Real estate brokerage in Toronto vs. Real Estate agents
A real estate brokerage in Toronto is an integral part of the real estate industry. So are real estate agents. To be honest, different people assume different positions to keep the real estate market churning like a well-oiled machine. There are brokerages, agents, inspectors, real estate lawyers, appraisers, and salespeople.
With so many positions, it can be very easy to blur the lines that exist to differentiate these positions. Most people sometimes confuse a real estate brokerage owner with an agent. Other times, agents and realtors are confused with people using the term interchangeably.
The simple truth is that a real estate brokerage in Toronto and a real estate agent working in Toronto are not the same. Although there may be a little overlap in their functions and responsibilities, they are not the same. This overlap is the major reason why real estate brokerage vs. real estate agents is such a divisive topic.
It may be complicated for you to find out that real estate brokers can work as agents. However, agents cannot work as real estate brokers. What then are the differences and similarities that exist between these two titles? This is what we are going to discuss in this article.
In this article, we will explore the significant differences between a broker and an agent. We will also discuss the similarities that overlap the responsibilities of both job descriptions. Keep reading to find credible answers to your real estate brokerage vs. real estate agent conundrum.
Related article: What to look for in a real estate brokerage in Toronto?
Real estate terms you should know
Before we start dissecting the finer points of the broker vs. agents arguments, there are a few real estate job descriptions that you should know about. These terms will help you to differentiate the different people that work on a property deal. They include
Real estate broker
In Toronto, the owner of a real estate brokerage is a broker. A real estate broker can be defined to be a step above an agent. Generally, real estate brokers have more training and education when compared to an agent. They can work on their own or hire a salesperson to work with them. Generally, a real estate broker manages several real estate agents.
Agents have to be affiliated with a broker. On the other hand, a broker can run an independent ship without any worries at all. There are different ways of becoming a broker. However, one thing is sure. To become a broker, you have to pass a series of qualification exams that will earn you a brokerage license.
A real estate broker working for a brokerage firm other than his own is a broker associate. A broker can work independently. However, it is not uncommon to see professionals with this title, joining a more extensive network to improve their chances of lead conversion. A broker associate may have to pay a flat rate to the managing broker.
Real estate agent
In Toronto, a real estate agent can be defined as a licensed salesperson. They are entirely different from real estate brokers. In this real estate brokerage vs. agent article, we will show you how different these two professions are.
They cannot work independently. An agent must work for a broker. The managing broker assumes responsibility for the actions of a real estate agent. Becoming a real estate agent requires a series of exams. However, these exams are not as extensive as those undergone by aspiring brokers.
This term can be used to describe an agent or the owner of a real estate brokerage in Toronto. All realtors can be brokers or agents. However, not all brokers/ agents can be considered to be a realtor. Being a realtor requires membership of the national association, annual dues and a subscription to the ethics code.
This is a term used to describe agents that are working with a property seller. They represent all of the interests of the seller. A listing agent may be a broker or a real estate agent. These agents are responsible to the seller based on a pre-signed listing agreement.
They work with people looking to buy a home. Sometimes, most agents work with both buyers and sellers to earn a commission. However, an exclusive buyer’s agent only works with buyers, never with sellers.
Dual agency is a term used to describe a scenario where a real estate brokerage in Toronto represents both the buyer and the seller. This can happen even if there are two different agents involved in the transaction. Remember that different agents can work for the same real estate brokerage. Dual agent/agency is the term that is used to describe this situation.
Dual agency is not permitted for every deal. For a deal where this rule is exempt, it is possible that a listing agent can write an offer to be submitted to the buyer. These agents can become the aforementioned transaction agents. Transaction agents do not represent any side of a real estate deal. They are just present to facilitate the transaction.
What Is a Transaction Agent?
In states where dual agency is not permitted, listing agents might find themselves in the position of writing an offer for the buyer. These agents can elect to become transaction agents. They do not represent either party but simply facilitate the transaction.
Who is a real estate agent, and how do you become one?
A real estate agent is licensed by the appropriate body to help people sell and buy residential as well as commercial property. They are usually a part of a real estate brokerage firm and are managed by a supervising broker.
