What Is a Real Estate Broker vs. Real Estate Agent—and Who Should You Hire?

Many people think that "real estate agent" and "real estate broker" are interchangeable titles, but there are actually key differences.

If you're a first-time homebuyer, knowing what kind of real estate professional to hire is perhaps the most important first step in your homeowner journey.

Once you understand the difference between the two professions, then you can decide who you need on your team to make your homebuying dreams a reality.

What is a real estate broker?

A real estate broker is someone who has taken education "beyond the agent level as required by state laws and passed a broker’s license exam," explains Jennifer Baxter, a broker at Re/Max Regency in Suwanee, GA.

Each state sets its own education and exam requirements. The extra coursework covers topics such as ethics, contracts, taxes, and insurance—at a more in-depth level than what’s taught in a real estate agent prelicensing course. Prospective brokers also learn about real estate legal issues and how the law applies to operating a brokerage, real estate investments, construction, and property management.

To sit for the broker’s exam and obtain licensure, real estate agents must have a certain level of experience under their belt—typically, three years as a licensed real estate agent.

Types of real estate brokers

There are a few types of real estate brokers, each with subtle differences in the role they perform.

Principal/designated broker: Each real estate office has a principal/designated broker. This person oversees all licensed real estate agents at the firm and ensures that agents are operating in compliance with state and national real estate law. Consequently, this person is in charge of reviewing all real estate contracts.

Think of it as a similar safeguard to how stockbrokers must work at a licensed firm to trade stocks, rather than just winging it on their own.

A principal broker is also often tasked with resolving transaction disputes with other brokerages (say, a disagreement over a home inspection). Hence, “oftentimes if an agent is having an issue with another agent in a transaction, it is common for the broker of that agent to reach out to the cooperating agent's broker to discuss the issues and determine a resolution,” says Baxter.

Like real estate agents, principal brokers get paid on commission—taking a cut of the commissions of the sales agents they supervise (although many principal brokers receive an annual base salary). Consequently, their earnings can fluctuate from month to month, depending on the volume and types of transactions completed by the agents at the firm.

Managing broker: This person oversees the day-to-day operation of the office and typically takes a hands-on approach to hiring agents, training new agents, and managing administrative staff. (Note: Some principal/designated brokers also serve as managing brokers.)

Associate broker: This real estate professional—sometimes called a broker associate, broker-salesperson, or affiliate broker—has a broker's license but is working under a managing broker. This person typically is not responsible for supervising other agents.

The pros and cons of working with a real estate broker

Generally, principal brokers don’t work directly with clients, but managing and associate brokers do. One of the main benefits of working with a licensed broker instead of an agent is that you’re typically working with someone who has more experience, says Peggy Yee, a supervising broker at Frankly Realtors in Vienna, VA. That experience can come in handy if you’re trying to navigate a more complex transaction, like buying a foreclosure or selling your home as a short sale. Real estate brokers are also typically very knowledgeable about real estate law.

Still, there are some drawbacks to using a real estate broker over an agent. If someone is a managing broker, the person might be busy overseeing other real estate agents and, in turn, not have as much time to spend with you as an agent would. Also, some real estate brokers spend a lot of time in the office, which can make them less intimately knowledgeable about the local housing market. And because they’re more experienced than a lot of other agents, real estate brokers may be less likely to be flexible on their commissions. However, you have to consider what you’re paying for—if a broker can help you sell your home for significantly more money, it might be worth the extra cost.

How to find a good real estate broker

Of course, not all real estate brokers are created equal. So, when you’re interviewing a prospective broker, make sure you ask the same basic questions you’d ask a prospective agent:

• How long have you been in real estate?
• How long have you lived in this area?
• What is your schedule?
• Do you have any vacations planned?

To review real estate agents and brokers in your area, visit realtor.com/realestateagent.com.