Who Makes More Money: Real Estate Agent Or Broker?

Who Makes More Money: Real Estate Agent Or Broker?

Real estate agents are people who have earned a real estate license which must be linked to a real estate brokerage. A broker holds an additional license which allows them to work independently or hire agents to work for them.

Besides salary differences, there are some major differences in their roles and responsibilities. 

Who Makes More Money, Real Estate Agent or Broker?

Real Estate Agent Vs Broker Salary 

Neither real estate agents nor real estate brokers actually earn a salary. Instead, both get paid on a commission basis. 

According to the National Association of Realtors 2020 Member Profile, the median annual salary for a real estate agent is around $40,000. For brokers, the median annual salary is $93,800-$121,400. 

What Is A Realtor?

Realtors are not another type of real estate profession, but is a title that indicates someone is associated with the National Association of Realtors (NAR).

So, both real estate agents and brokers can also be Realtors. As a member of the NAR, you are expected to operate according to the NAR’s code of ethics alongside state laws.

Being a member doesn’t require any additional training or requirements, but it does build trust with clients and can increase your earning potential. For example, the average median salary for Realtors is $49,700. 

Real Estate Agents 

There are actually several different types of real estate agents, and each have their own unique responsibilities.  

The four main types of real estate agents are:

  • Listing Agent: Listing agents represent a homeowner during the sale of their home. They will also negotiate with buyers to get the maximum value of the property. 
  • Buyer’s Agent: Buyer’s agents represent buyers who are in search of a new home by helping them to find their ideal property for the best price. 
  • Dual Agent: A dual agent will represent both a seller and buyer during one single real estate transaction. 
  • Transaction Agent: If a buyer chooses not to work with a real estate agent, the listing agent can act as a transaction agent and write the offer for them.

Although you can choose to specialize as either a listing or buyer’s agent, in most cases it’s not necessary. Usually, a real estate agent will work with both buyers and sellers. 

Real Estate Brokers

There are varying roles and responsibilities for real estate brokers which depend on the career path they want to take. Transitioning to become a real estate broker can open up a world of opportunities which real estate agents don’t have access to.

There are three main types of real estate brokers:

  • Designated Real Estate Brokers: Also called broker-owners, these are people who hold all legal responsibility for the transactions that are conducted by the real estate agents working under them. 
  • Managing Real Estate Brokers: These people take care of the day-to-day operations at brokerage firms. For example, they recruit, train and support agents, however, managing brokers may delegate these roles to someone else.
  • Associate Real Estate Broker: These are people who have updated their real estate license, however, they do not operate their own office. Instead they place their business with another broker. 

According to the NAR, broker-owners have the highest average earning potential out of all real estate broker roles, and their annual median income is around $155,000. 

Differences In Responsibilities

One of the biggest differences between agents and brokers is that only brokers can own real estate firms and/or manage real estate agents.

As an agent, you will work under a broker/brokerage and the majority of work will be focused on buyers and sellers.

As a broker, you can also work with buyers and sellers, however, you will also handle contracts, marketing and property management. 

Benefits Of Being A Real Estate Broker 

There are a lot of significant benefits if you choose to be a real estate broker instead of an agent. It affords you a lot more opportunities and allows you to progress in your career in ways an agent cannot.

However, you will have to be prepared to work hard and will need more education requirements. 

Brokers Can Run Their Own Brokerage 

Licensed brokers have the opportunity to open their own real estate brokerage to represent buyers and sellers. They also have the opportunity to work alone, which allows them to keep 100% of their commission.

If you choose to hire agents or associate brokers to work under your license, commissions will be split. 

Brokers Earn A Higher Income 

Alongside the better career options and greater opportunities, a lot of agents choose to become brokers as they can make more money. 

Here is a breakdown in the differences between real estate agents and brokers incomes. 

Median Annual Income of Real Estate Agents and Brokers (According to the NAR 2020 Member Profile):

  • Real Estate Agent/Sales Agent: $40,000
  • NAR Registered Realtor: $49,700
  • Associate Broker: $65,000
  • Designated Broker/Broker Owner (Without Selling): $121,400
  • Designated Broker/Broker Owner (With Selling): $93,800
  • Managing Broker (Without Selling): $91,000
  • Managing Broker (With Selling): $100,000

Brokers Have Better Commission Splits

As both real estate agents and brokers work on commission, as a broker your license and expertise will allow you to command a higher commission split. 

Brokers Can Run Property Management Companies

Being able to run a property management company is another great benefit of getting a broker’s license. These companies act as middlemen between the owner of a rental property and the tenants who live there. 

To lease buildings and collect rent, you must have a broker’s license. If you find the rental market is pretty hot, property management can be a great way to get additional revenue. 

Benefits Of Being A Real Estate Agent 

Although Real Estate Agents have fewer opportunities than brokers, this can actually be a pretty good thing. They don’t have as many responsibilities as brokers. For instance, they have fewer administrative tasks, and are not financially responsible for other agents. 

The Bottom Line 

In general, real estate brokers earn more than agents do, but that doesn’t necessarily mean that they are superior to agents. Both roles are essential to the real estate industry. 

As a broker you will have to further your qualifications in order to get your license. Also, by running a brokerage you have to take on a wide range of extra expenses such as office rent, supplies and equipment and the payroll of administrative staff.

Previous Post
Is 80K A Year A Good Salary For A Family?

Is 80K A Year A Good Salary For A Family?

Next Post
What Is A Teaser Rate?

What Is A Teaser Rate?

Related Posts