Real Estate Jobs: Being a Real Estate Broker
Across the country, there's a growing demand for licensed real estate brokers. In fact, the United States Bureau of Labor Statistics estimates that there will be a need for more than 114,800 additional brokers across the country by the year 2030.
For those interested in a career in real estate, working as a broker can be a sensible choice. While obtaining a brokerage license requires some additional training and licensing beyond what is expected of a traditional real estate agent, this extra effort can pay off in higher income and greater opportunities for career advancement.
By understanding what real estate brokers do and what it takes to become a real estate broker, those considering this career path can confidently move forward.
Table of Contents
- What is a Broker?
- Requirements for Becoming a Broker
- The Duties of a Broker
- Advantages of Being a Broker
- Disadvantages of Being a Broker
- The Final Word on Becoming a Real Estate Broker
What is a Broker?
When a real estate transaction occurs, a broker must oversee the transaction from start to finish. They may assist clients with buying and selling properties like an agent, but the scope of their work and responsibility is much larger. For example, brokers can work independently and even create their own brokerage firms, hiring real estate agents to work for them.
It should be noted that in some states, all agents are brokers and vice versa. This article is addressing states where real estate brokers must obtain additional licensure to differentiate themselves from standard real estate agents.
The Difference Between a Broker and an Agent
One of the most common questions people have when exploring career opportunities in real estate is, "What is the difference between a broker and an agent?" Because both brokers and agents help clients buy and sell properties, differentiating between the two can seem confusing at first.
However, there are actually many differences between real estate agents and brokers. While all brokers can facilitate the sale and purchase of real estate properties (just like an agent does), these professionals have completed additional training and licensing requirements. As a result, they can do some things agents cannot, such as work independently and even hire real estate agents to be part of their brokerage team.
There are also differences in how brokers and agents get paid. A real estate agent receives commissions on each sale, but a percentage of their commission is split with their brokerage firm. On the other hand, a broker earns money not only from the commissions on their own sales but also the sales of the agents working for them.
The Difference Between a Managing Broker and Associate Brokers
Within the real estate brokerage world, different types of brokers take on various roles. Two of the most common types of brokers are managing and associate brokers.
A managing broker (also commonly referred to as a broker-owner) runs their own real estate agency. They handle the hiring of all their own agents and the day-to-day operations of running the firm.
On the other hand, associate brokers do not run their own firms but instead work for a managing broker. This brokerage option tends to be better-suited for brokers who want to continue working directly with clients while also managing their own team of real estate agents without the added hassle and stress of running their own firm.
Requirements for Becoming a Broker
Every state has specific requirements for becoming a real estate broker. However, all brokers must first become licensed as real estate agents, and in some states, aspiring brokers may even be required to practice as real estate agents for at least two years before obtaining a brokerage license.
All brokers must also receive specialized training and education. In most states, this entails completing eight college-level real estate courses. Upon completion of these credits (as well as additional background screening and fingerprinting), prospective brokers can schedule their licensing exam.
After passing the multiple-choice licensing exam, prospective brokers must complete an application for licensure. There may be fees associated with submitting this application, but specific costs and requirements can vary from one state to the next.
A State-Specific Example: Indiana
Those applying for a brokerage license in Indiana must complete 90 hours of pre-licensing education. From there, applicants must pass the brokerage licensing exam with a score of 75% or higher.
In Indiana, aspiring brokers are also required to obtain sponsorship from a licensed real estate broker in the state. Even after becoming licensed, Indiana also requires brokers to complete a minimum of 30 hours in post-licensing education credits. This consists of:
- Six hours of instruction in Indiana real estate transactions
- Six hours of instruction in financing
- Ten hours of instruction in business planning, sales, and marketing
- Five hours of instruction in negotiating and counseling skills
- One hour of instruction in fair housing laws
- Two hours of instruction in basic construction
In addition to the post-licensing education required for brokers in Indiana, all real estate brokers must also complete 12 hours of continuing education from July 1 through June 30 of each calendar year. Failure to do so can result in the revocation of one's license.
The Duties of a Broker
So, what does a day in the life of a real estate broker look like? While specific duties and job functions may vary based on whether a person is working as a managing broker or associate broker, most real estate professionals regularly carry out the following duties.
