What Is a Real Estate Broker?

Real estate brokers negotiate and oversee real estate transactions. They do the same things that real estate agents do, but they have had additional training and achieved a higher license level. That allows them to run their own business and hire real estate agents to work for them.

As you consider how to get involved in real estate investing, you’ll need to understand the basic terms thoroughly. In this real estate broker guide, we’ll go through the proper definitions, qualifications, and duties of a broker.

Real Estate Agent vs. Real Estate Broker vs. Realtor

Agents, brokers, and Realtors are all professionals who can help you to buy, sell, or rent properties. Many use the above three terms interchangeably; however, they have different qualifications and status levels.

Real estate agents are also called real estate associates or real estate salespeople. In most states, a real estate agent must be sponsored by a real estate broker or a brokerage firm.

A real estate broker has completed additional courses and had a certain amount of experience before earning their title. They can work independently or head their own brokerage firm.

Note: In some states, such as Colorado and New Mexico, every licensed real estate professional is referred to as a broker. However, even brokers in these states have to complete additional training before they can hire other brokers to work for them.

A Realtor could be either a real estate agent or a real estate broker, or even a property manager or an appraiser. But not everyone in those professions is allowed to use this designation: Realtor is a trademarked title governed by detailed rules from the National Association of Realtors (NAR). NAR stylizes this term as “REALTOR®” in its usage.

The National Association of Realtors was formed in 1916 in order to create ethical standards within the then wild and unregulated real estate business. Its protocols are still the highest standard of ethics within the industry.

What gives professionals the right to call themselves Realtors is that, beyond their particular license in the real estate business, they have also become members of NAR. This means they pay dues to the organization and have promised to uphold NAR’s strict code of ethical behavior.

Real Estate Broker Qualifications

Real estate brokers must meet the requirements of their particular state in order to become brokers. While each state’s requirements will differ, they will most likely require all of the following qualifications: 

  • A minimum number of years of working in the profession (usually two to three) 
  • A certain number of required hours attending specific accredited courses
  • The passing of a state test
  • A minimum level of sales per year

Principal Broker vs. Associate Broker

Your investor-friendly real estate broker may be an associate broker or might be the principal broker of the firm – also called the managing broker, designated broker, or qualifying broker.

The principal broker will own or operate a real estate office and be responsible for that brokerage’s daily operations. They are the one with the legal authority to sign contracts on behalf of the firm. A principal broker may have associate brokers and/or real estate agents who work for his or her brokerage.

Associate brokers – also called affiliate brokers – typically don’t oversee other agents.

What Are the Duties of an Investor-Friendly Real Estate Broker?

Some real estate brokers prefer to work with home buyers, but others have chosen to specialize in working with real estate investors.

An investor-friendly broker must follow all state and federal laws, adhere to the highest professional standards, and always maintain confidentiality. This includes providing the full range of normal brokerage services, as described below.

What Services Can an Investor-Friendly Real Estate Broker Provide?

Every real estate broker will provide a range of services that includes negotiating sale prices, helping them to close deals, and drafting contracts for buyers and sellers. When you are buying, the broker will submit your offers to sellers and oversee the transaction through closing. When you are selling, the broker will list properties for you and negotiate on your behalf.

In most states, a real estate broker can also provide what’s known as Broker Price Opinion (BPO). To calculate this figure, a broker will use not only the details of that specific property, but also their expert knowledge of the neighborhood, and of sales trends in the local market at that time. A BPO is not as official as an appraiser’s price, but they have been shown to be typically quite accurate.

In addition, an investor-friendly real estate broker might also be a helpful and knowledgeable consultant regarding your goals. They may even be a specialist in the investment strategy you have chosen, whether it’s wholesaling, house flipping, or rentals. They will place their expertise in the local property market at your service.

Real estate brokers will also provide invaluable knowledge of the details of local ordinances in the city and state you are interested in investing in. They can frequently offer connections to trusted local attorneys, contractors, and other professionals an investor might need.

Real Estate Investing Frequently Asked Questions

What is wholesale real estate investing?

Wholesale real estate investing allows you to gain experience in the real estate investing game from home. You can get started with your wholesale real estate investing business by getting in the right mindset, properly setting up your business, verifying the legal requirements, learning the wholesaling process, and jumping into wholesaling.

What’s the best way to get into real estate investing?

Starting your own buy and rent real estate business gives you an additional monthly income and is a good option for starting real estate investing. The steps for owning a buy and rent business are: making a plan, getting a team together, choosing your property type and market, getting funding and making an offer, rehabilitating the property, and, finally, renting it out.

We have everything you need to learn about all these steps, from researching target neighborhoods to calculating rental revenue and preparing an income statement.

How do you form an LLC?

If you’re wondering how to form a limited liability company (LLC) for your real estate investing business, the process is easy:

  1. Choose your LLC name
  2. Find a registered agent
  3. File your LLC formation documents with the state
  4. Create an LLC operating agreement
  5. Get an Employer Identification Number (EIN) for tax purposes

Check out our How to Form an LLC guide to help you with the process.