The Differences Between the Real Estate Broker and Real Estate Sales Agent - Research Paper Example

Introduction In 2009, the most recent U.S. real estate outlook revealed that the global economy would be worst as compared to the previous year (Esrig, Hoagland and Nottage). In line with the low revenue on real estate business, the weak labor condition throughout the United States significantly discourages more household from creating new residential demands. Although there are some families who could afford to purchase a new home, most of them choose to delay the process of moving into a new home for the reason that they may not be able to immediately sell their old house. One of the most difficult and most complex events in our lives is the process of purchasing or selling a new home. The U.S. residential housing crisis resulted to a sudden decrease in the market price of houses. Considering the current economic condition in the United States, individuals who wish to purchase a good real estate at a competitive market price may still be difficult to find due to the fact that the real estate sellers would somehow prefer to negotiate the best price for their properties (Quilan, p. 11). In order to narrow down the search for a good investment property, a lot of people around the world tend to seek professional assistance from the real estate brokers and sales agents when buying or selling a real estate property. Although real estate brokers and sales agents are both considered as real estate professionals, it remains a fact that there is a thin line that differentiates the role and responsibilities of real estate brokers from those of the real estate sales agents. In line with this, the significant differences and similarities between role and responsibilities of real estate brokers and sales agents will be identified and thoroughly discussed. Significance and Purpose of the Research Topic Due to lack of sufficient job availability in other industry outside the real estate business, there are more people entering the real estate business in order to support the financial needs of their family. As of 2006, the U.S. Bureau of Labor Statistics has recently reported that the number of real estate brokers and real estate sales agents is has reached as high as 131,000 and 432,000 respectively. This figure has been projected to increase up to 146,000 and 478,000 real estate brokers and real estate sales agents by year 2016 respectively (U.S. Bureau of Labor Statistics). Because of the increasing number of people who would eventually decide to become one of the real estate professionals, the research topic chosen for this study would be useful in allowing the target audiences to be able to meticulously distinguish the differences between the real estate broker and real estate sales agent. By knowing the differences between the role and responsibilities of each job position, individuals who would want to enter the real estate profession would be able to assess their qualifications and ability to deliver outstanding work performance (Edwards, p. 1). Research Questions The following research questions will be used as a guide throughout the research study: 1. What is the acceptable definition of a real estate broker and a real estate sales agent? 2. What are the similarities and differences between the role and responsibility of real estate brokers and real estate sales agents? 3. What are the job qualification of real estate broker and real estate sales agents? Chapter II – Literature Review Similarities in the Role and Responsibilities of Real Estate Brokers and Sales Agents In the United States, real estate broker is a widely used term when describing a third party who acts as the intermediary between the sellers and the buyers of real estate properties (Mantrala and Zabel). Similar to the responsibility of real estate brokers, sales agents are focus on selling real estate properties. Real estate brokers and sales agents are the ones who personally assist the sellers in the marketing and selling of real estate properties at the highest possible price within the agreed payment terms. In order to determine whether the market price of real estate properties are competitive, real estate brokers and sales agents are most likely to compare the recently sold properties with those that are available for sale. Once the real estate brokers and sales agents were able to sell the real estate property, both real estate professionals would receive commission based on the standard commission rate which is 5% or the agreed percentage (Venezia, p. 18, 178). To be able to assist prospective buyers who are seriously looking for real estate properties, real estate brokers and sales agents manages their offices and advertise real estate properties on news papers and online advertising page. Over many years in service, most of the real estate brokers and sales agents have successfully acquired a thorough knowledge about not only the market trend of real estate but also the local zoning of real estate properties in each community, the available source of transportation within a particular geographic area, possible flood or drought and other natural calamity in the area, availability of energy and water resources, sensitive matters related to tax laws including annual gift tax exclusion, and the available financial options