Buying or selling a home can involve a great deal of money, so it’s natural to feel at least a little intimidated. You need the right real estate professional to guide you through it all.
Knowing the differences between the types of people you’ll encounter at a real estate firm can help you choose the one who can be most helpful, whether you’re ready to buy a home or sell one.
Here’s how to tell whether you want to work with a real estate broker or a real estate agent.
Types of real estate professionals
- Real estate agents are licensed sales people who help clients buy and sell homes or other properties. Their duties include listing and marketing the properties, and guiding the parties through the sale. Although they are often considered independent contractors, agents must work under the management of a broker.
- Real estate brokers are owners or managers of real estate agencies. They run the office and work with the title companies and real estate lawyers who process real estate transactions. They can provide the same buying and selling services to the consumer as a real estate agent. Some brokers choose to work alone in their own offices while others have agents working for them.
- Realtors are real estate agents or brokers who are members of the National Association of Realtors, or NAR. As members of the trade group, they agree to follow its code of ethics. But that doesn’t mean brokers and agents working outside of the NAR are unethical; every licensed agent and broker must adhere to state standards.
- Broker associates, sometimes called associate brokers, are licensed real estate brokers who often work as agents but also have the ability to broker their own transactions so that they may receive a greater commission.
Responsibilities of brokers, agents
The biggest difference between real estate brokers and agents is the level of responsibility each has within an agency.
Brokers essentially run the real estate office where agents work. This includes reviewing contracts the agents bring in and overseeing the transfers of escrow money and other financial transactions.
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Agents tend to work more directly with clients. And, when real estate agents first get their license, they “have to practice or begin with another individual that has received a broker’s license,” says Jeffrey Hicks, an associate broker in Atlanta and vice president of the National Association of Real Estate Brokers.
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Real estate brokers and agents must pass real estate classes as well as the licensing exam for the state in which they plan to work. However, brokers are required to take extra classes beyond the coursework demanded of real estate agents.
Every state has a different requirement for training, but most require at least 60 hours or more of coursework before a real estate professional may take the exam for the appropriate license.
How they’re compensated
Both agents and brokers are paid by commission, typically split between the listing and selling agencies.
Total commissions can range from around 6 percent on up to 10 percent of the sale price, depending on the type of property. It’s something to keep in mind when you’re calculating whether you can afford to make a home purchase.
“For example, in California the total commission is generally between 5 percent and 6 percent,” says Beverly Shepard, a broker in Sacramento. “But if it’s a mobile home that’s not expensive, it can go up to 10 percent.”
Brokers who work alone receive money for their roles as both the agent and the broker, while brokers who supervise other agents earn money for each of the transactions they oversee.
Making the choice
A real estate broker and a real estate agent can provide the same level of service to the consumer. So, your decision may come down to the types of services you need and the amount of experience you’re looking for.
One final point: Don’t make assumptions about experience. Some agents might have years in the game but have delayed getting their broker’s license or have decided they don’t want one. Meanwhile, some brokers may have just a few years under their belts.