Jacqueline Kyo Thomas
Should you get your Massachusetts real estate broker’s license in 2023? Absolutely! There’s never been a better time to be a real estate broker. Why? Someone will always need shelter and someone else will always be selling it. Your services as a broker will help these two parties find each other and win.
If you’ve been an agent for a few years now, you’ve already proven that you love working in real estate. Why not take what you’ve already learned and expand it into more opportunities and more money? As a broker, you can continue working in real estate, but you will have more flexibility in how you work. You may choose to still work face-to-face with clients, or you can hire other salespeople to work for you while you shift into the role of mentor and/or entrepreneur. You may work independently or for another broker, and with whatever you choose to do, you have options.
In this article, we’ll explore the benefits of becoming a real estate broker.
What is a Real Estate Broker?
All brokers are real estate agents but not all agents are brokers. Confused? A real estate broker is a real estate salesperson who has continued their education. Like a real estate agent, a broker must take a course first before sitting for their broker licensing exam with the state of Massachusetts. Upon successful completion of the exam, an agent can then receive their license to operate as a real estate broker.
Before you can become a real estate broker, you must first gain experience as an agent. In fact, you’re unable to sit for your brokerage exam unless you’ve first worked as a licensed real estate salesperson under a legal brokerage for at least three years.
There are several types of brokers.
Principal brokers are brokers who own a brokerage. Principal brokers may choose to work for themselves or hire others, including agents and other brokers, to work for them.
Managing brokers oversee the daily activities of a brokerage firm. They may own the firm or they may simply work as a manager for another broker. Managing brokers are responsible for the daily operations of a brokerage, including hiring, training, and ensuring the long-term success of the firm.
An associate broker is a licensed broker who acts as a broker salesperson. While this broker may have acquired the same amount of education as a managing broker, they may not have the same level of experience in the field. Instead, they choose to work as a senior salesperson who has added responsibilities, such as being able to prepare contracts. Associate brokers may also prefer working face-to-face with clients instead of moving into a managerial mode.
Whether you’d like to continue working in the field as a salesperson, mentor and manage others, or open your own brokerage, it all starts with obtaining your broker’s license. More opportunities open up to you once you decide to level up and become a broker.
Why Should You Become a Real Estate Broker?
Here’s why you should continue your education and become a broker:
1. More Flexibility in Your Career
Becoming a broker gives you career flexibility. While many brokers decide to open up their own real estate firm, many others choose to use their broker license to command a greater level of respect as an expert and keep more of their commissions via tax planning strategies only available to brokers. Having your broker license gives you options, even if you don't take advantage of them right away.
2. More Knowledge
In Massachusetts, getting your broker's license means taking an additional 40 hours of real estate course work. You'll no doubt deepen your knowledge of real estate by taking these courses, and you'll simply know more than you did as a salesperson. Not only does this make you a more valuable resource to your clients, but it can also make you a greater asset to your team.
3. More Money
Perhaps the top reason to become a broker is to increase your paycheck. This can work in several ways.
First, as a broker, you may be able to keep a higher split of your commission. As an agent, you may currently split your commission with your broker. You may still do this if you choose to continue working as an associate broker, but a broker license gives you options you don't have as a salesperson.
As a broker, you may be able to set up a corporation or LLC to receive the commission payments from your principal broker so that you can take advantage of S Corp taxation. Some brokers do this because of the tax benefits for their personal tax situaton.
However, you must have a broker's license in Massachusetts before you're able to receive commissions through a corporate entity, even if you're working for another broker, and there are special rules you'll need to follow if you do set one up. This means that you need to get a broker license to create this kind of setup. Depending on your personal tax situation, this could help you pay less tax on your commissions and keep more of the commission money you earn. Read more about the rules governing these structures for brokers here on Mass.gov and the tax rules on IRS.gov.
So having a real estate broker license can be a great way to unlock tax benefits not available to licensed salespersons. Be sure to consult a licensed CPA or other tax professional before setting anything up, though. These sorts of tax structures have special rules and can be complicated to get right, and nothing on our website is tax or legal advice. You need to get the advice of a licensed tax professional before setting anything up!
Finally, as a broker, you'll also have the option of opening your own agency where you can act as agent and broker. This means you don't have to share any of your earnings with another broker. It also means you can hire other agents to work under you and build a brokerage business. But you'll have business expenses to consider if you go this route, so be sure to plan accordingly if this is your long-term plan.
What are the Benefits of Becoming a Real Estate Broker in 2023?
It's no secret that the housing market has been in a state of upheaval recently. Even before the pandemic of 2020, the price of housing was on a steady incline. However, the pandemic led to a decrease in property availability and an unprecedented surge in pricing as buyers were in a frenzy to secure housing.
Individual buyers weren't the only ones in the market for housing. Investors also took advantage of the record-low interest rates to purchase properties that they then leased out.
How does this impact your decision to become a broker?
There are several reasons why now’s the time to transition from salesperson to broker. Experts predict that the U.S. housing market may be headed for a slowdown from its red hot highs. But remember, even in slow times, people will continue to buy and sell homes and will still need a place to live. You can take advantage of this economic slowdown to level up your professional skills or use tax-planning strategies only available to brokers to keep more of the commissions you earn. In these times, you can also stand apart from the crowd by marketing yourself as a real estate expert who can offer a higher level of knowledge and skills.
As mentioned above, obtaining your broker’s license also means that you’ll have the freedom to work for yourself, which gives you more autonomy over your career. You can start your own business or work for a top-producing firm where you’ll have more access to opportunities. When you take your Massachusetts real estate broker course with us, you can opt-in to our job recruitment program. By joining this program, you’ll be in the hiring pool for local brokerages. Learn more about our recruitment program here.
What are the Steps to Becoming a Real Estate Broker in Massachusetts?
Becoming a real estate broker in Massachusetts requires the following:
- You must be 18 years old.
- You must have a Social Security number (SSN).
- You need to also have a government-issued ID, such as a driver's license or passport.
In addition to the above basic requirements you must also meet the following:
- Be a licensed real estate agent in the state of Massachusetts
- Have worked as a licensed real estate agent
- Have worked as an agent under a licensed broker for a minimum of three years
- Complete real estate broker courses at an approved real estate school (that's us!)
- Pay for and pass the real estate broker's exam
- Pay for your real estate broker’s license
- Be bonded as a broker
Are You Ready to Become a Real Estate Broker?
You can get started as a real estate broker with us. We offer the easiest and most flexible way to become a real estate broker in the state of Massachusetts. Click here to learn all about our online real estate broker classes.