when purchasing a real estate property (Scher and Scher, p. 10, 18, 22; Venezia, pp. 10 – 11, 183 – 185). This is one of the main reasons why buyers and sellers of real estate properties seek professional help and advice from either a real estate broker or sales agent. Real estate brokers and sales agents are expected to pass the licensure exam before they can be legally qualified to sell real estate properties. Regardless of the type of real estate property being sold in the market, real estate brokers and sales agents are expected to develop strategic ways on how they could satisfy the specific requirements of each prospective client (Quilan, p. 13). As a standard operating procedure, real estate brokers and sales agents should determine how much the prospective client is willing to spend for a given real estate property aside from other requirements including the size of a vacant lot, size of house and lot, preferred location, and preferred neighbourhood such as close to school area, business district or shopping center. Likewise, real estate brokers and sales agents may need to meet their prospective buyers from time to time in order to discuss and visit the site where the real estate property is located (Quilan, p. 19). Differences in the Role and Responsibilities of Real Estate Brokers and Sales Agents Real estate brokers are mostly an independent business men and women with the goal of being able to sell the real estate properties of other people in exchange for a professional fee. In order to easily close a business deal, real estate brokers have the option to assist the buyers when making important decisions on how to finance the real estate property the buyer wishes to purchase (The United States Department of Labor, pp. 414 – 415). Unlike the real estate brokers, most of the real estate sales agents work independently to serve licensed real estate broker based on their agreed contract. As a result of paying back the service of real estate sales agents, licensed real estate brokers would grant the real estate sales agents with commission in exchange of successfully selling real estate properties (The United States Department of Labor, p. 414). With regards to the typical commission scheme given to real estate brokers and sales agents, the study that was conducted by Nadel suggest that the use of incremental value is better in terms of motivating the brokers and sales agents to sell real estate properties as compared to giving them a fix 3% commission rate. Between the real estate brokers and sales agents, it is the real estate brokers that supervises and guides the work performance of real estate sales agents. Nature and Condition of Working Environment Aside from having the option to work full-time or part-time, both real estate brokers and sales agents may choose to become self-employed (The United States Department of Labor, p. 416). Even though real estate brokers and sales agents have the option to work either full-time or part-time, the working hours of real estate brokers and sales agents is highly dependent on the time availability of their prospective clients. Depending on the number of clients who would seek professional assistance from real estate brokers and sales agents, this two groups of real estate professionals are likely to work more than the standard 40-hours each week. Despite the long working hours, real estate brokers and sales agents have the opportunity to accept or decline meetings with their prospective clients (The United States Department of Labor, p. 415; Quilan, p. 19). Since most of the people who are searching for a real estate property works during the day time, most of the real estate brokers and sales agents have no other choice but to work at night and on weekends (U.S. Bureau of Labor Statistics; The United States Department of Labor, p. 414). Even though it is easy for any person to become a licensed real estate broker or sales agent, it will not be that easy for a new broker and agent to compete with those individuals who have been in this profession for years (Edwards, p. 33). For this reason, most of the new real estate broker or sales agent needs to go through proper training and guidance from those who have been in the real estate business for a long period of time (U.S. Bureau of Labor Statistics). In some cases, newly licensed real estate brokers or sales agents may tend to sell other products like insurance or car in order to reach their desired annual income. Employment Requirements To ensure that each of the real estate professionals in the United States are highly qualified and competitive enough when professionally dealing with the real estate buyers and sellers, both the real estate brokers and the real estate sales agents are required by each State to pass the real estate licensure exam (Edwards, p. 16; The United States Department of Labor, p. 414). With regards to the type of licensure exam, real estate brokers are required to pass a more comprehensive type of exam as compared to real estate sales agents. This is one of the reasons why there are more real estate sales agents in the United States as compared to real estate brokers. (U.S. Bureau of Labor Statistics) Aside from passing the real estate licensure exam, real estate brokers and sales agents are required to be high school graduates and at least 18 years old (The United