So, what is the next step up from being a real estate professional (agent)? The answer is to become a real estate broker. What does that look like? How do you accomplish it? We’ll discuss it below. Please keep in mind each state has their own set of requirements and rules, please make sure you check your state on the proper procedure in being a real estate broker.
The Journey from Real Estate Agent to Broker
Real estate brokers are often different from real estate professionals with the amount of responsibilities they oversee. While we don’t look at it in terms of competition, this different designation exists because brokers are responsible for overseeing a group or groups of real estate agents. Brokers can also own and operate real estate firms and franchises.
A real estate broker is someone who began their real estate career as a real estate professional. The real estate broker has to take additional courses and obtain more certifications beyond the coursework, experience, and certifications they had in sales. Again, the requirements and designations vary by each state so you’ll have to check with your state on what’s needed.
What educational requirements and certifications do real estate professionals need to become brokers? For example, as of the date of this writing, in the state of Florida, prospective brokers must complete 72 hours of coursework and pass the Florida Real Estate Broker Examination with a grade of 75 or higher. They must also submit fingerprints, complete a background check, and have at least 24 months with an active real estate license in the last 5 years. To learn more about the specific requirements for becoming a licensed broker in your state, visit the National Association of Realtors website.
The Pros of Being a Real Estate Broker
Being a broker unlocks the door to many more opportunities compared to those of real estate agents. Like any profession, there are pros and cons. Here, we’ll discuss the pros. Some of the biggest benefits include:
- Higher earning potential
- Greater independence and flexibility
- Enhanced market knowledge and expertise
Greater Independence and Flexibility
Being a broker promotes greater independence in work as it’s an extremely flexible position. While working as a real estate professional limits you in real estate, becoming a broker opens up doors for various opportunities the younger version of you dreamed of.
Brokers find this greater independence and flexibility in work due to the fact that there are more available work opportunities. Brokers can set their own work hours, choose their clients, set up their own brokerage structure and fees, and make other operational decisions regarding themselves and the firm.
Enhanced Market Knowledge and Expertise
Becoming a broker is no small task, but the benefits you can reap from making the transition are big. Another pro includes the new knowledge and expertise you’ll gain to help boost your skills.
Because brokers oversee people and manage teams, their real estate market knowledge is broader than that of real estate agents focused solely on sales. They are key decision-makers who offer insights into the most effective strategies and investments. Brokers understand market trends, can advise on wise investment moves, and determine when it’s best to hold off on certain actions.
The Cons of Being a Real Estate Broker
You’ve most likely been reading this article and thinking, “If it’s this great, why isn’t everyone a real estate broker?” That’s a great question. To quote the band, Poison, “Every rose has its thorns,” and it’s no different in the real estate industry. Below, we’ll discuss two main cons to being a real estate broker:
- Augmented responsibility and risk
- Greater initial investment
Augmented Responsibility and Risk
Brokers have more financial liability and responsibility than the other members of a real estate team. They are legally responsible for any transactions that occur within their team. They also have managerial responsibilities as part of owning a firm or franchise. Their financial risk is higher than those in sales since they have the ultimate oversight.
Greater Initial Investment
Furthermore, brokers have higher initial investments to make. We discussed the requirements for licensure above, but what about brokers who also want to open their own brokerage? Opening a firm and hiring other real estate professionals to form a team also requires significant investments in labor, time, and money.
Comparison: Real Estate Broker vs. Agent
We have discussed the pros, cons, and definition of a broker. We’ve also discussed the responsibilities and what it takes to become ONE. Now, let’s take a look at how brokers compare to real estate professionals:
- Hierarchy and Responsibilities: Brokers operate at a higher level than real estate agents in most states as they manage the overall operations of their firm. They oversee agents, ensure compliance with legal and financial regulations, and make strategic decisions that impact the entire team. Real estate agents, on the other hand, primarily focus on individual transactions and client relationships, reporting to the broker and often receiving leads and support from them.
- Financial and Legal Responsibility: Brokers hold significant financial and legal responsibilities. They manage the firm’s budget, ensure agents are paid, and in mst cases are legally accountable for all transactions conducted within the brokerage.
