In 2014, I set out on my own and started an independent brokerage firm. It has been a long and exciting road, and I bet some of you are wondering if it’s time for you to become a real estate broker and start your own journey.
I can help you think through all of the pros and cons of becoming a real estate broker, but first, I’ll dive into some basics. In this article, you’ll find the information and resources you need to make this major decision and to know if you’re ready to take this giant next step in your real estate career.
What Is a Real Estate Broker?
First things first, real estate brokers are experienced real estate agents who have continued their education, completed the requisite courses, passed a broker’s exam, and have been licensed by their state.
What’s the Difference Between a Broker & an Agent?
Simply put, a salesperson real estate agent must work under a broker. A broker is fully licensed to work independently, either within a brokerage or by starting up their own brokerage and hiring salespeople. Watch Chris break it down in under two minutes:
What Does a Real Estate Broker Do?
Brokers often do the same work as salespeople. On the buyers side, they help clients seek out properties that match their criteria, make offers, negotiate, and manage the purchase transaction through closing. On the sales side, brokers list and market properties for their sellers, negotiate, and also see the process through to closing.
Additionally, brokers can hire new agents, train and supervise them, oversee administrative staff, and ensure everyone is acting in accordance with the law and ethical best practices.
Finally, a broker is going to have an increased amount of fiscal responsibility. Brokers will oversee and review contracts and make sure everything is perfect—both for their own transactions and those of agents working under them.
Are There Different Types of Brokers?
Yes! There are different types of brokers within a brokerage.
The designated broker (or principal broker or broker-in-charge) ensures that everyone within the brokerage is adhering to local, state, and federal real estate laws.
The managing broker oversees the salespeople, hires new agents, offers training, and manages the administrative team.
Associate brokers have their broker licenses and are part of the brokerage. Typically they don’t supervise other brokers or salespeople.
In some states, like New York, you can also hire a broker of record. I call these brokers “Four-star Generals.” They think they’ve earned their stripes so they feel entitled to just sit behind a desk and bark orders.
Note that nomenclature is unique in each state. For example, in Illinois, a newly licensed salesperson is called a broker and they’d continue on to become a managing broker at the next stage of their career.
Why Should I Become a Real Estate Broker?
In my dozens of years in the real estate industry, I’ve been a REALTOR 30 Under 30 agent, broker-owner, franchise partner, recruiter, speaker, coach, and author. I’ve launched two brokerages, invested in two others, and coached broker-owners. I’ve put in the crazy workweeks and the sleepless nights, and yes, I made plenty of mistakes along the way.
There are many reasons one might want to become a real estate broker. It’s a natural progression in your career and an important step in professional development. But I want to make sure you’re taking this next step for the right reasons, help you avoid major mistakes, and save you a lot of heartache in the process.
Becoming a Broker Means You Can:
- Earn more, either by getting a better split within your brokerage or by starting your own brokerage and earning splits from your salespeople.
- Build your own brand or offer a unique service or system that other brokerages are not doing. Your competitive advantage separates you from the competition in the customer’s view. This would allow your brokerage to stand out.
- Cut back on selling and instead focus on recruiting, training, and leading new real estate agents.
On the Flip Side, Don’t Become a Broker Just To:
- Save money.
- Avoid supervision and/or regulation.
- Grow your business just for the sake of growth
7 Things I Wish I Knew Before Starting My Real Estate Brokerage
What Is a Typical Broker’s Earnings?
Associate brokers can negotiate better splits with their brokerage. If you start your own, you’ll make full commissions from your own deals, but also get a cut or a split from the salespeople who work under you.
Nationwide, as of May 2022, the average broker “salary” (or total earnings) was $77,296 per year. According to ZipRecruiter, reported salaries may range from $43,000 in the low 25% and $100,000 in the top 75%.
This reflects statistics collected by the Bureau of Labor. The median broker salary in 2021 was $62,010, with the lowest 10% earning below $30,000 and the highest 10% earning above $100,000.
Earnings, however, depend entirely on the work you put in and the market where you reside. More deals and/or higher sale prices will result in higher annual earnings.
[Related article: The Average Real Estate Broker Salary for Every State]
What Skills Are Needed to Become a Real Estate Broker?
Real estate brokers build on the skills that they develop during their time as agents:
But brokers can also:
If you’re thinking about building your own brokerage, remember that it’s not just about being a great salesperson or the number of transactions you’ve done—it’s about being a good manager. Your brokerage will fail or succeed based on the team that you build and retain.
Learning how to hire, train, and manage employees is a monumental feat on its own. The best advice I can give you is to be very clear on your expectations for each position from the beginning. But to do this, you’ll need to have established clear processes and procedures in advance.
If you’re considering starting a brokerage, I suggest you take the time now—before you even get your broker license—to be clear on your objectives, think about the skills that are required, find a competitive advantage, determine the type of agents you want to serve, and consider what your processes and procedures will look like.
What Are the Experience Requirements?
Since you can legally enter into contracts of sale as a real estate broker, all states require that you have experience as a licensed real estate agent in order to become a real estate broker. Some states just say you need to be actively licensed for a number of years, while others, like New York and California, require you to have closed a certain number of transactions.
Here is a quick rundown of the experience requirements in California, New York, Florida, Texas, and Illinois.
