Whether you're hoping to purchase your first piece of commercial real estate or are interested in upgrading to a larger home, you may be anxiously searching for the right real estate professional to help you browse properties, secure financing, and get the parties to the closing table. However, wading through lists of agents, brokers, broker associates, REALTORS®, and others can be exhausting. What should you know about these professionals' job responsibilities to ensure you select the perfect person who can offer what you need? Read on to learn more about some of the differences between real estate agents and brokers.
Differentiating Between Real Estate Agents and Brokers
Just as a square is a type of rectangle, but a rectangle is not a type of square, a real estate broker can be an agent, but an agent cannot be a broker (at least, not without first obtaining a broker's license). A real estate agent is primarily a salesperson—although there are roles for buying, selling, and transaction agents, as well the ability to perform all three roles, most agents are in the business of putting their clients into (or helping them get out of) a specific house.
Real estate agents who give advice on real estate—whether advice to purchase a specific house, tips to make a house more curb-friendly, or market estimations on the value of a particular piece of property—must have a real estate license to do so. Each state handles its own real estate agent licensing process, and most states maintain an online database that allows consumers to browse agents by name or check on any previous consumer complaints.
Real estate brokers are a step above a licensed real estate agent, and are often required to take additional state licensing exams to achieve this designation. Many states require real estate agents to work for (or under the supervision of) a licensed broker, often as part of a real estate agency, but real estate brokers are free to operate independently.
Real estate brokers are also distinct from "mortgage brokers," who work in the financing realm and can help connect consumers to loan products that are right for them.
Real estate "broker associates" are real estate brokers who work for another real estate broker. In some situations, this type of arrangement is advantageous in that it allows brokers to share clients or pool their efforts and resources toward joint marketing and overhead expenses.
Determining What You Need
In general, using an agent for a transaction will also open you up to the services of a broker; to comport with state and federal law, the real estate agent is required to operate under the supervision of or in partnership with a broker, even if you never end up using these services yourself.
In some cases, it can make more sense to seek out a broker from the get-go, especially if you're anticipating a complex transaction. For example, if you're planning to cash out a retirement account to afford the down payment on a piece of commercial property, or if you and a family member wish to purchase a duplex together, your purchasing process may present too many complexities for the typical agent to handle.
On the other hand, if you're just seeking a bare-bones purchase or sale transaction of residential real estate, it's unlikely you need a specialized real estate or mortgage broker in lieu of a licensed real estate agent. Using an agent instead of a broker may be able to reduce the amount of commission you pay (or the amount taken from your home's sale price), putting more money in your pocket.Share