Careers: Real Estate Broker (Residential)

What's the difference between a real estate agent and a real estate broker? Is the latter just, uh... out of cash? Quite the opposite, in fact. Jump into this vid to learn all the ins and outs of getting people... in and out of homes.

College and CareerCareers
LanguageEnglish Language
Life SkillsCareer Categories
SubjectsCareers
College and Career

Transcript

00:24

professionally whitened teeth, a mercedes in the garage or two but why do

00:30

we really need these people and why would anyone want to be one of them [Woman praying to framed picture of real-estate agent]

00:34

well for starters why is buying a house different from buying a sub sandwich

00:38

from salami shack well you've eaten your share of sub sandwiches in your lifetime

00:42

you know when the lettuce is wilted you're aware if the cheese has turned it

00:47

won't get past you if they try sneaking you any of that gluten-free garbage [Man puts sub sandwich in the trash]

00:52

because you've probably purchased hundreds if not thousands of sub

00:55

sandwiches in your life by contrast the average person buys a home only once

01:00

every 7 or so years maybe just five or six times in their life and it's a big

01:05

purchase you don't want to mess this one up you want someone who knows the

01:09

business inside and out to be kind of holding your hand well if you're buying

01:13

you want someone you actually trust who will know if the listing agent is trying [Hand pulls rug beneath man]

01:17

to pull a fast one on you someone who can refer you to a good home inspector

01:21

who in turn will be able to tell you whether a house's foundation is suspect

01:25

or if those four bodies buried in the woodshed might affect the home's

01:28

value so yeah that's where a real estate broker comes in they've studied their [Home estate broker appears]

01:33

butts off in real estate classes by the way no college necessary so when

01:37

everything there is to know about the listing negotiating buying and selling

01:41

of real estate in some states they've gone to law school and then pass the bar

01:45

and that might be enough to get licensed but you know they make you study for [Boy studying at library]

01:49

that thing so real estate brokers will take their cut in the form of a

01:52

commission based on the final sales price but for a home buyer it's well

01:57

worth shelling out a few percent of the cash made from a sale because for the

02:01

same price you want to end up in one of these and not in one of these all right

02:07

first thing to understand is that there's a difference between a real

02:10

estate broker and a real estate agent a broker can own and run a real estate [Definition of a real estate broker appears on a sign]

02:16

agency they typically got a lot more skin in the game than an agent who can

02:21

just quit their job at that brokerage and leave to go be an agent for another

02:25

brokerage across the street at any moment a broker needs to get heavily

02:29

licensed, registered with their state and so on but while a broker will make less

02:34

money off each sale than an agent does they generally make more money overall [A stash of gold bars appear]

02:39

thanks to volume i.e taken a cut off of every agents sale and those add

02:45

up and note that when they clear 20 grand on a home it's not like they get [Woman with pile of cash on a bed]

02:49

to take all of that Commission cash home with them and sleep with it under below

02:53

much as that sounds kind of fun the broker is responsible for marketing the

02:57

real estate agency paying fees complying with legal guidelines establishing a [Responsibilities of a broker appear]

03:02

physical location and so on there's a heck of a lot more responsibility in

03:06

being a broker versus being just an agent all right so let's talk about the

03:10

real estate agents well they make less money but they're kind of freer if an [Woman agent flying on a bald eagle]

03:15

agent doesn't like his or her situation well he or she can find a better gig

03:21

elsewhere if you're truly desirable as an agent you may even get brokers [Brokers fighting each other]

03:25

fighting each other to get you on their team most agency costs are passed on to

03:30

the agent through desk fees errors and omissions insurance and

03:36

marketing fees agents will have to pay board membership dues if they want to be

03:41

able to refer to themselves as a Realtor and it's actually a registered term

03:45

denoting someone who's registered with the National Association of Realtors and

03:50

MLS memberships and everything you have to get so they can search and find

03:54

information on all this is so they can officially be part of triple-a awesome [Woman holding AAA business card]

03:58

real estate brokerage LLC and be able to put that name on their business cards

04:03

plus they typically have to pay for their own advertising and this cost can be huge to

04:07

the agents if an agent wants their mug on that billboard overlooking the [Billboard of real estate agent appears]

04:11

Pacific Coast Highway it's going to cost them a pretty penny or three or

04:15

million so how does the process of a sale work? well a brokerage or agency is

04:20

going to have a bunch of listings i.e a select offering of available homes that

04:24

if sold the agency will collect the commision on...[List of houses for sale appear]

04:27

for any sale there's both the selling and the buying agent in normal polite

04:31

company among Realtors the selling agent is actually called the listing agent at

04:36

times both agents might work for the same brokerage meaning the broker makes

04:41

twice as much money when the property sells okay so here's the map we have a

04:46

million-dollar sprawling one-bedroom ranch house sold in Silicon Valley you [Ranch house in Silicon Valley appears]

04:51

know that's about all you get for a million bucks here and the commission on

04:54

the sale is 6% of that or 60 grand well the listing and buying agents take

04:59

their split in halfsies, so about 30 grand each then each agent takes his gross

05:03

commission to their broker that's the total 30 grand before their support team

05:07

starts dipping fingers into the winnings save the listing agent has a 64-36 split