Minimum Real Estate Broker License Experience Requirements by State
|State||Time Requirement||Transaction Requirements||Exceptions|
|California||2 years as a salesperson in the last 5 years||None||Attorneys or those with a 4-year college degree in real estate are exempt from education requirements|
|New York||At least 2 years as a salesperson or 3 years in the general real estate field||Yes—3,500 points for salespeople working for at least 2 years, or 5,250 for working in general real estate field within 3 years; more info||Attorneys do not need to meet the time, education, or transaction requirements|
|Florida||2 years as a salesperson in the last 5 years||None||Attorneys and those with 4-year college degree in real estate may not need to meet education and/or time requirements in Florida|
|Texas||4 years as a salesperson in the last 5 years||Yes—3,600 points; more info||Attorneys and those with 4-year college degree in real estate may not need to meet education requirements in Texas|
|Illinois*||2 years as a salesperson in the last 3 years||None||Attorneys do not need to meet the education requirements in Illinois|
*Again, since salespeople are called brokers in Illinois, brokers are called managing brokers.
What Are the Education Requirements?
While the length and difficulty of your broker licensing courses varies a bit by state, you should expect to spend at least a full week in classes to qualify for your broker license. Just remember that these are college-level courses, so they will be a bit more difficult than salesperson courses.
Many agents will find the broker courses more interesting than their salesperson prelicensing education. In most states, there is more of a focus on appraisals, finance, and economics.
Real Estate Broker Prelicensing Course Hours by State
How Much Does It Cost to Get a Real Estate Broker License?
Getting your real estate broker license can cost between $400 and $1,200. These costs are broken up between your real estate broker courses and application fees from your state.
Here’s a quick breakdown of the costs for courses and application fees to get your broker license in California, New York, Florida, Texas, and Illinois:
Costs to Get a Real Estate Broker License in 2022
|California||$429 with Allied||$300||$729|
|New York||$349 with Kaplan||$170||$519|
|Florida||$199 with Colibri Real Estate||$178.50||$377.50|
|Texas||$888 with Colibri Real Estate||$235||$1,123|
|Illinois||$200 with Colibri Real Estate||$208||$408|
What Are the Steps to Getting a Real Estate Broker License?
Here is a quick overview of the process in all 50 states:
1. Learn the basic requirements for your state
2. Complete and document the required experience
3. Take your real estate broker prelicensing courses
4. Pass the real estate broker exam
5. Apply for your broker license online
1. Learn the Requirements for Your State
The first step is, of course, to learn the requirements in your state. In most states, there are basic legal requirements to get your license (in addition to education and experience), and these include a minimum age requirement and a clear criminal history.
Minimum Age to Get a Real Estate Broker License
You must be at least 18 years old in order to get your real estate broker license in all 50 states. Some require you to be 20 years old. Of course, since you need to be at least 18 to get your real estate salesperson license, this makes sense.
Criminal Conviction History
Likewise, since you cannot get your real estate license with a felony conviction on your record in most states, you cannot get your broker license either. If you did manage to successfully petition your state licensing department to grant you a salesperson license with a felony conviction, you will need to do the same for a broker license.
Our State Specific Guides to Getting a Broker License
Learn more about what’s required in these states with our specific guides:
2. Complete & Document the Required Experience (+ Transactions, if Needed)
Most states require a certain number of months or years of real estate experience to qualify as a broker. However, if you are in a state like New York or Texas that requires a minimum number of transactions, then you need to complete and document those transactions before getting your license.
Since your managing broker is legally your broker of record, they will likely document your qualifying transactions for you. Don’t worry, though—in order to apply for your license, you do not need to provide any details from your transactions. You just need to know the number and type of transactions you’ve closed as a salesperson.
3. Take Your Real Estate Broker Prelicensing Courses
Once you’ve learned the qualifications you need to get your broker license and completed and documented the right number of transactions, you need to complete your real estate broker courses.
Consider taking your real estate broker courses online with Colibri Real Estate. They offer the same courses as everyone else, but often for a better price. Plus, they’re our top pick for best online real estate school.
Many agents don’t realize that there are often exemptions for the education and experience requirements. Attorneys in good standing admitted to the state’s bar and those who have college degrees in real estate-related majors generally don’t need to take the required education courses and may not need the required experience either.
4. Pass the Real Estate Broker Exam
Just like your salesperson license, the next step in getting your broker license is to take and pass your state’s broker prelicensing exam.
While the tests vary from state to state, they are all multiple choice and will take you several hours to complete. All real estate broker exams are pass/fail, and in order to pass the exam, you need to get 70% of the questions correct.
How Hard Is It to Pass the Real Estate Broker Exam?
The real estate broker exam is generally a little bit harder to pass than the real estate salesperson exam. However, since many people who take the salesperson exam have no real estate experience, the pass rate for broker exams is often higher.
5. Apply for Your Broker License Online
Once you’ve passed your broker exam, all you need to do to officially become a real estate broker is to apply for your license!
The process is pretty straightforward in most states. You need to gather your information, including your application, documented experience (if needed), and certificate of completion of the course, and submit everything to your state’s licensing or real estate commission.
That’s it! Congratulations, you are now a licensed real estate broker!
Want to Start a Brokerage?
Now, I’m not necessarily encouraging you to start your own brokerage. I just want to provide you with information to ensure that you have a real and true picture of what becoming a real estate broker means. From here, only you can make the best decision for you—based on your individual goals and situation.
If you think starting a brokerage sounds like your next great adventure, I have plenty of resources to help you along the way. Consider these five important next steps:
- Really do some soul searching and decide what kind of brokerage you’d want to build. Read my article on how to start and get those wheels turning.
- Create a budget with my worksheet.
- Consider your comparative advantage and come up with a name. Start thinking about branding your new business.
- Determine your procedures and processes. For example, what splits are you going to establish?
- Start strategizing for recruitment. Learn how to attract both customers and agents!
Getting your real estate broker license can be a long and expensive process, but follow these steps and you can become a broker and even consider starting your own brokerage. Take it from me, becoming a broker can be one of the most rewarding career steps you ever take.
Do you have advice for someone considering becoming a real estate broker? Leave a comment below!