In most circumstances a broker is a third party to an agreement to purchase a commodity, the item being bought and sold is neither owned nor controlled by the broker who simply acts as an intermediary and is normally paid on completion of an agreement. Brokers who also act as sellers or as buyers become a principal party to the deal whereas an agent is one who acts on behalf of a principal.
Lets look at a real estate broker for example.
Real estate brokers are in the business of brokering real estate transactions; Simply put that means, finding sellers for those who want to buy real estate and finding buyers for those selling real estate. The real estate broker doesn't own the property they are selling and would normally find potential buyers by advertising and from their own customer lists.
Real estate brokers and their salespersons assist sellers in marketing their property and selling it for the highest possible price under the best terms and also assist buyers by helping them purchase property for the best possible price under the best terms.
They also sell mortgage...
Those who specialize in selling mortgages are known as mortgage brokers and would normally have access to a range of mortgage and loan packages from a number of finance companies and is then able to offer these to people wanting to purchase property with finance.
A mortgage broker would typically work in close association with both real estate and insurance brokers because often these all go hand in hand
Who pays the broker?
There is no hard and fast rules on this, brokers may take a fee from either the seller or the buyer and in some case both parties will pay the broker. Real estate brokers will often work to a fee which is payable regardless of success in finding a buyer.
Brokers and the law
In many jurisdictions, particularly in the United States, a license is required to be either a real estate or mortgage broker. In particular, any of the following could refer to either a real estate or mortgage broker in America: A person owning, managing, or being in charge of a real estate or mortgage brokerage firm, even if the broker just works for him- or herself.
The broker brokerage.
The brokerage is the firm or business of the broker which can also called a real estate agency in the case of a real estate broker. A licensed professional who has obtained a broker's license (which entitles them to operate a brokerage).
By default, brokers of this kind has already met the requirements of "salesperson" or "agent" licensure. Brokers can still be designated as such without owning a real estate or mortgage brokerage, some people may refer to any licensed agent as a broker.
A licensed real estate or mortgage agent is a professional who has obtained either a salesperson's license or a broker's license.
This article was written by John Buckle and you are free to use it in any manner you like providing this resource box remains intact. Read more of John's work at What is a broker?
