What Is a Real Estate Broker?

A broker is a real estate professional who receives a license from an individual state to assist home buyers with real estate transactions. Licensed brokers work for real estate brokerage firms or their own brokerage, hiring and overseeing agents, handling escrow account funds, writing property contracts, and ensuring real estate sales comply with state laws. Brokers collect a portion of the real estate commission that the listing agents who work for them earn.

Brokers handle various real estate industry tasks, including:

• Contracts: Brokers write, edit, and submit property purchase contracts for real estate transactions.
• Employee hiring and oversight: A broker hires new agents or real estate salespeople, oversees sales agents’ day-to-day activities, provides opportunities for additional training, and takes a share of their agent commission whenever they sell a property.
• Finances: Brokers may transfer money in and out of an escrow account, a type of real estate business account for holding potential buyers’ or lenders’ purchase price funds until the buyers or sellers qualify for an approved financial transaction.
• Legal issues and oversight: Brokers may mediate or arbitrate if a legal dispute emerges. In addition, brokers ensure sellers and buyers meet paperwork deadlines and comply with real estate law requirements.
• Property preparation: A broker may help sellers with property management before selling, such as preparing for open houses or assisting with listing services.

“I’m very passionate about real estate because it's an industry of dreamers. You have real estate agents. You have buyers. You have sellers. You have commercial brokers, residential. You have software providers of all different sorts. You have brokerage firms. It’s all these people that are coming from all different types of places, all different types of industries and companies and designers and marketing people, real estate, engineers, to come together, mix it up, and build. There’s so much opportunity to create better.” —Robert Reffkin, founder and CEO of Compass

Though they may sound like similar occupations, and both may become National Association of Realtors (NAR) members, real estate brokers differ somewhat from real estate agents. The distinctions include:

• Contracts: Though your real estate agent may supply you with a listing agreement, the contract commits you to the real estate brokerage, not the agent.
• Education: To become a real estate broker, you’ll need to meet continuing education requirements for a brokerage license. You’ll need to complete additional coursework regularly to keep your license current.
• Experience: You don’t need prior experience to become a real estate agent, but you’ll need several years of experience as a sales agent to obtain a brokerage license.
• Licensure: Agent licensing requirements include passing a licensing exam to become a licensed real estate agent. In contrast, real estate brokers require both a real estate license and a real estate broker license (by passing a separate broker exam) issued by the state.

Real estate brokers fall under one of three of the following types:

1. 1. Associate broker: An associate broker, also known as a broker-salesperson or affiliate broker, assists the principal broker with real estate transactions and may be an independent contractor depending on the circumstances.
2. 2. Designated broker: Also called a principal broker, a designated broker handles and oversees the legal aspects of all property-related transactions at a brokerage, ensuring that real estate agents follow real estate laws. Only one designated broker at a time may work at a brokerage.
3. 3. Managing broker: As the name suggests, a managing broker manages day-to-day operations, including human resources duties such as training and mentoring new agents, overseeing administrative tasks, and handling licensing issues. Sometimes designated brokers also take on the responsibilities of a managing broker.

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