States Department of Labor, p. 415). Although the minimum age requirement to be either real estate broker or sales agent is 18 years of age, the average of the real estate brokers and sales agents belongs to older work force particularly those who are retired from their previous career or housewives who choose to have a part-time job. It is necessary for real estate brokers and sales agents to have pleasing personality, presentable appearance, and positive character such as honesty, maturity, trustworthy, and good judgement (The United States Department of Labor, p. 416; U.S. Bureau of Labor Statistics). Likewise, real estate brokers and sales agents should be smart, good problem solver, knows the real estate properties by heart, has perseverance in closing a deal, has the ability to work with all kinds of people, flexible, responsible in arranging meetings with their prospective clients, being organized, detail-oriented, strong communication skills, competent leadership skills, negotiating skills, and having a strong memory is necessary to enable the real estate professionals perform their tasks well (Edwards, pp. 5 – 7; Sparta, pp. 203 – 204, 223 – 224; Quilan, p. 19). Discussion Even though both real estate brokers and sales agents are offering their professional assistance to people who are either searching or selling real estate properties, there is a slight difference with regards to the employment requirement and role and responsibilities between the two kinds of real estate professionals in the sense that the professional ranking of real estate brokers is much higher as compared to those of the real estate sales agents. For this reason, the licensure exam of real estate brokers is more comprehensive as compared with the licensure exam given to real estate sales agents. Even though real estate brokers and the real estate sales agents are required by each State to pass the real estate licensure exam (The United States Department of Labor, p. 414), it remains a fact that not all licensed real estate brokers and sales agents are competitive enough to assist the real estate property buyers (Venezia, p. 76). Since there are some real estate brokers and sales agents that has been legally charged with fraudulent sales practices in the past (Scher and Scher, p. 10), it is highly recommended that buyers and sellers of real estate properties who may consider seeking the assistance of the real estate professionals to be careful when dealing with real estate brokers and sales agents. To avoid having the need to face problems when dealing with real estate agents, real estate buyers and sellers should pay attention with the real estate professionals’ personal characteristics including honesty, integrity, responsiveness, professionalism, and the number of years of experience in selling and buying of real estate properties (Venezia, p. 77). Knowing the length of years of involvement in real estate business is important since active individuals who are working as real estate brokers and sales agents for many years are more reliable and knowledgeable with the in-and-out of business transaction as compared to those who are newly licensed real estate brokers and sales agents (Scher and Scher, p. 10). Chapter IV – Conclusion Regardless of the purpose behind the need to purchase a real estate property, both the real estate brokers and sales agents are present to assist the prospective buyers in search for the client’s preferred real estate property. Since requiring real estate professionals to pass the real estate licensure exam is not enough to guarantee professionalism from this group of workers, buyers and sellers of real estate properties who would decide to seek for their professional assistance should be careful at all times. In order to prevent dealing with real estate brokers and sales agents with history of practicing fraudulent acts, buyers and sellers of real estate properties should carefully evaluate the personality, credibility, and reliability of the real estate broker or sales agent they are personally dealing with. Likewise, it is highly recommended that buyers and sellers of real estate properties should consider the number of years the real estate broker or sales agent has been working in real estate business. *** End *** References Edwards, Kenneth W. Your successful real estate career. AMACOM, 2003. Esrig, Dave, et al. "U.S. Real Estate Outlook - Insight." 2009. Mantrala, Suryamani and Edward Zabel. "The Housing Market and Real Estate Brokers." Real Estate Economics (1995): Vol. 23. Nadel, Mark S. "A Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure (Abridged)." Cornell Real Estate Review (n.d.): Vol. 5, pp. 26 - 46. Quilan, Kathryn A. Real Estate Sales Agent . Capstone Press , 1999. Scher, Les and Carol Scher. Finding and buying your place in the country. 5th Edition. Kaplan Business, 2000. Sparta, Kelle. The Consultative Real Estate Agent: Building Relationships That Create Loyal Clients, Get More Referrals, and Increase Your Sales . AMACOM, 2005. TheUnitedStatesDepartmentofLabor. Occupational Outlook Handbook, 2006-2007 Edition . McGraw Hill, 2006. "U.S. Bureau of Labor Statistics." 2009. Occupational Outlook Handbook, 2008-09 Edition: Real Estate Brokers and Sales Agents. 6 September 2009 . Venezia, Craig. Buying a Second Home: Income, Getaway Or Retirement. NOLO, 2007. Read More