If you have bought a property, considered buying a property, or even if you just know someone that has but property then you may have heard of the term real estate broker. So, what is a real estate broker? If you are not a real estate professional, then it can be a little confusing to figure out the difference between an agent in real estate and a real estate broker.
What is a real estate broker?
A real estate broker, like Compass Realty, is a real estate professional in their own right as well as being a licensed real estate agent. A broker holds information that can help people with real estate transactions whilst also assisting with selling or buying real property. The main difference between a broker and an agent is that it is the brokers’ duty to ensure that a real estate transaction is carried out lawfully, that all paperwork is correct and complete, and that all monies are recorded and reported properly – whether they are working for themselves or form a brokerage firm.
An estate agent must work for a broker so think of a broker or brokerage firm as an umbrella that covers the individual estate agents and ensures that all transactions are legally compliant while the estate agents are the ones that handle clients, listings, and sales.
When an agent presents you with a listing agreement or agency agreement, you are not signing a contract directly with them but rather you are signing a contract with their broker. Typically, this does not affect you however if your agent leaves the firm before your agreement expires then you may be legally obligated to work with another agent from the brokerage firm until it expires.
What does a real estate broker do?
A real estate broker is essentially a real estate agent who can manage their own business without the aid of an umbrella company. Brokers can work independently, or they can hire other real estate agents to work for them. They may also work with other businesses in the real estate sector to handle all their transactions and manage their agents.
If you imagine real estate as a ladder, the higher you climb the more licenses you need with home buyers and sellers at the bottom, agents in the middle, and brokers at the top. Brokers can do everything that agents can – market a home, represent the buyer or seller, write up a contract.
What can a broker do that an agent cannot?
- Move money in and out of an escrow account.
- Mediate conflict in a legal dispute.
- Hire agents to work under them.
- They do not have to work for a firm and can instead own their own brokerage.
Brokers have to be licensed in the state where they work in addition to holding a real estate agent license. Broker licensing may vary by state but typically a broker must first be a licensed agent for a predetermined amount of time, must be 21 years of age, and must also reside in the state where they are applying for their license.