker/salesperson for two years during the last five years. Also, the broker’s exam requires an additional fee that is usually higher than the exam fee for a real estate salesperson. Last, some states provide an exception to the requirements of work experience and college credits for a broker’s license if the applicant has obtained a bachelor’s degree from an accredited university. Some states waive the experience and educational requirements if the applicant is a licensed lawyer. However, absent spending the money and time to successfully complete law school, most applicants will have to meet the educational and experience requirements.

The preceding paragraph begs the question, “If sitting for the broker’s license requires all of those additional qualifications, what is the advantage of having a broker’s license?” The main advantage of having a broker’s license is money! Let us be realistic about the real estate business; I am sure that it feels great to help a person buy their first home. However, if a person wanted a job solely for the good feeling, becoming a real estate agent or broker would not be near the top of the list, if at all. People become real estate agents for the money. Real estate agents can make a lot of money through commissions. However, the broker that employs the agent will always make more. The best way to become rich is to make money of the efforts of others. Brokers usually collect anywhere between 10% to 50% of the agent’s commission. Now, if a broker employs ten agents, that broker is making money off of his/her efforts and off the efforts of ten others. Real estate agents cannot do this, therefore, would you rather be a broker or a real estate salesperson?

Before you answer that question, it is important to note the liability issues with brokers. A broker has a duty to supervise and train agents, therefore, if the agent messes up, the broker could be held liable along with the agent. Back to the example of the broker that employs ten agents; that broker has the possibility of being held liable for the mistakes of ten people whereas a salesperson can only be held liable for his/her own mistakes. The broker in our example may get ten times the monetary benefit, but, in return, he/she has ten times the liability issues.

In the end, if the broker is competent, the liability issues can be easily avoided (also helping a broker in this task is the fact the most states require a continuing education requirement where a salesperson has to take “refresher” classes every two years in order to renew their real estate licenses). Therefore, although harder to obtain, if you possess the necessary qualifications, the monetary benefits of being a broker outweigh any potential liability issues.

Real Estate Career Revival Tips

Yes, I have a real estate license. Truthfully, I do not use it that often. I do a small deal here and there, but nothing that I would call a career. Why then, you may ask, am I writing a post about how to revive a real estate career? I am writing this post because reviving a real estate career is similar to reviving any career, you have to think like an entrepreneur! Why am I discussing a real estate career? I am discussing a real estate career because the housing market is currently a hot topic in the news, therefore, I thought the readers would be able to relate more to this post.

First and foremost, you have to love the career that you enter into, or at the very least, you must enjoy it. If you enter a career for the sole purpose of making a lot of money, but you hate your job, you will hate your life. In my opinion, making money is fun and there are infinite amounts of ways to do it. Why then should you settle for a job you hate but makes good money? Why not pursue a job you love and figure out a way to make a lot of money from that job? The point, if you do not like working in real estate, reviving your career is the least of your worries. If you do not like the job, find a new one!

Second, you are going to have to like to talk on the phone. Change your perception about things like “cold calling.” Do not think of it as a burden or an intrusion on the person being called. Instead, convince yourself that you are calling this person for the purpose of helping them make money or buy the property they always wanted. As a real estate agent, you are in the business of selling dreams. It may sound cheesy, but when you help somebody buy their first home or their dream home, you just made a huge impact in that person’s life, and I guarantee that you will get referrals from him/her. Get on the phone and sell people their dreams.

Third, be persistent. You may notice that sales begin to slump in markets like our current market. When this happens, you have to think of new approaches to get clients. Now is the time to start pushing the idea of investment properties. Sellers are desperate and need to get out of their homes, however, nobody is buying. This means that home prices are rapidly falling. In this situation, if you are a seller’s agent, concentrate on changing your primary clientele and represent more buyers. Change your business model for the time being and you will change your income bracket. Flexibility in different markets is key to survival.

Last, set goals. If you find yourself in a rut, set a short-term goal. Example: “I will help two people buy an investment property this month.” Two properties is not going to break the bank, however, the pecuniary gain is not the point. The point of setting a short-term goal is to create a sense of accomplishment and motivation for yourself. This way you will want to endure in this business, you will know the feeling of receiving a commission check, and you will want to have that feeling again!