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Edited by Bailey Peterson
Written by Andrew Whytock
Edited by Bailey Peterson
Real estate broker vs. agent | Types of real estate brokers | Qualifications | FAQs
A real estate broker is a real estate professional with an advanced license, years of experience in the industry, and additional state-mandated education.
Brokers can start real estate brokerages and then hire agents, monitor transactions, and oversee the day-to-day operations of a real estate agency.
If you’re buying or selling a home, a real estate broker can also represent you by assuming the role of a real estate agent.
The terms “broker” and “brokerage” are sometimes used interchangeably, but they are technically two different things:
- A broker is an individual who manages agents and handles real estate transactions.
- A brokerage is a firm operated by one or more brokers.
🔑 Key takeaways
- Brokers can represent home buyers and sellers, but their main responsibilities include managing agents, coordinating transactions, and ensuring that their brokerage is compliant with state law.
- Individuals must have experience as a real estate agent (two years, usually) before they are eligible for a broker’s license.
- Your agent’s level of experience matters more than whether they’re a licensed broker.
- All real estate agents must work under a licensed broker, but brokers can operate independently.
What’s the difference between a real estate agent and a broker?
The main difference between real estate agents and brokers is their licensing requirements.
To become a broker, a person first needs a real estate salesperson’s license from their state along with the minimum required experience working as an agent (usually a minimum of two years).
Brokers must also complete advanced real estate courses and pass their state’s broker’s licensing exam.
Agents, however, only need a real estate salesperson’s license and can’t work independently — they must be sponsored by a licensed broker.
» MORE: Real Estate Agent vs. Real Estate Broker vs. Realtor — What’s the Difference?
Broker states
In these nine “broker states” licenses have two levels:
- Colorado
- Illinois
- Indiana
- New Mexico
- North Carolina
- Oregon
- South Dakota
- Tennessee
- Washington
An entry-level broker’s license in one of these states is equivalent to a salesperson’s for real estate agents. An upgraded license is a full broker’s license.
Agents in broker states who want to manage a brokerage need to upgrade their license to advance.
Are real estate brokers better than agents?
It isn’t necessarily a bad sign if your agent doesn’t have a broker’s license — many agents prefer to focus on working with clients instead of taking on administrative and people management duties.
You should always hire an individual, not a title, when you need a real estate professional. Experience and expertise matters more than anything.
Broker’s licenses require more experience and education, so technically a broker is a safer bet in terms of knowledge — but plenty of highly experienced and knowledgeable real estate agents exist out there. Not to mention that there are bound to be some bad brokers!
Types of real estate brokers
There are three main types of real estate brokers:
Associate broker
An associate broker is usually a new broker who still fills the role of a real estate agent, with some management responsibilities in the brokerage.
Associate brokers might still split their commission from sales with the brokerage, but their splits are typically more favorable than what agents receive. For example, an associate broker might start with a 70%/30% split and continue to move up as their sales volume increases.
Managing broker
Managing brokers are involved in the day-to-day management of a real estate brokerage.
The responsibilities of the managing broker include hiring agents, overseeing transactions, and working directly with clients.
Managing brokers report to the firm’s designated broker.
Designated broker
A designated broker — also called a principal broker — is in charge of the brokerage.
The designated broker ensures all deals that pass through the brokerage comply with state real estate laws.
Designated brokers usually have extensive real estate experience and education because they must carefully evaluate deals, review agent performance, and manage compliance.
What qualifications does a real estate broker have?
Licensing requirements for real estate brokers vary by state, but in general, the requirements include:
- 2+ years of experience as a real estate agent
- Completion of state-approved real estate courses
- A passing grade on a state’s broker licensing exam
FAQs
What is the definition of a real estate broker?
A real estate broker is an individual who is licensed to operate a real estate brokerage, hire and manage real estate agents, and oversee transactions.
Real estate brokers must have experience working as a licensed real estate agent and pass a state licensing exam.
Should I use a real estate agent or a real estate broker?
A real estate broker isn't necessarily better than an agent. Technically, brokers have more qualifications, but many real estate agents are highly experienced and knowledgeable.
When you're hiring a real estate professional, focus on their industry experience and expertise rather than their title. It's important that you work with someone who earns your confidence
Alternatively, you can use a low commission company that can help you find a pre-vetted agent and save you money at the same time.
How do you find out if an agent is a real estate broker?
To verify your agent's credentials, use your state real estate association's website to conduct a name search.
The results will tell you what type of real estate license the agent holds (salesperson or broker) and whether any formal complaints have been filed against them.
Related links
To learn more about how real estate professionals can help you when you’re ready to buy or sell a home, check out more of our content!
How to Find a Real Estate Agent: What You NEED to Know. A complete guide to finding the best local real estate agents, with tips from the experts.
What Companies Offer the Lowest Real Estate Commission Fees? An in-depth look at the top 10 low-commission real estate companies.
The Role of the Real Estate Agent. Find out what real estate agents do for home buyers and sellers, how they get paid, and more!
How Much Do Real Estate Agents Make? Real estate agents make 5-6% commission to sell a house, or $18800 per home sale – but average take home earnings vary widely.
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