Types of Real Estate Agents
There are numerous types of real estate agents who focus on different segments of the market or take on different responsibilities in a given market segment. Before starting the licensing process, you should have a clear idea of what kind of agent you want to be and why. By becoming familiar with the different kinds of real estate agents enables you to get a better idea of where you are heading and whether being a real estate agent is a good fit for you. Here are some of the options available to you.
Real Estate Broker Vs Agent
Frequently the words real estate broker and real estate agent are used interchangeably. From the public’s point of view, they see brokers and agents as people who help them buy, sell, and rent houses and other kinds of real estate. In actuality, there are two different kinds of real estate licenses in most jurisdictions – agent licenses and broker licenses. In most jurisdictions you must obtain an agent license before you can apply for a broker’s license. The process to get licensed varies depending on which kind of license you want to obtain.
Depending on the jurisdiction, agents may also be referred to as realtors, real estate agents, or real estate salespeople. Regardless of the term being used, an agent is typically involved in helping people buy, sell, or lease real estate. The Job Description Of a Real Estate Agent sets out more clearly all the activities involved in this process. Most real estate agents are typically paid by commissions earned on the successful completion of a real estate transaction.
In most jurisdictions, a Broker is the person responsible for managing a real estate firm (typically referred to as a Brokerage). In the province of Ontario, the Broker of Record is a person with a broker’s license who is also the primary person responsible for managing the Brokerage and all the agents who work in the Brokerage.
The Job Description of a Broker of Record sets out in greater detail the various duties of the Broker of Record/Manager.
Unfortunately, there is a lot of confusion because in many jurisdictions someone can have a broker’s license and essentially act the same as an agent (i.e. has no management responsibilities). Unlike salespeople, Brokers of Record or managers are typically paid a salary and may also in some situations earn commissions depending on the details of their management agreement.
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Full-Time vs Part-Time Real Estate Agents vs Hobbyist
A full-time real estate agent is typically a full-time professional who works on their business on a full-time basis and works every day to provide high quality services to their clients. Some brokerages and some provinces have preconditions which will only allow full-time agents to operate as agents. Full-time professionals typically have a number of shared characteristics including:
- work at full-service brokerages (types of real estate brokerages) and earn a significant income doing exclusively real estate brokerage
- have no other source of income or other kind of employment
- invest heavily in their education and development
- invest heavily in marketing and their technology tools
As every real estate agent is an independent businessperson, it is sometimes very difficult to distinguish between full and part-time agents. Frequently agents can work 20 hours per week and significantly outproduce agents who are working 60 hours per week. The real distinction is how productive they are when they are working – not how many hours they work.
New agents often work as part-time real estate agents until the they see some success or generate enough income to make the switch to full-time. Other agents may have a full-time job and instead choose to work in real estate in the evenings and weekends. This can be a tough grind and typically not something which most real estate agents want to do for an extended period of time.
Hobbyists are a different breed of real estate agents altogether. They may have either a full-time job in some other field or industry or are retired and have no real interest in operating a successful real estate business. Hobbyists, unlike full-time real estate professionals have no real need or desire to generate income, but rather get licensed out of interest or potentially to sell the properties of family members. Hobbyists typically gravitate to warehouse companies where the brokerage fees are generally lower.
Commercial vs Residential Real Estate Agents
Another major distinction in the types of real estate agents is commercial vs residential agents. Most full-time real estate professionals generally prefer to specialize in one kind of real estate. These agents find that commercial brokerages and residential brokerages operate very differently and have a greater comfort level working in one or the other kind of environment. In some instances, the brokerage prohibit agents from practising both kinds of real estate.
Residential agents will typically focus on resale, rentals, or residential investment specialties. In contrast, commercial agents tend to specialize in more distinct segments including:
- Sale of income producing properties (Commercial investment sales)
- Office leasing
- Retail leasing (working with big brands)
- Industrial sales and leasing
- Land assemblies
- Sale of businesses
In some brokerages, typically smaller residential brokerages, some agents act as “resi-mercial” agents and participate actively in both the commercial and residential markets. These agents have limited success as they have no real expertise in either area. In general, it is best to focus on one or the other in order to achieve greater success.
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Multitude of Choices
Other choices an agent can make are whether they want to work as an independent agent or as part of a team, or work with a developer on the sale of preconstruction projects.
Becoming a real estate agent does not just mean selling houses––there are a multitude of exciting possibilities for what your career as a real estate agent can look like. The next step is figuring out which area interests you the most and taking action.
The duties of the Broker of Record
The duties of the Broker of Record include all aspects of running a brokerage including ensuring the brokerage meets all legal and regulatory requirements for the brokerage. Typically, the Broker or Broker of Record is responsible to:
- Actively participating in the management of the brokerage
- Select and train real estate agents
- Supervise and support for Agents and brokers working in the brokerage
- Review transactions and approving trade records (Send to Glossary)
- overseeing the management of trust funds
Initially all real estate agents and brokers go through the same education process of becoming a licensed agent. Thereafter most jurisdictions including Ontario, to receive a broker’s license require the completion of additional classroom participation and typically require a minimum of two years of experience as an agent before they can become a Broker of record
There are many distinctions between residential and commercial real estate including:
- Size of the transaction
- Complexity of the transaction
- Geographical specialization (i.e. downtown, versus suburbs versus rural)
- number of specialties available
Independent Agents vs Teams
Many agents love handling all aspects of the business. But between analyzing the market, advertising listings, communicating with clients, and everything in between, real estate agents do handle a lot of duties including all the administration. Some agents will choose to operate with a team so that these duties are divided up, meaning that each member only needs to focus on their assigned tasks.
While it results in less work for everyone involved, this method also means that team members make a smaller percentage of commission than they would as independent agents. Having a team is likely more well-suited to an established agent who has developed a network and can more consistently make sales. Doesn’t say what the advantage if of being on a team especially when starting out … i.e. leads, etc.
Preconstruction Sales Agents
Preconstruction agents sell property to clients looking to invest in real estate that is not yet developed. For example: selling the site of a future condo with an expected completion date. A preconstruction agent works with clients to decide whether a certain property is a smart investment based on the projected details of the building and surrounding developments.