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 and is, therefore, more credentialed and experienced 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 additional 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 work 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.
- strong>Principal broker: These brokers have extensive managerial and administrative responsibilities above and beyond that of a managing broker, including 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 obtain an additional broker license from their respective state, which involves completing pre-licensing work and educational requirements and passing a comprehensive exam that tests you on your real estate know-how.
What’s the Process for How to Get a Broker 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, and, in some cases, 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 requires five mandatory 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 pass.
- Apply for licensing: After passing the exam, you must apply for and be approved for a broker license. In some states, you can apply 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.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.