Home Buying 101: Why Do You Need A Real Estate Broker?
When people refer to a real estate broker, they are usually talking about a brokerage firm, but it is not always the case. If you do not have experience or extensive knowledge of real estate, then it can get a little confusing about the difference between agents and brokers.
This distinction is important to know to figure out exactly which professional is best to suit your needs. And in case any questions or complications arise during your transaction.
What Is A Real Estate Broker?
A real estate broker is a licensed real estate professional in their own right. As well as being a licensed real estate agent. Compass Real Estate is an example of a brokerage, check here for more info about their firm.
A broker holds expertise that can help people, like an agent would, with their real estate transactions but it is a broker’s duty to ensure that all transactions are lawful, all paperwork is correct and complete, and all monies such as funds in escrow accounts are recorded and reported properly.
A brokerage firm or broker is the umbrella that covers individual real estate agents. The agents handle clients, listing, and sales. While a broker ensures that everything is carried out in line with legal requirements.
Agents must work under a broker or brokerage. So when your agent gives you a listing agreement you are not signing a contract directly with them. But rather with the agent’s broker. This is important to know because if your agent leaves the brokerage before your agreement expires then you may be legally obliged to work with another agent from the firm until it expires.
What Can Brokers Do?
If real estate was a ladder – the higher you climb, the more licenses you need. With home buyers and sellers at the bottom, agents in the middle, and brokers at the top. A broker must have both a real estate agent license and also be licensed as a broker in the state where they work.
This means that brokers can do everything that agents can. But with a couple of differences with regard to their responsibilities. Brokers can put money in and out of an escrow account, mediate conflict in a legal dispute, and hire agents to work under them. Brokers can work for themselves and start their own brokerage.
Types Of Real Estate Brokers
Designated or principal broker – a principal broker is responsible for all the operations and transactions that are carried out throughout the brokerage firm. Their job is to ensure that all agents in the firm are working in agreement with the laws of the state. And that all business dealings are financially and legally compliant and protect themselves against fraud.
Managing broker – a managing broker handles the day-to-day operations. The principal broker is more transaction-based and the managing broker is more HR focussed.
They usually handle any licensing issues such as onboarding, training, and mentoring of new agents. As well as facilitating the continued education of existing agents.
Associate broker – associate brokers help with the workload and act as the brokers’ agents when conducting real estate transactions.