To become a real estate agent, you have to complete a specific number of classes before passing a state prescribed examination. These are the major requirements for those looking to become a real estate agent, although licensing requirements may differ from state to state.
Usually, an applicant must complete between 30-90 hours of lessons taken at an accredited university or college. The exams are designed to make sure that prospective applicants have a true understanding of the state as well as national real estate law and practices.
Becoming a real estate agent can be broken down into the simple steps outlined below
- Carry out research on the education and state requirements in the state you want to work in.
- Enrol in approved real estate courses. In today’s digital world, these courses can be held online or in person.
- Submit an application and accompanying paperwork to qualify to write the licensing exam. This should only be done after you have passed all of the required courses.
- Take the exam and make sure to reach the required minimum score for the state you want to work in.
- Work for a while with a real estate brokerage. This will help you gain the required experience you need to apply for a real estate license.
- Apply for your license to gain the legal standing required to work as an agent.
- Don’t stop learning. Continue with your real estate education and make sure to renew your certifications whenever you need to.
The kind of real estate courses you will need to undergo is hugely dependent on the type of real estate agent you want to become. Each type of real estate agent has its own unique set of responsibilities, rules and specialization.
A listing agent who wants to sell homes will require different training compared to a buyer’s agent who wants to help people purchase a property. In fact, you can take the two different trainings needed for these titles to offer yourself more versatility.
A listing agent can become a transaction agent if the deal calls for it. This is why you need to keep yourself updated on training and certifications. You want to make sure that you have the education and skills necessary to satisfy an extensive clientele.
What is a real estate brokerage?
A real estate brokerage is a firm that belongs to a broker. It is a firm that can work independently to sell or buy property for a client or work with real estate agents. The managing persona at a real estate brokerage in Toronto is a broker.
A broker is somebody who has passed the broker exam. That is, they continue their education past the quintessential agent level. They have also received their state licenses.
Different types of brokers can work at a real estate brokerage in Toronto. They include:
By law, a real estate brokerage in Toronto must be managed by a real estate broker. This broker is the designated broker. They bear all of the supervising and overseeing duties for a brokerage.
That’s not all. They are also charged with the responsibility of handling transactions conducted by agents working under them. If a designated broker owns the brokerage where they work, they can also be referred to as broker-owners.
Although, their job description tasks designated brokers with the responsibility of handling the day to day activities of a brokerage, their approach to the job may vary. Some designated brokers work by using a hands-off approach with their agents, especially if they have been working together for a long time.
Other designated brokers have a much more active role that involves, hiring, training and managing staff. Some even go as far as working with certain clients that are looking to sell or buy a property.
A managing broker works by managing a group of real estate agents or even associate brokers. A designated broker can work as a managing broker. A designated broker who wants to take the foot of the pedal with a hands-off approach must hire a managing broker.
A managing broker must be very hands-on. They work around the clock to make sure that every wheel in the cog of the real estate brokerage they work at works perfectly.
Mentioned above, associate brokers are similar to your everyday broker in all ways except one. They are real estate agents who have continued with their education and licensing exams until they reached broker status. However, they do not own a real estate brokerage of their own.
Associate brokers work under a managing broker. This means that they have the same responsibilities and roles as a real estate agent. However, they have more experience and have received more education when compared to their agent peers. Also, at any point in time, they can decide to open up a brokerage of their own to become a managing/designated broker.
The responsibilities of a real estate brokerage
The major difference that separates the real estate brokers vs agent arguments is that only a certified broker can own a brokerage and manage other agents. As an agent, you must work under a supervising broker. This singular difference has led to differences in the duties and functions of these two different job descriptions.
However, you must remember that these two job descriptions work under a real estate brokerage. As such, their responsibilities may intersect based on the type of transaction that is being handled. To that end, we have decided to let you know the everyday responsibilities that can be handled by brokers and agents in a real estate brokerage in Toronto. Such includes:
- They represent both buyers as well as sellers
- Brokers market homes that are for sale
- They are responsible to manage transactions and negotiate prices
- The prospect with seller and buyer leads
- They show homes to clients and hold open houses
- They rent out residential as well as commercial units
Remember that we mentioned a managing broker at the beginning of this article. If you want to work as a managing broker, you may need to get a higher-level license even if you are already a licensed broker. It all depends on the state.
