Owning and Managing a Real Estate Brokerage
If you already have a job selling real estate, you’ve probably considered owning your own brokerage at some point. While ownership can be a lot of work, the financial rewards can be significant. Plus, you’ll be able to create the kind of business that you’ve always wanted to work for, particularly if you are a mother. As a broker, you can take advantage of flexible working hours that allow you to be with your family.
Like real estate sales agents, brokers hold a state license that allows them to represent clients in real estate transactions. Unlike an agent, however, the broker is licensed to manage or own a brokerage company. Sales agents must affiliate with a brokerage, while a broker has the option of operating independently.
From a financial perspective, becoming a broker can have significant advantages over being an agent. While a sales agent generally only earns commissions on his or her sales, a brokerage may have dozens of agents on its roster. The broker receives a share of all commissions earned by its agents.
Real estate brokers also take on significant responsibility. They are responsible for the day-to-day operations of the brokerage, which includes bookkeeping, marketing and promotion and ensuring that agents are conducting business ethically and legally. Strong management skills are a necessity.
Some states use different titles to describe people who work in real estate sales. For example, Illinois uses the title “real estate broker” instead of “real estate agent” to describe somebody who represents buyers and sellers and real estate transactions, but who are not licensed to own or operate a brokerage. Individuals who want to own or manage their own real estate company must be licensed as “managing brokers.” Check with your state’s department of professional licensing to find out which titles are in use.
Like real estate sales agents, brokers are licensed at the state level. This means that every state has its own process for becoming a broker. However, most, if not all, states require a few things:
- Experience as an agent: The first step in becoming a broker is earning your real estate agent license. Depending on your state, you’ll be required to work from anywhere to one to three years in sales before you can begin training to be a broker.
- Pre-licensing course: Once you have gotten experience, it’s back to school. You’ll need to complete a broker’s pre-licensing course. These classes are taught through real estate offices, at trade schools, community colleges or even four-year universities.
- Exam: After completing your coursework, you’ll sit for a state-sponsored licensing exam.
According to the United States Department of Labor’s Bureau of Labor Statistics, the average median annual salary for real estate brokers was $56,790 as of May 2016. The lowest 10 percent of earners made less than $24,370, and the top 10 percent earned more than $162,260.
About the Industry
The majority of brokers, 56 percent, are self-employed, while 39 percent work for real estate, rental and leasing businesses. Brokers may work in conventional or home offices, but they often may be out of the office, showing properties to clients or training sales agents.
Most brokers work a full-time schedule, which may include evenings and weekends. If you become a self-employed broker, you may have some flexibility in setting your hours, though you should also be aware that some homebuyers and sellers, as well as agents working under you, may need your presence on short notice.
Years of Experience
Like real estate sales agents, many real estate brokers find that their income increases with job experience. According to a PayScale.com survey, the median wages for real estate brokers based on length of time working in the industry are:
- 0–5 years: $54,000
- 5–10 years: $67,000
- 10–20 years: $64,000
- 20+ years: $73,000
Job Growth Trend
The need for real estate brokers is expected to increase about 6 percent between 2016 and 2026, and the BLS notes that this kind of growth is average across all occupations. Factors contributing to this growth include millennials buying homes, as well as an ongoing need for real estate services. Job prospects also depend on the real estate market in your area.
Lainie Petersen writes about business, real estate and personal finance, drawing on 25 years experience in publishing and education. Petersen's work appears in Money Crashers, Selling to the Masses, and in Walmart News Now, a blog for Walmart suppliers. She holds a master's degree in library science from Dominican University.