Listing and Showing Properties
Like real estate agents, real estate brokers can help list new properties when they go up for sale and schedule showings for buyers interested in different properties. This is done through the Multiple Listing Service (MLS), which brokers must become very familiar with.
When listing properties, brokers are also responsible for advertising listings to expand their reach and help them make a quick sale. This may include marketing on social media, taking out print ads, and handling other forms of advertising.
Negotiating Deals for Clients
Another important job duty of a real estate broker is to handle all aspects of communication between clients and the buyers or sellers of each property. If a broker's client is looking to buy a home, the broker will assist with determining the best offer for the property and formally submitting the offer. From there, the broker may help each party negotiate back and forth until an agreement is reached.
Arranging Transaction Documents
Real estate brokers also play the important role of preparing all contracts, property disclosures, and other documents related to the purchase or sale of a property. Because buyers and sellers can quickly become overwhelmed by all the documentation associated with buying or selling a property, the knowledge and expertise of a broker are vital. Real estate brokers are expected to answer any questions clients may have about specific documents or other aspects of the closing process.
Overseeing Other Agents
One of the biggest job duties that sets brokers apart from real estate agents is training and overseeing other agents within the firm. Both managing brokers and associate brokers will have agents working under them that they are expected to train, mentor, and manage. This may include reviewing their sales numbers, helping them set up their own websites, and making sure they complete continuing education requirements to keep their licenses in good standing.
Advantages of Being a Broker
There are many benefits to becoming a real estate broker, especially for those who enjoy working with a greater sense of independence. Specifically, being a broker often means making more money than a person working as a real estate agent. Likewise, there may be greater opportunities for career advancement.
Brokers Typically Earn More Money
Like real estate agents, brokers receive a commission on each sale made. However, unlike real estate agents, brokers receive commissions from their own transactions and a portion of the commissions made by the agents that they manage. The specific commissions and percentage breakdowns can vary greatly from one brokerage firm to the next, but collecting a small portion of each agent's sales commission adds up quickly and creates greater earnings opportunities for brokers.
More Opportunities for Upward Mobility
The career possibilities for somebody with a brokerage license are vast. With a brokerage license, real estate professionals can work independently or even start their own real estate firms. Many brokers opt to work for an already-established brokerage, saving them the hassle and start-up costs of launching their own businesses.
From there, associate brokers working for a firm can advance their careers (and increase their earnings) by building and managing their own teams of real estate agents within the brokerage.
Disadvantages of Being a Broker
As with any career path, there are some potential drawbacks to becoming a real estate broker. For those considering a career as a broker, it's worth exploring these possible disadvantages before making a decision one way or the other. Not only does obtaining a brokerage license require more work (and possibly more money) than getting a traditional real estate license, but brokers must also take on greater responsibility at work.
Getting a Broker's License is More Intensive
Compared to pursuing a standard real estate agent license, getting a brokerage license is more work-intensive, time-intensive, and expensive. While exact requirements for becoming a broker will vary from one state to the next, many states require prospective brokers to complete a minimum number of college credits before taking the brokerage exam and applying for a license.
Meanwhile, some states may even require brokers to complete post-licensure education credits, adding to the cost and time required to work in this field. And because some states require brokers to first complete at least two years of full-time work as a real estate agent, the path to becoming a broker can be a long one.
Brokers Need to Master Multiple Roles
In addition to the added time and costs associated with becoming a licensed broker, there is also the added weight of responsibility to consider. Not only do real estate brokers carry out all the job duties of a traditional real estate agent, but they must also handle extra duties that may include:
- Hiring and training agents to work for the brokerage firm
- Reviewing sales figures and performance of agents
- Managing day-to-day business operations at the firm
The Final Word on Becoming a Real Estate Broker
For those interested in a career in real estate, working as a broker can be an excellent choice. This is especially true for those who don't mind furthering their education and going "above and beyond" to achieve the additional training and licensure required of brokers in most states. Likewise, those who desire to work more independently and manage their own teams of agents may be well suited for a career in a real estate brokerage.
By understanding what real estate brokers do and what becoming a broker entails, aspiring real estate professionals can make informed decisions regarding their future careers.