This training is important. If agents are not properly supervised, managed or trained, there is a lot of risks involved. Agents may violate housing codes and environmental regulations. A managing broker needs to make sure that the brokerage avoids all penalties that may arise from agent mistakes.
As such, the duties of a managing broker are as follows:
- Training, hiring and managing real estate agents
- Resolving all internal conflicts that may arise within the brokerage
- Reviewing contracts and making sure that they are up to date
- Establishing internal escrow accounts
- Distributing leads and managing marketing activities
- Managing property under the supervision of the brokerage
- Managing every member of the office
- Establishing communication with professional bodies and the government
- Managing recordkeeping, compliance and relationships with vendors
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The duties of a real estate broker
There is a major point that is always contested in the real estate brokerage in Toronto vs real estate agent argument. It is the duties of the two parties involved – the brokers and agents. To that end, we will discuss the significant duties and responsibilities of a real estate broker and real estate agent. This will make it easier to make a clear distinction between the two sides of the same coin.
A real estate broker is the owner of a brokerage. They work to negotiate ad well as arrange all kinds of real estate transactions. The daily duties of a broker range from writing and reviewing contracts down to overseeing significant financial operations that involve the sale of land, homes and other property.
But that’s not all. The duties of a real estate broker vary based on the party they are currently working for. Under management and supervision, a real estate broker may be tasked with reviewing an agent’s website and marketing strategies. However, when working for buyers or sellers, the job description changes. We will discuss the duties of a real estate broker based on the party they are working for per time.
Brokers working with a seller
A real estate broker in Toronto can handle a transaction for sellers in Toronto. Remember that before they became brokers, they were agents. When working for a seller, a broker at a real estate brokerage in Toronto is tasked with the following:
- Listing the property for sale on local, personal and Multiple Listing Service
- Distributing the brokerage listings to other broker members of the MLS to draw buyers
- Sharing the commission for the listing with successful brokers that work for the buyer
- Advices the property owner on how to prepare their home for showing prospective buyers.
Basically, a broker working for a seller helps to draw buyers and acts as a guide for the seller. They will help to set up open houses, showings and report back to the seller. Brokers are also tasked with submitting an offer for due consideration. They also coordinate every step of the transaction from the seller’s end, negotiate and make sure that the seller’s property is sold at the best prices.
Since most sellers are laymen when it comes to the real estate world, a real estate broker will help to explain and deliver documents and disclosures associated with the transaction. They also work with the seller on closing the deal and handing over the property to the successful buyer.
Brokers working with buyers
A real estate broker can work on either side of a transaction. When it comes to working with people looking to buy property, a broker is tasked with helping them find the right property and completing the transaction. In the course of doing this, a real estate brine is required to
- Help buyers locate properties that fall within their desired prices and meet all of their specific needs
- Coordinating with the buyer to view properties that are up for sale.
- If a purchase will be attempted, it is the express duty of the broker to draw up a purchase offer as well as a purchase agreement.
- Work with the buyer to negotiate terms until the buyer is comfortable with the aforementioned terms.
That’s not all. A broker working for buyers must be on hand to explain and deliver documents involved in the transaction. Also, they must coordinate inspections, write detailed reports on the home and negotiate for repairs if need be. Finally, they must assist with the closing and ownership of newly bought property.
Brokers working with agents
Managing brokers are licensed to have real estate agents working under them. Sometimes, they are called managing or supervising brokers. These kinds of brokers allow their agents to take control of most transactions. However, they still have their part to play. The duties of a supervising broker include:
- Verifies the licensing status of all agents working in the real estate brokerage
- Hires, trains and provides useful training results for agents
- They are responsible for the performance, behaviour and compliance of agents
- They provide marketing results and specific services for agents
- Tasked with maintaining a website that can be used for an agent marketing
All in all, supervising brokers have the highest level of licensing. They set the standard for agent practice in the area. They are also responsible for ensuring that the customer service between clients and agents of the brokerage is pristine.
The sheer financial implications of the transactions that brokerages engage in is a testament to the level of risk associated with this business. Managing brokers work to minimize this risk. They are tasked with continually educating and monitoring the actions of their agents. They make sure that their agents are provided with the best leads and platforms to meet clients.
