What is a real estate brokerage?

Real estate brokers are individuals who have completed additional training and have obtained a license to manage their own business. State laws that determine the specific licensing requirements for brokers vary.

The business a broker manages is called a brokerage. Real estate agents who are not licensed brokers are legally required to hang their license with a brokerage to professionally help people sell or buy property. Real estate agents typically work for the brokerage as independent contractors, not employees. Through this arrangement, most brokerages make their money by taking a cut of the agent’s commission after every successful transaction.

With this revenue structure, it’s in brokerages’ best interest to guide their agents toward success. Hartmann shares that “Ultimately, a brokerage’s goal is to build a business and have a stable of strong agents who specialize in a specific area.”

For sellers, the most important thing to think about when considering an agent’s brokerage is what kind of support the brokerage provides their agents. Support may include:

• Training: Brokerages often give agents free classes and educational resources, so that they are up-to-date on the best practices for real estate transactions.
• Access to marketing networks: Brokerages leverage their extensive networks to generate quality leads to their agents. Hartmann says that “because of strict rules about marketing outside of your brokerage, it’s important to think about the size of the brokerage’s database and buyer network.”
• Tech: Many brokerages supply their agents with useful software that helps them organize their business and makes the transaction process more intuitive for agents, buyers, and sellers.
• Agent support and services: Commonly, brokerages include support staff to assist agents. Staff may include legal and tech support, human resources, accounting, and more.