Jacqueline Kyo Thomas
You’ve worked as an agent for a while, and now you’re wondering if you should become a real estate broker.
On one hand, becoming a broker may be the next logical step in your career. If you love real estate and want to realize your full potential, pursuing your broker’s license seems like a no-brainer. You get the opportunity to do more of what you love with less of the restrictions that you have currently as an agent.
On the other hand, becoming a broker may not be the right move for you. Not everyone is cut out to be a broker— not because you can’t do the job, but because you may not want to. Brokers often have a greater list of responsibilities, and these tasks can be intimidating or downright exhausting if you’re not the management type.
To help you determine if this is the right path for you, let’s take a look at the pros and cons of becoming a real estate broker.
The Pros of Becoming a Real Estate Broker
Here are several reasons why you should consider becoming a real estate broker.
More Knowledge
When you receive your broker’s license, you get automatic bragging rights. You know a lot about real estate— more than the average agent. This means you can help, train, and mentor other agents who don’t know as much as you do. And, if you choose to continue working with clients, this extra knowledge will give you a marketing advantage. As a broker, you’ll appeal to those discerning clients who prefer working with experienced real estate professionals.
More Money
One of the biggest benefits of becoming a broker is uncapping your earning potential. Sure, when you work as an agent, you can earn more by selling more. But when you become a broker, you’ll automatically earn a higher commission simply because you’re a broker.
As a broker, you can work for yourself as an agent broker. This means you can still represent clients as a buyer’s or seller’s agent. If you work in this capacity, you can earn 100% of your commission, without worrying about splitting it with someone else.
Another option is to work as an associate broker for another broker. In this setup, you will still work face-to-face with clients, but you’ll have the added power and reputation of being a broker. You can negotiate a better commission split for yourself as a broker than you can as an agent.
You also have the option to manage a team of agents. You’ll then take a commission from their sales. You can negotiate the terms of the split based on the agent’s experience and other factors, such as the amount of help your agency provides. In addition to the commission, you may collect desk fees from your agents to create a reliable income, whether your agent makes a sale or doesn’t.
More Flexibility
Brokers have more flexibility. As an agent, you’re limited to what you can do in real estate. You can represent a buyer or seller in the transfer of real estate, but you can’t really do much beyond that.
As a broker, you can do what you’re doing now as an agent, or you can operate your own agency. You don’t have to work under someone else— unless you want to. Here are several options you can consider as a broker:
You can work as an associate broker
As an associate broker, you’ll have your broker’s license but still act as an agent. You will not supervise others. Some brokers choose this path because they don’t want the added responsibilities of running an agency. They like the in-person interactions with clients. They may pursue their broker’s license to increase their knowledge of real estate or improve their commission split. Some brokers choose to work as associates temporarily so that they can gain more experience before opening their own agency.
An associate broker is also known as a broker-salesperson, a broker associate, or an affiliate broker.
You can work as a managing broker
As a managing broker, you’ll be in charge of running the day to day operations of the real estate agency. You’ll hire, train, and manage agents and associate brokers. You’ll also help them with marketing. In addition to working with agents, you’ll also manage your administrative staff, ensuring that everyone has the resources they need. This position is perfect for people who enjoy coaching others and have an eye for detail.
A managing broker is also known as a supervising broker.
You can work as a designated broker
As a designated broker, you’ll be responsible for every agent and broker who works under you. You are wholly responsible for every transaction that goes on in your agency. You must ensure that your agents are acting in compliance with all state and national real estate laws, and you will be held legally and financially liable if they don’t. Designated brokers can either receive an annual base salary or earn a commission from sales.
Designated brokers sometimes work as managing brokers. Others prefer to hire a managing broker to handle the daily operations while they concentrate on growing the agency’s reputation and revenue.
A designated broker is also known as a principal broker. If they own the brokerage (which is not always the case), they are called broker-owners.
More Control Over Your Career
As an agent, you have limited control. For example, you don’t own listings— your broker does. You function as a salesperson for your broker.
However, when you become a broker, you can choose how you’ll spend your day in real estate, whether it’s face-to-face with clients or behind the scenes as a trusted mentor for new agents. In fact, if you want to branch out from buying and selling to renting, you can. Property management companies must have a broker on staff to lease properties and collect rent. With your broker’s license, you can work as a property manager and assist owners who want to rent their properties.
The Cons of Becoming a Real Estate Broker
Let’s balance all of the above benefits with a few negative considerations.
More Education
Educating oneself isn’t exactly a con, but let’s be honest: Not everyone is excited about the prospect of taking more classes and sitting for another exam. If you’re still recovering from your agent exam, you may not be ready for another four hours of fun (not to mention the required 40-hour pre-licensing class).
However, if you take our class, you’ll find that we’re not that bad. In fact, we guarantee your satisfaction. Our students consistently score better and pass more often than students from other schools. If you don’t pass, you can re-take our classes free of charge.
Learn more about our broker classes here.
More Responsibility
Unless you opt to work as an associate, you’ll take on more responsibilities after becoming a broker. And these responsibilities may not be tasks that you enjoy. If writing and reviewing contracts, hiring and training agents, or handling disputes between agents and clients aren’t your idea of fun, you may not be fulfilled in your career as a broker.
However, no one forces you to take on those added responsibilities. You can earn your broker’s license and maintain your current workload.
More Risk
If your goal in becoming a broker is to operate your own agency, remember that you’ll assume full legal responsibility for all of the agents who operate under your license. Even if you only work for and by yourself, you’re legally and financially responsible for all of your transactions.
However, if you work for another broker (or remain an agent), you’ll operate with the safety net of the sponsoring broker. You won’t be penalized for the mistakes that other agents make.
What are the Requirements for Becoming a Real Estate Broker?
To become a licensed real estate broker in Massachusetts, you’ll need to meet the following criteria:
- Be at least 18 years old.
- Have a Social Security Number.
- Have a government-issued identification (i.e. driver's license, passport).
- Have a current state license as a real estate salesperson.
- Have worked for at least three years as a state-licensed real estate salesperson.
- Have worked for at least three years under a licensed real estate broker.
- Have three references from people who are not related to you.
- Take a broker class at an approved real estate school. Find out more here.
- Take and pass the real estate broker's exam and pay associated fees for exam and license.
- Show a $5,000 surety bond that was signed by an insurance agent. (This five-year bond insurance policy will require a $50 investment on your end.)
Final Thoughts
Becoming a broker may be one of the best decisions you make in your real estate career. It allows you to earn more and do more. However, being a broker isn’t for everyone. Weigh the pros and cons and decide if pursuing your broker’s license is the right move for your career in real estate.