Duties of a real estate agent
Real estate agents have the proper licensing to help sellers and buyers conduct real estate transactions. They have the legal standing to negotiate, operate and arrange sales under the supervision of a real estate brokerage. The long list of duties of a real estate agent includes negotiating, arranging sales, showing a property, listing the property, handling agreements and filling in contracts.
The duties and responsibilities of an agent are regulated under state law. However, they can be briefly classified based on the client a real estate agent is working with. We will discuss these duties in more detail.
Listing property for sale
When a property is up for sale in Toronto, the best way to get it sold is to call a real estate brokerage. A broker will then assign an agent to help you get your home listed on the MLS. The MLS is shared among all brokerage members who will work together to bring in a buyer tor the home.
- Any agent assigned to help you list property for sale will
- Determine the value of the home in the real estate market
- Advise you on how to ready your home for showings as well as listings
- Enter your home into the appropriate databases
- Market your home to other agents and members of the MLS
- Make sure the home is marketed in print, on the internet and via emails.
All in all, the major duties of a real estate helping you list your property for sale also includes communication with prospective buyers. Also, they will be tasked with making sure you get a signed purchase agreement.
They also report any interest as well as feedback from prospective buyers that have checked out your property. Finally, they coordinate every single step of the process from signing a contract to closing the deal. This includes inspections, reviewing documents and getting signatures from the appropriate buyers.
Working with buyers
A real estate agent can also pitch their tent with somebody that is looking to buy a property. Any agent working with buyers is tasked at locating and viewing property that meets your requirements. They also help with the financial side of things by helping you secure a mortgage.
An agent working for a reputable real estate brokerage in Toronto must advise you on the proper area to buy property, the market conditions in that area and whether you should buy a property. They also help in crafting an initial offer plus negotiating and sending counter-offers to the seller.
Other functions of a real estate agent working with a buyer include
- Coordinating every aspect of the real estate agreement on the side of the buyers.
- Schedule appraisals, inspections and other activities that will help to broker a successful transaction
- Deliver all documents, review deeds and title insurance
Real estate agents add a lot of value to the real estate business. They play an important role in making sure that buyers and sellers meet under the best of conditions. They also make sure that every transaction is satisfying for both the sellers and buyers. Therefore, it is crucial that you choose the best real estate agent for your property needs.
How do you choose the best real estate agents?
There are many ways to make sure that you are working with the best real estate agents. You can find a real estate agent by
Asking for recommendations
If you know somebody that has used a real estate agent in the past, this is a good way is find an agent. Ask your close friends and family for agents with glowing recommendations.
The internet is an excellent way to find the right agent. With the internet, you can get a long list of agents, read online reviews and make an informed decision.
Check out current listings
A quick look at current property listings may be an excellent way to meet an agent. Check local listings and get the contact details of the listing agent.
Go to an open house
An open house is a great way for you to meet agents. At an open house, you can meet the agent that is coordinating the open house as well as other agents that are looking to buy.
After identifying qualified agents, the next thing for you to do is to meet with them. This will help you find out how experienced they are and how well they know the market in Toronto. You can also get a feel for how easy it will be to work with an agent. There is no point in working with an agent that you can’t relate to on a personal level.
Sometimes, whether you are looking to buy or sell property in Toronto, working with a real estate agent may require that you sign an agreement. This agreement will give the agent the ability to represent your authority on all deals. Be careful when signing contracts with real estate agents; make sure to negotiate and agree on commissions before making a decision.
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Real estate brokerage in Toronto vs Agents: How do they get paid?
You should know that real estate agents don’t work without real estate brokers. When it comes to real estate transactions, it is the broker that actually gets the commissions. Professionals involved in the sale or purchase of a property are paid after the closure of a transaction. Therefore, if you do not buy or sell property, the agent involved in the deal will not get paid.
After the closure of a sale or purchase, the real estate brokerage is paid a split that has been pre-agreed as the commission for the sale. Your transaction pays the real estate brokerage. The brokerage, in turn, pays the real estate agents based on a commission split ratio agreed during the hiring process.
