Difference Between a Real Estate Agent and a Real Estate Broker

What is the difference between a real estate agent and a real estate broker? Experience, knowledge, longevity, and responsibility differentiate the two statuses. A real estate agent is dependent on the real estate broker in order to maintain his or her license and conduct business.

While I can only speak for Ohio, where my license is held, most other states have very similar requirements.

To become a real estate agent in Ohio, you must be at least 18 years of age, have no felony or criminal convictions, be sponsored by a real estate broker, complete the required coursework, and pass the licensing exam. If born after 1950, you must have received a high school diploma or equivalent.

The course work includes 40 hours of Real Estate Principals and Practices, 40 hours of Real Estate Law, 20 hours of Real Estate Appraisel, and 20 hours of Real Estate Finance. After completing the coursework you must pass the licensing exam to become licensed.

After receiving your license, you then have the legal right to complete real estate transactions, market and sell real estate, and work in the best interest of the client in real estate transactions. The agent works for a real estate broker, and all transactions are legally those of the broker. The commission on each sale is determined by an agreement made between the broker and the agent.

To become a real estate broker you must have been a licensed agent for at least 2 years and have completed 20 transactions. You must also take additional courses in Business Economics, Business Law, Financial Management, and Human Resource Management. Also required is the completion of 90 quarter hours at an accredited college or university. After passing the Broker's Exam, you receive your broker's license.

An agent who becomes a broker may or may not choose to open his or her own business. As a business owner, the broker has the ultimate responsibility for all contracts written by any agent whose license he or she holds. The contracts, both for listings and sales, are the property, and the responsibility, of the broker.

The broker provides space to conduct business, pays for advertising, office machines and supplies, postage and supplies, contract materials, marketing materials, and usually additional training through in-house forums and seminars. A broker shoulders the major financial burden of operating the business. Each agent is considered to be self-employed, and is responsible for taxes and fees individually.

In general, a real estate broker brings a more fully developed knowledge of the real estate industry and its rewards, trends, and pitfalls. Their experience over the years helps put each market change into perspective, and allows the broker to pass this knowledge on to the agents who work for him.