June 11, 2016

How to Become a Broker

What is a broker?

broker salary The term “broker” is a base term for many professions, like insurance broker, real estate broker, mortgage broker, and more. There are too many to name. This article will cover 2 that has been mentioned because they are 2 that are well-known professions that most people have heard. In general, a broker is an individual that arranges transactions between a seller and a buyer for a commission when the deal is completed. If the broker acts as a buyer or a seller, they become a principal party to the deal. Every deal that this businessperson fixes it will bring them a business fee or commission. A broker is considered an independent agent. There are many advantages to being a broker like they know their market and have already established a relationship with prospective accounts. They also have the resources and tools to reach the largest base of buyers. Then the broker would screen the potential buyers for how much revenue they had that would support the potential acquisition.

Insurance broker—they are considered an independent insurance agent who works with many different insurance companies in order to find the best available policies for their clients. They will settle claims, structure polices, and generally work for a commission, just like a regular insurance agent. The difference between the two is that a broker works for many companies and the insurance agent works for one company. You must be licensed to become an insurance broker.

Real estate broker–this is a professional that helps sellers sell a property. They act as the intermediary between the sellers and buyers. During the selling process the real estate broker is helped by real estate agents. Although the real estate broker usually works exclusively with the seller it is possible for them to represent the buyer if they sign a special agreement. In most places you will need a license to work as a real estate broker. This is especially true if there are agents working under your supervision or if money will exchange hands. Unless the buyer is acting as their own broker unlicensed activity is usually not permitted. If this is the case there is no need for any further paperwork.

Career information

Insurance broker—when becoming an insurance broker you can specialize in one certain type of insurance like life or auto insurance, or deal in many different types. If you decide that you want to concentrate in insurance that deals of an investment nature it will require special training and special licenses from any association that deals with investments, like the Securities and Exchange Commission. All types of insurance is in high demand, which also means that good brokers are also needed. Some insurance agencies will offer to reimburse your tuition if you continue your education. This is especially a great benefit if you are a regular insurance agent and want to become an insurance broker. You may have to sign an agreement to work for that agency for a specific period of time after you finish your education. After that time frame you would be free to work for yourself or other companies.

As an insurance broker you will help your client to find products, plans, and insurance companies that meet their needs. In order to do this they will research other insurance companies to find what best fits what their client needs.

Real estate broker—when working as a real estate broker you will be providing a number of different services, which can include:

Property appraisal
Analysis of the home’s value
Consulting and guiding the seller
Preparing documents
Supervising real estate auctions
Helping with the listing and advertising of the property
Negotiating price
Drafting closing records
Helping with financing and loans
Organizing an open house to showcase the home

As you can see, when you select a career as a real estate broker you are working with the seller from the beginning to the end of selling their home. Many times you may have several properties you are helping a client to sell their home so you may be at different stages with each one. The hours that a real estate broker might work can vary. They may work evenings if they have an open house or even weekends. They could work more than 40 hours a week. Many times a broker will open their own real estate firms and have real estate agents working for them. You can become more successful by increasing your clients and maintaining a loyal client following. You can also choose to move into other related areas like real estate investment or financing. If you choose to do this you may need more specialized training.

Reasons to be a broker

Insurance broker

Love to help people
Have great communication skills
Like to work independently

Real estate broker

Love to show off houses
Like to help people sell their home so they can buy their dream home
Like to stage houses for an open house
Have great communication skills
Love to meet people

Required skills to become a broker

Insurance broker

Great communication skills, both written and spoken
The ability to get along with people
Patience
Organization skills
Time management skills
Ethics
E-trading skills
Computer skills, especially in excel worksheet and word program
Confident with your negotiating skills
Attention to detail and accuracy
Report writing skills
Ability to gather and then analyze information
Up to date knowledge about financial and insurance markets

Real estate broker

Great communication skills, both written and spoken
The ability to get along with people
Organization skills
Time management skills
Works great under pressure
Good negotiating skills
Proficient on the computer
Attention to details and accuracy
Legible handwriting
Motivation
Dedication to the seller to sell their home

How long does it take to become a broker?

Insurance broker—how long it will take to become an insurance broker will depend on whether you are going for a degree or just on-the-job training. If you go for an associate degree it normally takes 2 years to complete if going full time. For a bachelor’s degree it will take 4 years going full time. Each degree will take longer if going part time. How long it would take to complete on-the-job training will depend on the company you are working for.

Real estate broker–to become a real estate broker it is recommended that you have a bachelor’s degree, which takes 4 years. In order to get your brokers’ license you have to have 3 years of experience selling real estate plus 60-90 hours of formal training.

How to become a broker?

Insurance broker—degrees or formal schooling are not necessarily required to become a broker but they can be helpful to pass the exam to become licensed. There are some insurance firms that prefer for their brokers to have a degree and if you have at least a bachelor’s degree it can help you get that first interview. Even if further education is not required to advance it does give you an advantage if you want to rise to the level of administration. Someone in this field can attend conferences and seminars to keep up to date on the latest insurance legislation and trends. Many times an insurance broker will start out as an insurance agent and advance to becoming an independent broker. This is where management experience is beneficial.

As mentioned you do need a license to work as an insurance broker. In the United States an insurance broker must have a license in every state that he plans to sell any form of insurance. To get a license it involves taking classes or obtaining training, studying, and taking the exam. Before you take the exam to get your license you will have to have a criminal background check done. If you have a criminal background it can prevent you from becoming licensed here in the United States. If you have a felony it will typically result in your being disqualified from taking the test to get your license. If you have a misdemeanor record it could or could not be approved to get your license. You may also have your financial background checked and if you have bankruptcies or a bad credit history it may be difficult to become licensed. You may be denied altogether from taking the exam and becoming licensed.