The commission of a real estate deal sits at around 6%. This commission is usually subtracted from the final amount received by a seller. This is why you need to hire an excellent agent. A good listing agent will help you price your home in such a way that the final amount makes up for part of the commission.
Real estate brokerage in Toronto vs Agents: Benefits of being a broker
Being a broker can hold a lot of significant benefits for you. Of course, it involves more hard work, and there are increased educational requirements. However, being a broker helps you to upgrade your career in so many ways that an agent can’t.
This is because as a broker, you can run a real estate brokerage in Toronto. You can also own a management company of your own. Why don’t we take a look at the significant benefits of being a broker?
Brokers can run their own brokerages
Unlike real estate agents, there is no ceiling for brokers. A licensed real estate broker in Toronto can run a private real estate brokerage and represent both buyers and sellers of property. A broker can work alone keeping all of the commission, or they can hire other real estate agents. Alternatively, they can offer 100% commission rates to agents and charge these agents desk fees.
If you prefer not to own a real estate brokerage of your own but want to manage and mentor other agents, then you can opt for a managing position. A managing broker supervises and oversees all other agents and brokers that work within a real estate brokerage.
Real estate brokers earn more
Granted, real estate brokers have additional responsibilities when compared to real estate agents. However, more duties also equal a higher income. On average, most real estate brokers in the business can make as much as twice the amount made by agents
Brokers have better commission splits
Brokers always command a higher commission split when compared to agents. You may not have the natural propensity to open up a brokerage of your own or prefer the safety of working with another broker. Even if this the case, the expertise and training of a real estate broker mean that you can command higher commission splits.
Real estate brokers also enjoy better opportunities to broker lucrative deals. The fact that they are highly trained and more experienced than agents means that they will be trusted with more complicated and profitable leads.
Brokers can own property management companies
One advantage that a real estate broker holds over an agent is that they can run a company that deals with property management. These companies act as the middle person between the owner of a property that is being rented and tenants. Property management can be a great way to make more revenue, especially if investment properties are a hot trend in the market.
Brokers but not an agent can conduct activities such as leasing, collecting rent and more. In fact, property management companies are required to have a broker as a member of the staff. Buying rental property, managing and owning investment property is one of the few benefits that you cannot enjoy as an agent.
They have more marketing experience
When it comes to the real estate industry, a real estate broker has more experience than an agent. The requirements to become a broker stipulate some form of training, specialization and designations that is more than that of the average agent.
This marketing and real estate experience comes in handily when dealing with clients. Most clients are more likely to trust experienced brokers as opposed to agents. As a broker, you can use this experience to your benefit. You can leverage your expertise, certification and credential when meeting with possible clients. This is is not possible for real estate agents.
Real estate brokerage in Toronto vs Agents: Benefits of being an agent
The duties and responsibilities of a real estate agent are limited. Real estate agents have a ceiling. However, this doesn’t mean that there are no benefits to being an agent. For instance, real estate agents do not have as many prelicensing requirements as brokers. Also, they do not have to deal with managing the financial and administrative responsibilities of a brokerage. In this section, we will take a closer look at the benefits of being a real estate broker.
Agents have fewer licensing requirements
To become a real estate agent, aspiring agents only have to meet a few administrative and course requirements before passing a licensing exam. On the other hand, real estate brokers have a lot more to do. They have to obtain a real estate agent license, work their way to gaining more experience, take on additional education before writing more exams. This hassle is not a part of becoming a broker.
Less financial liability
Real estate agents cannot own a brokerage or manage a group of other real estate agents. This means that they are financially responsible for themselves. They do not have to worry about the legal or financial implications of the actions of other agents. Reduced responsibilities are a benefit that agents enjoy. Brokers, on the other hand, have to be worried about managing and working with a group of agents.
Less administrative burden
Brokers are responsible for a lot of the administrative activities that go into operating a real estate brokerage in Toronto. These activities include back-office duties, writing contracts, updating licenses, hiring and training agents. On the other hand, agents only have to be responsible for sellers and buyers.
