Do you feel right at home brokering property deals between buyers and sellers? A career as a real estate broker may be right up your alley — if you’re willing to obtain a professional permit known as a broker license.
Read through to get the scoop on whether you need this permit and how to get a broker license.
What is a real estate broker?
Real estate brokers facilitate transactions between buyers and sellers of property and land and may also oversee operations at a brokerage firm. Generally, a real estate broker is a person who has met more rigorous requirements than a real estate agent. Therefore, a broke has more credentials and experience than an agent.
A broker can be of particular value to his or her clients during advanced real estate transactions such as those involving foreclosures. The increased knowledge you have at your disposal as a broker can also be used to generate additional revenue streams. You can, for example, take on extra work in property management or even open a property management firm of their own.
He or she can also choose to work independently or hire other real estate agents to work for them, whereas a real estate agent must operate under a broker. Some brokers also receive a cut of the commissions of the real estate agents they oversee.
Brokers generally fit into one of three roles in a brokerage firm:
- Associate broker: These brokers work under another broker and do not typically manage other real estate agents.
- Managing broker: These brokers have substantial managerial responsibilities, including the recruitment, training and supervision of real estate agents.
- Principal broker: These brokers have extensive managerial and administrative responsibilities above and beyond that of a managing broker. Additional duties include contract sign-off, dispute resolution and legal compliance.
Do brokers need a license?
Yes, in fact, the key difference between brokers and real estate agents is that brokers have completed additional licensing requirements above and beyond what a real estate agent must obtain. Real estate agents who want to become brokers must get an additional broker license from their respective state. This involves completing pre-licensing work and educational requirements. Lastly, passing a comprehensive exam that tests your real estate know-how.
What’s the process for getting a broker’s license?
The steps for how to get a broker license can vary by state but usually include the following:
- You must be at least 18, be in good standing with the law and live in the state in which you plan to practice as a broker.
- Work as a real estate agent: You will generally need to get a certain number of years under your belt as a licensed real estate agent. Some cases require a certain number of points of practical work experience. In California, you need at least two years of experience as a full-time licensed agent within the last five years. Or equivalent education or activities.
- Complete required coursework: Broker educational requirements vary by state but generally includes a certain number of mandatory and elective courses. California calls for five required and three elective college-level real estate courses spanning the practical, financial and legal aspects of brokering.
- Pass examination: You will need to take and pass the broker exam. In California, you must get at least 75 percent of 200 questions right to succeed.
- Apply for licensing: After passing the exam, you must apply for and obtain approval for a broker license. In some states, you can put for the broker exam and license at the same time. Both come with a fee.
Check the Department of Real Estate or Division of Licensing website for your state for the latest broker licensing requirements.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.