05:13

with his broker the one who owns the place ie runs the brokerage and footed

05:17

the original bills in this case the agent would take home 19,200 and the

05:22

broker would clear 10,800, the buying agent does the same

05:26

with whatever split they've worked out with their broker so you're an agent and

05:30

you've secured a listing on a cookie cutter house in the burbs it's listed at [Woman appears by a listed house]

05:34

500K and here's where you've got a massive conflict of interest if offers

05:39

are coming in at well below the listing price say 450 grand you've got two

05:44

options hold out for a better offer but the market is telling you that you

05:48

overpriced the home and likely promised the person who trusted you with the [Hold out hot air balloon appears beside a estate agent]

05:52

listing that they'd get way more money for their home than they actually will

05:56

or you've got choice two; persuade the owners of the property

06:00

that they should lower their standards and their hopes and their prices and

06:03

sell let's think about this for a second if you're making your 1.5% on a $500,000

06:09

sale you're making seventy five hundred bucks if the house sells for 450 grand

06:13

well you make sixty seven fifty so less but not that much less and per hour of

06:18

additional time you'd need to sell and all the other ads you'd have to pay for [Woman working at laptop and house ad's fall on her]

06:23

as well as grief for dealing with whiners yeah is it really worth all the pain and

06:28

heartache and possibly weeks or months more on the market just to squeeze out [Tumbleweed breezes past property]

06:32

an extra seven hundred fifty bucks well no and this is where things get

06:36

ethically tricky because while the seller would love to make max

06:40

cash for their home you kind of just want to churn and burn the thing over and

06:44

move on to the next house why would you hold out well the Realtors

06:48

reputation is everything you may only be making a sale for a particular client [Man spray paints on a womans face]

06:52

once every seven years but clients talk if you royally screwed someone out of a

06:58

hundred grand that they could have made if you hadn't been quite so eager to

07:01

grab a quick commission well they likely tell their friends at the Country Club

07:04

and those friends might tell their friends at the spa and those friends

07:08

might tell their friends who are guest judging the annual dog show or you know [Dog appears on a table beside judges]

07:12

whatever circles they run in you rub one person the wrongway or give them reason to

07:16

think you're putting your own interests ahead of theres then you might never work

07:20

in that town again it's not like you're a neurosurgeon that's sought after from

07:24

halfway around the globe for your unique incredible head slicing skills well some

07:29

real estate agents might be more talented than others but they're [Real estate agents on a conveyor belt]

07:32

basically all about the same in a local area so it's a balancing act

07:35

you want to make sales and quickly but you also want to serve their clients and

07:39

keep them happy ish now we mentioned that brokers take on more risk than

07:43

agents that's true but that isn't the whole story an agent has to do whatever

07:47

they can to sell the properties they've got listed that means marketing it like

07:52

maybe taking out an ad in the local paper well maybe that's too pricey so [Newspaper appears of desperate estate agent]

07:56

instead they have flyers printed up by themselves on their own time and they

08:01

have to go door-to-door jamming them into people's mailboxes advertising for

08:05

and running the open houses and staging the properties ie filling them with [Estate agent places open house sign on property]

08:09

sleek modern furniture and knickknacks basically turning every home into a

08:13

Pottery Barn that's all on you the agent so keep in mind even if you make 10

08:17

grand off a home sale that's not really your profit until you factor in your

08:22

staging cost advertising and so on if you put in a few grand trying to make a

08:26

home all pretty and lavish but you're not able to sell within a few months and [Estate agent standing in a home and items sparkle]

08:30

you're exclusive right to sell contract expires well say goodbye to that

08:34

investment you go the agent route that's your risk..what makes someone a good

08:39

realtor well you have to have one very important skill you got to be able to

08:43

you know kiss the tutee you know get those lips way up there everything your [Lipstick kiss mark appears on a butt]

08:48

client says is amazing or brilliant or hysterical...

08:52

Every thought they have about their dream house is absolutely inspired they

08:57

tell you to jump off a cliff you ask them which way to the nearest precipice [Agent jumps off a wall]

09:01

why well because you want to make your client feel as if they are in complete

09:04

control and well they kind of are the second they start to suspect you may

09:08

only be in it for your selfish self of course you are well they're going to

09:13

start shopping around for the next best brown-noser in line so if you want to

09:16

make sales pucker up and hold your nose that said you have a moral obligation [Woman leans into to kiss a statues butt]

09:21

not to flat-out lie to your client so flatter them nod your head and laugh

09:25

at their jokes sure but if there's difficult news to deliver it's up to you

09:29

to deliver it they won't be able to afford payments on their budget the

09:33

offer they want to make will be considered insulting and will be

09:36

rejected they can do better than that house with a front lawn that's littered

09:40

with porcelain fountains all up to you to set them straight they are after all [Woman laughing at a man]

09:44

relying on you for your expertise..That's the gist it can be a grind you might go

09:49

weeks or even months without selling a property or even getting much of a bite

09:53

but when you get rolling and especially if you start selling 7 and 8-figure [Woman rolls dice]

09:57

residences well you can make some serious bank 2% doesn't seem like a lot

10:02

of commission to take home but those numbers on a hundred million dollars

10:06

worth of sales is definitely doable in a lot of parts of the country these days

10:10

you can buy a lot of personalized pens with two million dollars [Pens raining down on woman estate agent]

10:16

you