Many people believe that a real estate broker and a real estate agent are the same thing. This is just not true. So, what is the difference between a real estate broker and a real estate agent?
Similarities Between Real Estate Broker’s And Real Estate Agent’s
Similarities: Both real estate broker’s and real estate agent’s are required to maintain an active real estate license. They must pass the state real estate exams of their states. Here in Utah, if you want to be a Utah real estate agent, you have to have 120 hours of education completed and pass the state exam, and you have to pass a federal criminal background check.
Both broker and agent are held to high standards when it comes to representing their clients. According to the Utah real estate agency agreement contract, agents fiduciary duties include loyalty, obedience, full disclosure, confidentiality, reasonable care, and any other duties required by Utah law.
What does this mean? It means that both broker and agent are held to high standards when representing their clients. If they fail to perform the fiduciary duties required by Utah real estate law, they can lose their license, face excessive fines, and can even go to prison.
The Difference Between Real Estate Broker And Real Estate Agent
The difference between real estate broker and real estate agent, if you get technical, is the difference in licenses they hold. A real estate agent holds a real estate license while a broker holds a broker’s license. What’s the difference?
In Utah, in order to qualify for a Utah real estate broker’s license, an agent must perform more hours of education, have at least three years of real estate experience, and they must have at least 60 points worth of real estate transaction experience. The point system in Utah is like this:
Real Estate Transactions – Residential CommercialA. One Unit Dwelling 2.5 pointsB. Two to Four Unit Dwelling 5 pointsC. Apartments, 5 Units or More 10 pointsD. Improved Lot 2 points I. Retail Building 10 pointsE. Vacant Land/Subdivision 10 pointsF. Hotel or Motel 10 pointsG. Industrial or Warehouse 10 pointsH. Office Building 10 pointsJ. Commercial Leasing 5 points
Property Management - Residential Commercial
A. Each Unit Managed 0.25 pt/month
B. Each Contract or Property 1 pt/month
Info gathered from the Utah Division Of Real Estate.
As you can see, in order for a real estate agent to become a real estate broker, they have to actually sell real estate. They must be experienced in real estate transactions and have a license for at least three years. But there’s more. In order to get a broker’s license, the applicant must complete another 120 hours of education and then pass the Broker’s exam, which is more difficult than an agent exam.
Who Should You Use To Help Buy And Sell Real Estate?
Honestly, you should pick an agent that you are comfortable with no matter if they are a broker or an agent. Just because an agent ins’t a broker, it doesn’t mean they are inadequate. In fact, that couldn’t be farther from the truth. Many real estate agents are well qualified to obtain a broker’s license, but they choose not to for numerous reasons. You see, being a real estate broker has two sides.
Real estate broker’s are more liable then a real estate agent. Every real estate agent has to work under a broker’s license. The reason being is, in a real estate transaction, there are certain liabilities that the real estate agents take on when helping people buy and sell real estate. By being a real estate broker, every agent that works under their brokerage adds more liability for the broker.
Because the broker takes on more liability, they can also make a little more money then agents. That’s where commission splits come into the picture. The reason real estate agents are willing to pay a commission split to a broker is because of the limited liability the agent has in a transaction.
They pass on that liability to their broker and pay them a split to cover it. The broker is required to oversee their agents actions to ensure the agents are working within the laws and they deserve compensation for their efforts.
The reason agent’s have to work under a licensed broker or obtain their brokers license themselves is; to provide you with the comfort of knowing the people handling your real estate transaction are performing their duties lawfully and honestly.
It gives you, as the consumer, more experience behind the transaction, and it gives you a safety net. A real estate transaction can be as easy as signing a contract or it can be a very complicated legal process. Having an experienced broker aiding in the transaction ensures that if their is a problem, the broker can step in and ensure you are being taken care of correctly. If they don’t, they could lose their license as well as the agent.
That’s why, when you buy or sell real estate, choosing an experienced agent with integrity and a solid reputation within the communities they serve is vital. I like to say every real estate transaction is different.
No matter how simple it looks on the outside, there is always something that comes up in a real estate transaction. From a little chipped paint, to funding being delayed, to major structural problems, getting real estate transactions to close on a consistent basis takes expertise, hard work, and some incredible problem solving.
Successful real estate agents and brokers aren’t just sales people, they are adept problem solvers, social workers, extremely knowledgeable, but above all, they are honest, caring people. Choose the right real estate agent in your real estate transaction and you will know first hand how much they can do to ensure your real estate dreams come true.