- Educational and Licensing Requirements: Becoming a broker requires advanced education and licensing beyond what is necessary for agents. Brokers must complete additional coursework and pass more rigorous exams to obtain their license. Agents have more basic requirements for getting their real estate license, which generally involve fewer courses and exams. Check with your local state requirements to determine what you need to do.
- Pros and Cons of Being a Broker: The pros of being a broker include a higher earning potential and the ability to shape the work environment. Brokers can still engage in sales while enjoying expanded job opportunities and being seen as more trustworthy and experienced. However, they face cons such as financial responsibility for their team, increased educational and licensing requirements, and the need to manage conflicts within their firm. Each state has their own rules and requirements, check with your local governing body.
- Pros and Cons of Being an Agent: Agents benefit from focusing primarily on sales, which allows them to concentrate on building client relationships and closing deals. They generally have fewer financial and legal responsibilities compared to brokers, which can reduce stress and overhead. However, agents may face limitations in their career advancement opportunities and have less control over their work environment compared to brokers.
| Pros | Broker | Agent |
| Earning Potential | Higher earning potential | Generally lower earning potential |
| Job Opportunities | More expansive job opportunities | Fewer managerial opportunities |
| Trustworthiness and Experience | Often considered more trustworthy and experienced | May be viewed as less experienced |
| Sales Involvement | Can continue operating in sales if desired | Focus primarily on sales |
| Work Environment | Can design their ideal work environment | Limited control over work environment |
| Financial Responsibility | Financially responsible for the team and operations | No financial responsibility for the team |
| Education Requirements | Requires advanced education and licensing | Basic education and licensing to get a real estate license |
| Legal Responsibility | Legally responsible for all transactions within the team | No legal responsibility for the firm’s operations |
| Investment and Spending | Requires significant monetary investment | Lower financial investment |
| Conflict Management | Responsible for managing team conflicts | Not typically involved in firm-wide conflict management |
Succeeding as a Real Estate Broker: Practical Tips
The path to becoming a broker may not be easy, but it’s certainly not impossible. Should you take the leap of faith and begin making moves toward becoming a broker, we have the practical advice you need. Your local real estate governing body may have their own set of requirements and rules, please make sure you check with them on the proper procedures. The information below will give answer all of the most common questions new brokers, or those looking to become brokers, may have:
- How to manage risk as a broker: The best way to manage risk as a broker is to stay educated and informed. Sometimes it is good to take risks, but as a broker, it is important to know how and why you may be taking a risk. You can further manage risk by using concise contracts, communicating often, asking questions, and always doing your research.
- Continuous learning: As a broker, you’ll always be learning. The key to success is staying on top of the latest research and advances. You can do this by receiving coaching, attending conferences, subscribing to blogs, and networking via social networks. Several vendors offer continuing education online.
- How to balance responsibilities: Being a broker comes with many tasks, some small and some more daunting than others. The keys to managing your responsibilities well are prioritization and delegation. Look at your to-do list and figure out what is most urgent. Do the urgent things first and if there are smaller tasks that can be checked off by co-workers, delegate to them.
- How to manage stress: Being a broker is stressful at times. Remember that your life does not end when you become a broker. Take the time during the day to take a break and make time in your life outside of work to do the things you love and bring you joy.
- How to maintain a work-life balance: This point can go along with managing stress. While it seems that the real estate industry does not stop (and it doesn’t), that doesn’t mean you can’t stop. Remember to leave your work at work, turn your phone on silent, and spend meaningful time with loved ONEs.
Becoming a Broker
If you’re considering becoming a broker, know that you’re embarking on a new and exciting path within your real estate career. There are many benefits to being a broker—including a higher earning potential and flexibility—but there are also some drawbacks, such as having more risk on your plate. Therefore, it’s important to consider your career goals and evaluate them against all aspects of what it means to be a real estate broker. Please keep in mind each state has their own set of requirements and rules, please make sure you check your state on the proper procedure in being a real estate broker.
As mentioned above, real estate brokers also have expanded job opportunities when they make the switch from sales to brokerage. If you’re considering starting a brokerage or buying a franchise, Realty ONE Group has what you need. If you are still at the beginning stages of your brokerage journey, we can support you as you begin the journey so you won’t miss a beat.