Whether you’re a real estate agent doing rehabs or you simply want to keep more of your hard earned money, you may have considered getting your real estate broker license. However, you also may be wondering if it's worth all of the extra time and money to get it.
Of course, you’ll have to be the one to make the final decision, but hopefully, once you’ve finished reading this, you’ll have the information you need to make the decision that’s right for you.
One of the most touted reasons, and rightfully so, for getting a broker’s license is that you call all of the shots. Who doesn’t love that?
For example, if you’re an investor and love to flip houses, you get to choose the deals you go after. As an agent, if you’re more aggressive in the flips you’d like to do, it can be frustrating if the brokerage you’re working under is ultra conservative.
The control you have as an agent is limited. For example, your broker owns the actual listing; you act as a salesperson for your broker. But if you hold your own broker license, you get the say on the properties that you believe will give you the best returns for your investment.
In short, there are limited opportunities for real estate agents to advance their careers.
When you work for yourself there are so many directions you can take your career.
As a designated or principal broker, you can become a broker-owner (where you own the brokerage).
You can also take on the role of property management. Property management companies must have a licensed broker on their staff. In this scenario, you can either work for an existing property management company, or you can start your own and not have to hire another broker.
Your real estate broker license could allow you to supervise a team of agents and earn commissions from their sales.
Or, you could also become an associate broker. Associated brokers can often make a higher commission while still working with clients directly.
Brokers who choose this route often don't want to deal with the added responsibilities that come with running an agency - interacting with clients in person suits them. They may decide to pursue their broker license to improve their commission split or simply increase their real estate knowledge.
Sometimes, a broker opts to work as an associate broker to gain some real-world experience before opening their own agency.
Once you gain your broker license, you’re automatically considered a real estate authority; you’ll know more than the average agent, which means you can help to train and mentor other agents.
As a broker, you have a marketing advantage as you can target clients who prefer to work with those they perceive to be more experienced.
Another, perhaps more obvious, draw to getting a broker license is that you don’t have to split your earnings. Who wouldn’t love to keep 100% of the commission?
You may negotiate the commission split based on the agent's experience and other factors, such as the amount of help your agency provides.
Not only can you negotiate a better commission split for yourself as a broker than you can as an agent, but you can also collect desk fees from your agents to ensure a reliable income, whether or not they make a sale.
As an agent, you’re already aware that brokers bring home more money, but how much more?
It depends on several things, but according to Investopedia, the median salary for agents is around $48,608 whereas the median broker income is about $59,768.
ZipRecruiter reports that real estate agents across the country working full time earn between $66,000 and $91,000 per year, with brokers pulling in as much as $80,000 to $110,000 annually.
It is difficult to pinpoint exact earnings (especially in a commission-based system), and your earnings will also depend on where you've set up shop, however, it is almost certain that your broker license will boost your salary no matter where you are in the US.
All of this sounds good, right?
Well, like anything in life, you've got to take the bad with the good. However great the benefits of a broker's license are, there are some negatives which need to be understood and considered before going through the licensing process.
The process of getting your real estate broker license will vary depending on the state, but it’s very similar across the board. Some things you can expect include the need to:
The requirements you’re expected to have will vary wildly too.
For example, in Massachusetts, you’re required to have 3 years of experience working as a real estate agent, plus you must complete 40 hours of coursework. In California, you don’t have to have agent experience if you graduated from college with some degree in real estate. But in Texas, you must have 900 hours of coursework!
You may work even harder than you do now
Depending on the role you undertake with your broker license, you may end up taking on more work. A lot of this work is administrative - scheduling open houses, reviewing and drafting contracts, building client databases, dealing with agent and client issues, etc.
Real estate agents love the thrill of a sale and interacting with clients, but administrative work often bores them. When it comes to helping people buy or sell their homes, don't feel obligated to become a broker - especially if you don't think you'll enjoy the work.
As an agent, your brokerage has legal and financial responsibility for your transactions. This responsibility passes to you as an agent broker.
There are certain broker roles that carry higher risk than others. If you plan to manage a team of agents, know that they are your financial and legal responsibility. If things go wrong, you could be held responsible.
Besides the increase in liability, as a broker if you go on your own you’ll have upfront expenses such as MLS access, insurance, broker fees, etc. and more paperwork too, so be sure it’s something you’re comfortable dealing with.
In summary, if you’re feeling a bit stagnant in your career, your next step could be to get your real estate broker license. Not only can you still work with both buyers and sellers, but having your broker license can move your career in an entirely different direction.