How to become a broker or an agent
Becoming a real estate agent is almost the same as becoming a broker. The main difference is that a broker has to be more educated than an agent. The first step is to take a prelicensing course before passing the agent exam of your state. You also have to join a real estate brokerage and then go ahead to gain experience. We will discuss all of these steps in more detail. Keep reading to find out how to become a professional in the real estate business.
Take prelicensing courses
Whether you want to make your way into the business as an agent or a broker, you need to secure an agent licence. This is the only way you will be able to work with a real estate brokerage in Toronto. You have to meet all of the educational requirements as determined by the Toronto government. This typically means between 75 – 200 hours of real estate course work. Your course work will touch on topics such as property ownership, land use and control, agency law, among many others. You can decide to take courses physically or online.
Pass the licensing exam for agents
After meeting the requirements for your coursework, you automatically qualify to take a licensing exam. After due application and registration, you need to pass your exam. Your exams are the only way you will be while to show that you are a proficient real estate professional.
After passing the exam, the next step is to submit a licensing application. The processing time for your application is between 4-6 weeks. Once your application has been approved, you are now a licensed real estate agent. You can work with a brokerage in Toronto.
Gain experience with a brokerage
With an agent licence, the next step is to work with a real estate brokerage. This is the only way you will be able to represent prospective sellers and buyers in real estate transactions. After a brokerage has hired you, you need to build your experience in the industry.
Choosing a brokerage to work with can be a highly specific task. If you want to become a specialist in a certain field of real estate such as commercial property, you have to work with a real estate brokerage that excels in that area. Perhaps you want to be a listing agent or a buyer’s agent, and you need to find a real estate brokerage in Toronto that can support those goals.
If you are looking to become a broker, you need to have some experience before you can upgrade your licence. You also need to have worked for a specific number of years.
Pass your broker licensing exams
Agents that want to become brokers must complete the additional licensing courses. They must also pass Toronto’s broker licensing exam. Courses for prospective brokers usually include about 100 credit hours. They also cover more complicated topics, including management and supervision topics.
Join a brokerage or start yours
As mentioned at the beginning of this article, there are different types of brokers. Depending on the kind of broker you prefer to be, you can work as an associate broker or start a brokerage of your own. An associate broker works under the supervision of another broker. If you want to be an associate broker, consider factors such as commission split, company reputation and culture before making a selection.
If you are looking to start a real estate brokerage in Toronto, you need to determine whether you will be an independent brokerage or a part of a franchise. You also have to decide on company structure, funding source. Lastly, you must have a solid plan.
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Why do you need a real estate brokerage in Toronto?
As a buyer or a prospective seller of property in Toronto, you must work with a real estate professional. They offer a unique set of skills and a whole lot of expertise. We understand that you may feel like there is no reason to with an expert. Here is why:
When you work with a real estate professional, you are hiring the experience that they bring to the table. A real estate brokerage in Toronto is familiar with the inner workings of the real estate market. They understand how the buying and selling process works. They can show you everything you need to do to make your transaction work smoother.
A real estate professional in Toronto will be familiar with the workings of the real estate market in Toronto. Since they live and work in Toronto, they understand crime rates, the advantages of buying property in a particular area and the nuances of the market. They can also help you determine the prices that are fair and over the top.
One major advantage that a real estate brokerage in Toronto offers you is that they can act as a buffer between all the parties involved in a transaction. They act as middlemen that help you to get through the negotiation process with less hassle.
Imagine trying to sell a house in Toronto. Will you start by going door to door asking people to buy your home? It doesn’t work that way. This is why you need a real estate brokerage in Toronto. Professionals have a network of clients and agents that can help you with your transactions whether you are looking to buy or sell a home.
Final take: Real estate brokerage vs Agents
Brokers who run brokerages offer more experience. They have also undergone more training and can command a higher income when compared to agents. Brokers are the only professionals in the real estate business that can open a brokerage of their own.
That is not to say that there is no advantage to being a real estate agent. Real estate agents do not have as many licensing needs as brokers. If you are an excellent agent and with the proper connections, you can make as much money as a broker without having to worry about management and supervision.
These two polarizing professions work at a real estate brokerage in Toronto. With a real estate brokerage, you can be sure of a smoother, faster and better transaction. We have experts that can help you get the best out of your real estate deals in Toronto. Call us today!
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