Think of that crisp and earthly smell of freshly cut grass drifting through the air at that open house. There you are, clipboard in hand, leading eager clients through homes.
But beneath the excitement lies a question: agent or broker? What is the difference between real estate and broker license?
The significant difference between real estate and broker licenses lies in operational authority. A real estate agent is licensed to work under the governing eye of a real estate broker. But on the other hand, real estate brokers have the choice to work on their own.
Brokers can open their own firms and hire agents to work with them.
But today, we’re diving into the not-so-obvious differences between a real estate agent license and a broker license. We will look beyond license obstacles and documentation woes as we calculate the real-world impact of each title on your career trajectory, earning potential, and the kind of magic you weave in the world of brick and mortar.
What Is the Difference Between Real Estate and Broker License?
Both real estate agent and broker licenses serve the real estate industry. If you are on the fence about which real estate license you should get, here are a few guiding differences worth noting between these two servicemen:
|Real Estate Salesperson License
|Real Estate Broker License
|No experience is required
|Experience as a real estate salesperson
|Complete approved pre-licensing education
|Complete additional education in conjunction with an approved broker course
|Pass the real estate salesperson exam
|Pass the broker exam
|Lower license application fees
|Higher license application fees
|Real estate agent
|Principal broker/ associate broker
|Allows you to help clients list, sell, and buy houses
|Operate as an agent does, plus they are licensed to start their brokerage and supervise real estate agents
|Earn in commission splits
|Earn from both commission splits and agent cuts
|Works under a real estate broker
|A broker can work independently
|Salesperson or agent licenses are issued through sponsoring brokers
|Brokers, except for associate brokers, don’t need sponsoring brokers
Real Estate Agent
Real estate agents are licensed salespeople who carry out real estate transactions under the watchful eye of a broker. Agents must take state-required pre-licensing courses and pass an exam to qualify.
There are two types of real estate agents involved in a transaction:
- Listing agent
- Buyer’s or seller’s agent
What they do: Agents perform day-to-day transactions representing buyers and sellers. Common agent activities include staging homes, marketing property listings, hosting open houses, negotiating offers, and guiding clients through the home buying/selling process.
How Much They Earn: Real estate agents at the top of the food chain have been reported to earn $109,490 in annual pay. Most earnings come from commissions based on the value of home sales transacted.
Real Estate Broker
Brokers are more experienced real estate practitioners who have taken advanced licensing exams to qualify as certified brokers. Most states require two to three years of licensed sales work before getting a broker license.
A good example would be the broker requirements set by the Alaska Real Estate Commission. To become a broker in Alaska, real estate agents must have held their licenses for at least 36 months before applying for licensure.
There are three types of brokers:
- Associate brokers
- Managing brokers
- Principal brokers
What They Do: Brokers are authorized to start their own firms and brokerage offices. In management roles, their duties include hiring/supervising sales agents, overseeing brokerage trust accounts, securing listings, and promoting their firm’s real estate business.
How Much They Earn: The Bureau of Labor Statistics indicates the median broker salary for the top 10% is $173,000 annually. Brokers have the potential to earn higher incomes by receiving shares of sales commission from all agents at their firms.
Charting Your Course to a Real Estate or Broker License
How far can you go in real estate? As far as you want. Why settle for the sky when there are footprints on the moon?
When entering the world of real estate, a critical crossroads is deciding whether to pursue an agent license only or try to reach for a broker license. Here are some factors to help you chart your course:
Identify your goals. Do you crave independence and leadership? Or do you prefer a supportive team environment?
Evaluating your temperament and ambitions can steer your decision. Self-driven entrepreneurs ready to take the operational reins may thrive as brokers. Growing as a sales agent could be more fulfilling if you prefer camaraderie and guidance.
Assess your financial comfort zone. Brokerage ownership comes with bigger rewards and risks. Brokers take the financial risk of opening firms but also gain the rewards of company profits.
If you have access to capital and a willingness to invest in or run a business, the broker path offers financial upside. Otherwise, the agent lane may suit those averse to risk.
Explore earning potential for both paths and budget for additional education. Brokers have the potential to earn more but often have more operating expenses.
Factor in education costs, advancing to broker requires more coursework. Make informed projections before you decide.
Test Drive Your Future
Take our free real estate practice tests for the real estate license and get a taste of what awaits. Gaining exposure to actual exam-like content can clarify your interests.
Do sample test questions get your wheels turning about operations or transactions? That reaction offers hints to align career ambitions.
Open the Door to Success a License at a Time
Choosing between a real estate agent license and a broker license depends on your career goals, financial comfort zone, and appetite for learning. While both paths offer opportunities in the vibrant world of real estate, they differ in terms of operational authority, education requirements, earning potential, and supervisory roles.
If you’re considering diving into the world of real estate:
1. Identify Your Goals: Determine if you prefer working independently or within a team environment.
2. Assess Your Financial Comfort Zone: Understand that becoming a broker comes with higher risks and potentially higher rewards.
3. Explore Earning Potential: Research the average income for both agents and brokers to help guide your decision.
4. Ace Your Exams: Take free practice tests to understand what each role entails.
Are you leaning towards getting an agent’s license or looking forward to studying further to become a broker? Maybe you’ve already made your choice?
We’d love to hear about it! Share your thoughts or experiences in the comments below.