What is the difference between a real estate agent, salesperson and broker?
Most people (including real estate agents!) use all three of these terms (agent, salesperson and broker) interchangeably, but in fact, there are technical differences between them. In some cases, it is actually important for you to know the distinction between a salesperson and broker.
Broker
A Principal Broker (Corporate Broker or “representative broker”) is an individual who is licensed with the Department of State as the broker of record for the brokerage firm (Note: there can be multiple principal brokers). Principal brokers are responsible for operating the firm, supervising all of their associated agents and are generally full or part owners of the company.
In addition, it is common for an individual to be a licensed real estate broker, but not be the principal broker of a brokerage firm. These types of agents are called Associate Brokers and choose to hold their license at another broker’s firm instead of their own.
There are specific requirements for becoming a broker, which involve extensive experience as a real estate salesperson (time and number of deals completed) and/or in other real estate dealings (e.g. owning, investing in or managing property, etc.).
Salesperson
A licensed real estate Salesperson works for a brokerage firm (commonly as an independent contractor) and is supervised by the firm’s principal brokers. The salesperson acts as an agent of the firm and all of his/her dealings must involve the firm’s name and the principals’ approval. Salespersons are the most common type of agent (vs. brokers) due to volume and have relatively easy requirements for obtaining a license (75 hours of class time and a passing grade on the state exam).
Agent
Real estate agents are both salespersons and brokers of a real estate brokerage firm. They represent the firm as an agent and generate business for its benefit. Most agents are generally considered independent contractors and are not in fact employees of a brokerage firm. However, some agents may perform substantial work in the office or hold a management position and are designated employees of the firm (i.e. earn a salary, receive benefits, etc.).
Brokerage Firm
A brokerage firm is the entity under which brokers and salespersons operate. Exclusive listings, legal agreements and other general real estate dealings are all executed through the firm’s name and the principal brokers. In addition, all commission checks must be payable to the brokerage (not individual agents!) and agents must make it clear that they are associated with the firm in all of their marketing and communications with clients and other agents.
