What is the Difference Between a Real Estate Broker and Real Estate Agent?

In answering this request, I'm taking into consideration my experience as a Realtor in Washington state and Hawaii. A note to the reader, laws, practices and role functions vary from one country to the next.....another hubbers answer to this request will substantiate this statement.

Here in The United States of America, federal laws pertaining to real estate are the same but state laws vary from one state to the next. Licensing requirements and continuing education requirements also vary. Of course one needs to consider this is an ever changing industry and keeping on top of the changes, including an awareness of those associated with it such as Mortgage Finance, is significant in itself.

In order to become licensed as a Real Estate agent in the state of Hawaii, I needed to complete a 45 hour course in two weekends. I received a 1 1/4" thick book containing 8 1/2" x 11 1/2" pages of material which I had to become more than just familiar with. In the state of Washington, the course requirement is 60 hours and the dimensions of the book are about the same. I completed an online course for Washington where in contrast to Hawaii, I participated in an interactive course with the instructor presenting many scenarios of what could potentially go wrong. I'd much rather learn from others mistakes than experience any first hand. With this business comes great potential risk for liability and for a Broker, the risk is greater than it is for a an agent. Thankfully, in my four and a half years of experience, I haven't encountered any personal litigation. All the same, I am thankful for E & O, othewise known as "Errors and Omissions Insurance." If anyone is considering becoming licensed, I do suggest an interactive course the first time around. In both states, test scores for potential licensees must be at least 70% before one can become actively licensed as a real estate agent.

Once an individual passes their real estate test and locates an office they would like to be a part of where the owners and or Broker are ready to welcome them to the company, this person can actively sell real estate after paying the appropriate fees. The fee's include the initial licensing fee (has to be renewed approximately every 2 years, depending on when one becomes licensed), desk fee, Multiple Listing Office (MLS) fee, and if necessary, a franchise and NAR fee (National Association of Realtors - not all agents are Realtors. Realtors adhere to a strict Code of Ethics...) . A real estate agent can begin to represent their company - and buyer and sellers who want to do business with him or her. Understand however if a seller lists their home with a particular agent, the listing belongs to the Real Estate Company before it belongs to the agent. Agents are "subagents" of their company. So if an agent decides to leave one company for another, the Real Estate Company does not have to release any listings to the agent who acquired them. However this would be the right thing to do in most instances since most of the time, a client decides to do business with a certain person because of their relationship, reputation, level of service (to possibly include marketing commitments etc.) more so than a particular company.

Most companines charge agents a desk fee...these fees can range from quite low for 50/50, 60/40 and 70/30 commission splits. For splits like these, they may range from $50 to $400 a month, depending on the office. An agent with RE/MAX can receive 100% of their earned commissions if they pay approximately $1200 in desk fees each month. There are fees associated with each transaction and again depending on the company and set up for each individual, they vary.

In Hawaii, in order for one to become a licensed broker, a person has to have worked as a full time real estate agent for 2 years and pass the Brokers exam by 80%. If I'm not mistaken, it's about the same here in Washington although exceptions may be made for those who have related experience in other parts of the country or a related business (for example, an attorney who wanted to become licensed as a Broker would not likely have to work two years as a full time real estate agent).

In Real Estate, various designation can be obtained. Some include:

GRI or "Graduated Realtor Institute."

CRS or "Certified Residential Specialists."

ABR or "Accredited Buyers Representative."

ARC or "Accredited Land Consultant."

SRES or "Senior Real Estate Specialists."

Designations can serve well, in particular when an agent is focusing on a specific market niche. For example, the SRES is a good designation for someone who primarily wants to cater to doing business with senior citizens.

My partner earned his Brokers license about a year ago and personally, it has been my goal to earn my CRS designation. These designations can contribute to the requirement for continuing education yet they require a good deal of time and several hundred dollars (usually about $400). When my partner received his Brokers designation, he said the teacher said the other designations in comparison to the Brokers are BFD (big f 'n deal)!

So to finally get around to wrapping this up and share about the role of a Broker... a Broker often times is owner or part owner of a company. Other times, a company will hire someone to be the managing Broker and this Broker will not have a vested monetary interest in the company. Ideally, a managing Broker oversees all the office operations including the management of all the agents. He or she reviews each agents client-files (offices need their own separate copy of everything) to make sure all is in order and bring to an agents attention anything which may be missing and they will question anything which appears to be potentially problematic. A great managing Broker provides a good deal of support to the agents in the office and checks in on them when he or she hasn't seen or heard from them in a while to make sure all is well on the personal front as well as the professional. Good business involves genuine personal caring as well as challenging others with accountabilities. Managing Brokers may or may not compete with agents for business. Not everyone with a Broker designation serves as a Broker, but they should possess a greater amount of knowledge than one who does not have this designation  but every office has to have a BIC or Broker in Charge.