How to go from real estate agent to broker?

Advancing from a real estate agent to a broker is a significant career milestone in the real estate industry.

This transition brings increased responsibilities and opens up new opportunities for leadership, higher earnings, and greater independence. In this article, we’ll explain how to make the leap, clarify the differences between agents and brokers, and explore what you need to know to succeed.

Real estate agent and broker: key differences

Real estate agent

Real estate agents primarily represent clients, whether buyers or sellers. Their work centers on facilitating property transactions on a daily basis.

Key responsibilities:

1. Representing buyers or sellers:
   • Agents act as intermediaries in property transactions, guiding clients through processes like searching for homes or listing properties.
   • They negotiate on behalf of their clients to secure favorable terms.
2. Conducting showings and open houses:
   • Agents showcase properties to potential buyers and explain features and benefits.
   • They provide local market insights to help buyers make informed decisions.
3. Preparing documentation:
   • Agents assist with preparing and reviewing contracts, disclosures, and other essential paperwork.
   • While they manage these documents, the final responsibility for compliance lies with the supervising broker.

Work under supervision:

Real estate agents must operate under the guidance of a licensed broker, who provides legal oversight and ensures agents comply with local and state real estate laws.

Real estate broker

Brokers build upon agents’ skills and responsibilities by taking on a leadership role within the real estate industry. They hold additional licensing that grants them the authority to manage their businesses or oversee other agents.

Key responsibilities:

1. Running a brokerage:
   • Brokers can open and operate their real estate firms, offering services to clients directly.
   • They develop business strategies, manage finances, and oversee day-to-day operations.
2. Supervising real estate agents:
   • Brokers hire, train, and manage real estate agents who work under their license.
   • They ensure agents follow legal and ethical guidelines, providing mentorship and support.
3. Ensuring legal and ethical compliance:
   • Brokers are legally responsible for the transactions their agents handle.
   • They must review contracts, monitor practices, and address any potential issues to protect both clients and the brokerage.
4. Expanding business opportunities:
   • Brokers can diversify their income by charging desk fees or commission splits to agents working under them.
   • They may also specialize in additional services like property management or commercial real estate.

Key differences summarized

Aspect	Real estate agent	Broker
Licensing	Requires an agent license.	Requires an advanced broker license.
Supervision	Works under a licensed broker.	Operates independently or supervises agents.
Authority	Limited to representing buyers and sellers.	Can run a brokerage, hire agents, and manage operations.
Responsibility	Handles client-facing tasks.	Manages compliance, business strategy, and agent performance.
Income potential	Earns commission, often shared with a broker.	Retains full commission and can generate revenue from agents.

How to go from real estate agent to broker

Transitioning from a real estate agent to a broker involves several steps. Here’s a clear roadmap:

1. Meet licensing requirements

Each state has unique requirements for becoming a broker, but standard criteria include:

• A set number of years working as a licensed real estate agent (typically 2-4 years).
• Completion of additional broker-specific education.

2. Complete broker education

Enroll in a broker training program that covers advanced topics such as:

• Property management.
• Real estate law.
• Brokerage operations.

3. Pass the broker’s exam

After completing the required education, you must pass a state-administered broker licensing exam. This exam tests your knowledge of state and federal real estate laws and brokerage management.

4. Gain experience and build a network

Before opening your own brokerage, gain practical experience working under an established broker. Networking within the industry can also help you build relationships that will be valuable in your new role.

5. Open your brokerage or work as a managing broker

As a broker, you have the option to:

• Open your own brokerage and hire agents.
• Work as a managing broker for an established firm, overseeing agent performance and compliance.

Real estate agent and broker fees

For real estate agents

Real estate agents work under the supervision of a licensed broker and must share their commissions and cover certain fees as part of their role. Here’s a closer look at the financial aspects:

1. Commission splits

Agents typically split their commissions with their supervising broker.

• Example: If an agent closes a $500,000 home sale at a 3% commission rate, the total commission is $15,000. Depending on the broker’s policies, the split might be 50/50, leaving the agent with $7,500.
• Variations: Some brokerages offer higher splits (e.g., 70/30 or 80/20) for experienced agents or those who meet certain sales quotas.

2. Brokerage fees

Agents are often responsible for paying fees to their brokerage to cover essential services, such as:

• Administrative support: Document processing, compliance checks, and transaction coordination.
• Marketing tools: Access to listing platforms, professional photography, and branding materials.
• Training and mentorship: Some brokerages provide ongoing education and coaching, which may incur additional costs.

3. Financial impact on agents

These splits and fees can significantly reduce new agents’ earnings, especially in their first few years. However, brokers’ support is essential for gaining experience, building a client base, and closing deals.

For real estate brokers

Brokers have more control over their earnings and expenses as they operate independently or manage their own brokerage. Their fee structure reflects this increased autonomy and responsibility.

1. Full commission retention

Unlike agents, brokers retain the full commission on transactions they handle personally.

• Example: In the same $500,000 sale with a 3% commission rate, a broker acting as the agent keeps the entire $15,000.
• Benefit: This direct retention significantly increases earning potential, especially for brokers who remain active in client transactions.

2. Additional revenue from agents

Brokers who operate their brokerage can generate revenue by hiring agents. Common fee structures include:

• Desk fees: Agents pay a monthly fee for office space and resources, regardless of their sales performance.
• Transaction fees: Brokers charge agents a flat fee per closed deal.
• Commission splits: A percentage of each agent’s commission goes to the broker in exchange for mentorship, brand association, and operational support.

3. Business Expenses

While brokers retain more income, they also shoulder greater expenses, such as:

• Office rent and utilities.
• Technology tools like customer relationship management (CRM) systems and lead generation software.
• Legal and compliance costs to ensure the brokerage operates within state regulations.

Real estate broker hiring agents

If you decide to open your brokerage, hiring skilled real estate agents is a key responsibility. Here’s what to focus on:

• Attracting talent: Offer competitive commission splits, training programs, and marketing support.
• Building a team culture: Foster collaboration and maintain high ethical standards.
• Compliance management: Ensure agents adhere to state laws and brokerage policies.

Questions to ask before becoming a broker

Before making the leap, ask yourself these critical questions:

1. Do I have the necessary experience and qualifications?
2. Am I ready to take on additional responsibilities like compliance and team management?
3. What resources will I need to open and run a brokerage?

These reflections can help ensure you’re prepared for the transition.

Going from real estate agent to broker: benefits and challenges

Benefits:

• Greater independence and earning potential.
• Opportunities to build your team or business.
• Leadership roles in the real estate industry.

Challenges:

• Increased administrative and legal responsibilities.
• Higher startup and operational costs for brokers opening their own offices.

Weighing these pros and cons can help you make an informed decision.

Real estate agent duties to buyers vs. brokers

While real estate agents focus on meeting buyer needs—such as finding homes, negotiating prices, and managing transactions—brokers have additional oversight responsibilities. Brokers must ensure all transactions comply with laws, protect their clients, and supervise agent performance.

Real estate agent broker jobs

If you’re not ready to open your brokerage, consider working as a managing broker or associate broker within an established firm. These roles allow you to gain experience managing agents without the overhead of running a business.

Summary

Transitioning from agent to broker is an exciting career step that requires dedication, more education, and a willingness to accept new challenges.

Grasping the differences between agents and brokers, performing all necessary steps, and strategically planning will unlock opportunities for new growth and success in the real estate industry.

Ready to take the next step in your real estate career? Lexawise offers comprehensive exam prep for both agents and brokers, along with the tools and resources to help you succeed at every stage of your journey. Explore more today!