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A real estate broker is a very specific designation in the real estate industry. In this article, we'll cover what a real estate broker does, whether or not you always need to hire one, and a few of the associations where you can find a broker.
The Real Estate Investor's Club (REI) calls a broker a person who negotiates a transaction between two parties. This rather broad definition explains why many people are not very sure about the real differences between a real estate agents and real estate brokers.
As the National Association for Independent Brokers indicates, it's really a distinction made by level of education. A real estate broker must normally work as a real estate salesperson or an agent for a period of time before being allowed to act as a broker. Then, as a broker, they have a series of licensing requirements that they must meet. This varies according by state.
A real estate broker then has additional responsibilities not granted to an agent or a salesperson. Depending on the circumstances a broker can 1) manage other real estate salespeople and agents, 2) own their own real estate firm, and additionally, sometimes with the proper education, 3) perform comparative market analyses (CMA) or broker's price opinions (BPO) both of which are valuation tools similar to an appraisal, but not as detailed.
Brokers are often more accountable to the clients they represent, so it can be preferable for a broker to handle your transactions. Always remember to ask up front what percentage of the sale will constitute their commission so you will know if it's beneficial for you to use their services.
When using a broker, ask them to explain their responsibilities to you clearly. They have to let you know what your rights are; and also familiarize yourself with the specific laws of your state.
Although an agent or lawyer can often handle the same exact transaction, real estate transactions can also be performed without an agent, which saves you the commission. But keep in mind that not having outside advice can cost you if something goes wrong.
Most real estate brokers also join an association of brokers in order to maintain contacts, have access to the Multiple Listing Service (MLS), and keep up with trends in real estate. These include the National Association for Realtors® (NAR), which can be found at http://www.realtor.org/ and the National Association for Independent Real Estate Brokers, found at http://nationalrealestatebroker.org/. These associations can also help you locate a real estate broker that will be able to help you with your transactions in your area.
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