The Difference Between a Broker and a Sales Agent

My son and I had a great conversation last night that spurred this video.

So the difference between a broker and a sales agent, especially as it pertains into a small rural community — when you have a lot of independent brokerages and not so much plethora of franchises like you do in larger metropolitan areas.

I asked him also what is the difference between a broker and a sales agent and he said, ‘Well, sales agents have to work underneath the broker in order to be able to do real estate,’ and I said yes, and he said. ‘Brokers have more experience and more education and have to get their brokers license,’ again, yes.

In Texas to be an active sales agent you have to have your license underneath a broker.
So the broker has all the sales agents underneath them, right? The broker takes on the liability of all the sales agents underneath them. So if the sales agent makes a mistake, gets sued, looses their license, anything like that, all those sales agents trickle up to the broker.
It it can be a lot of liability.

Smaller rural communities, you see a lot of independent brokerages and you see like the broker in and of itself is similar to me — we help buyers and sellers. We do listings everything just like a sales agent in addition to all of the brokerage management.

In larger metropolitan areas, the broker doesn’t sell real estate. They don’t help buyers. They don’t help sellers.
All they do is brokerage oversight.

Some people will ask. Sales agents, ‘Hey, why don’t you get your broker’s license? Just kind of do your own thing?’
Most sales agents know and understand that when you become a broker, you got a lot of liability. But also as the broker, you’re the resource for those sales agents.

They have questions, they ask you.
They have a situation that comes up that you gotta put out some fires, they go to the broker. And if the broker didn’t have the answer, they have a plethora of resources that they can go to, or it’s contractors, attorneys, surveyors. Imagine they have those resources that they can go to to give you the correct answer.

Those sales agents, they’re not employees of the broker. They’re complete 100% independent contractors.

So when somebody says, ‘Oh, you work for Cori!’
No — they don’t work for me. I always correct everyone.

Then how do you get paid for doing all that? Well, the broker gets a percentage cut of the sales agents Commission that they earn, but the sales agent isn’t earning any Commission then the broker makes nothing off of them. And every brokerage handles their Commission splits with a broker completely different.

If you know someone who’s a sales agent and you ask them if you ever wanted to go off on your own and be your own broker, sometimes they’re probably going to be honest with you and say:
‘I don’t want to take on that liability.’
I need to be able to ask questions.’
‘I don’t know the answers to everything.’
‘I don’t have those resources.’
I don’t want that liability.’

This is why some brokers don’t wanna take on a ton of sales agents, because the responsibility is pretty heavy and you have a lot of liability.