A real estate agent and a real estate broker are both licensed professionals who can help you buy or sell a house. In fact, the terms "real estate agent" and "broker" are often used interchangeably in casual conversation - we'll admit it, we are guilty of it too! However, there are some key differences between the two titles and the roles they play in real estate transactions.
Education and training
In most states, a real estate agent is required to complete a certain amount of education and training before they can receive their license. Real estate brokers, on the other hand, are typically required to have more education and experience, and may be required to take additional exams.
In order to facilitate real estate transactions (e.g. buy and sell property), the basic agent's license is all that's required. However, in states like California every agent must conduct their business under the branch of a sponsoring brokerage firm. So if an agent wants to become the leader of their own firm to start a team, and stop splitting their commissions with their sponsoring broker, then they might pursue their broker's license.
Unsurprisingly, a quick check at your state's department of real estate (or NAR, the National Association of Realtors) will show that there are way more licensed agents than designated brokers. This makes sense -- only an agent truly established in the real estate industry would be in a logical position to make the leap to running their own brokerage.
Responsibilities
Real estate agents generally work under the supervision of a broker and are responsible for helping clients buy or sell properties (and rent real estate). Brokers, on the other hand, are responsible for managing their own businesses and may have additional responsibilities such as hiring and training other real estate agents, managing the finances of the business, and handling legal and regulatory issues.
When we think of a real estate transaction, brokers don't usually even enter our minds. We think of the seller's agent (formally known as the listing agent) and we think of the buyer's agent (formally known as the selling agent) -- and maybe how much we're dreading closing costs. Many people are surprised to learn about these other real estate professionals called brokers who themselves earn money in a home sale. While it may seem slightly unfair, the only reason real estate agents are able to focus 100% on getting deals done is because they have a real estate broker behind them handling all the larger logistics and compliance of the business. It takes time to handle paperwork and hire real estate agents and secure resources for them to do business -- managing brokers earn their keep by empowering their agents to thrive.
Authority
Real estate agents generally have the authority to represent clients in the buying or selling process, but they may not have the same level of independence as brokers. Brokers, on the other hand, have more autonomy and may be able to make more independent decisions.
While technically each real estate agent works for themself, it is a bit of a stretch to imply they are truly independent contractors. Only real estate brokers can set policy at their real estate firm that other agents must follow.
In the absence of national real estate laws, each state sets their own governance and civil laws regarding real estate. So if you're ever curious about the extent of the powers of a buyer's agent or seller's agent, you can check your state's website or confer with their broker of record. (NOTE: Some states have a position called a broker associate; but that is not universal).
Summary
It's important to note that the specific roles and responsibilities of real estate agents and brokers can vary depending on the state in which they are licensed. In some states, the distinction between an agent and a real estate broker may be more blurred, while in other states the roles may be more clearly defined. The biggest differences between the two roles in in licensing requirements, management duties, and authority. Not all agents become brokers, but every broker is an agent.
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