Look at the different types of licenses for your state because some states no long have an insurance broker license but have an insurance producer license. With this type of license you would be allowed to sell insurance products if you are an insurance agent or insurance broker. You also need to look at the deadlines and fees because some states only offer the test a few times a year while other states have an open testing policy, which is where you just show up at the center for testing and take the exam. The fees will usually have to be paid in advance. After becoming licensed you can become certified in a particular specialty like health insurance but certification is not mandatory. Having certification in a specialty could make you more attractive to the insurance firm and potential clients. What the requirements are to become certified will depend on the organization that offers the certification.

Real estate broker–To become a real estate broker you will need to take courses that will help you get your license. All real estate brokers will need formal training. Firms that are looking to hire a real estate broker may favor those with some college education according to the US Bureau of Labor Statistics. In addition to going to school to get a degree many larger real estate firms or local real estate associations offer training programs, which get them ready to meet the state licensing requirements. Once you get your license you will be a sales agent. Most states require a real estate agent to gain work experience before they apply for a broker’s license.

To get your broker’s license you first have to start off as a real estate agent. You have to have 3 years’ experience selling real estate and completed 60-90 hours of formal training. In some states, if you have a bachelor’s degree it may be sufficient to meet the above requirements. The licensing exam is on real estate law and transactions and is more comprehensive that the real estate agent’s exam was. Depending on the state you will have to renew your license at various intervals, such as yearly, every 2 years, etc. To renew your real estate broker’s license you have to complete your renewal forms and pay your renewal fee. You will also have to submit proof of your continuing education credits.

In some states they will provide a window of time when your real estate broker license can be renewed like no earlier than 45 or 90 days before it expires. For renewal you may or may not have a grace period if you miss the renewal date. Even if you do have that grace period you still will be able to conduct any business under a license that has expired. If you fail to renew your real estate broker’s license you will need to apply for a new license. You will also have to meet the requirements for the initial licensure.

A common requirement for renewing your real estate broker’s license is continuing education. The state that issued your license determines the specifics of how many hours you need and what type of continuing education. In some states your first renewal may require that you take specific post-licensure coursework for your continuing education requirement. You can get these classes at your local community college and the professional education departments of a 4-year college. Some of the classes could include fair housing, trust funds, consumer protection and more. There are some states that mandate a yearly course in real estate law to make sure that their brokers have current information on laws that pertain to home inspections, real estate disclosures, and agency rules.

Broker Schools

Insurance broker—if you are going for a bachelor’s degree any college that offers a business administration program or a program where you can get a degree in economics or finance. Although you can get an associate degree it is advisable that you get a bachelor’s degree program instead. When you have a bachelor’s degree in insurance or any of the above named degrees you will be taught the fundamentals concepts that underlay management and risk assessment, protecting against risks to life and property, and practical methods of conduction assessments. These programs will cover insurance law and ethics, value analysis, estate planning, and portfolio management.

Real estate broker—many community colleges, universities, and 4-year colleges offer real estate programs where you can get your associate or bachelor’s degree.

Broker Salary

Insurance broker—the average median salary for an insurance broker is $60,635. Starting out the average salary is on average $34,356 plus commission. Some insurance brokers only work on commission.

Real estate broker—they generally make their money on commissions, which is generally 5 to 7% on the final selling price of the home or property. There is also the option of taking a flat fee but in most places this is not a popular choice. The reason is that when you work on commission it can mean a higher selling price for the seller because the broker want to try and get the most for their work. Going this route can either harm or benefit the seller and the broker because if it is a pricey piece of property or house it can take longer to sell.

For both broker careers, in addition to their wages and/or commissions there would usually be a bonus package unless you are self employed. In this bonus package you may have paid vacation and sick days, paid holidays if you work, health insurance that may include the family, life insurance, retirement benefits, 401K, profit sharing, and more. For the real estate broker they may also get mileage benefits along with reimbursement on their cell phone. If either go back to school to further their education they may get tuition reimbursement.

Job outlook

Insurance broker—the job growth for all insurance agents between the years of 2012-2022 is 10%. According to the US Bureau of Labor Statistics (BLS) the best job prospects will be working in brokerages, insurance agencies, and carriers. Approximately 34% of insurance brokers will be working for one of the above employers. Some may even consider working for themselves. The employee prospects will be driven by the expanding elder population and general population growth that will be in need of long-term health care and financial planning.

Real estate broker—the job growth rate expected between 2014-2024 is expected to be at 3%.

Similar/related jobs

There are many different broker jobs it is impossible to name them all.

Commodity broker—they will typically function as agents that are responsible for executing sales of commodity futures, purchases, and options, making trades for companies, individuals, and even their own account
Futures broker—this professional is someone who uses risk capital to invest in the futures market, which is like the stock market with the only difference is that they are trading in predictions of future decreases or increases in commodity prices. Commodities are a standard set of goods that can include salt, oil, pork, steel, and wheat.
Food broker—this is one who helps a food manufacturer or producer get their products marketed and sold. His clients would normally include chain and independent wholesalers and a mix of retail stores.
Wine broker—they act as a liaison between wine buyers and sellers. This would entail negotiations for sales terms, import conditions, and sales terms. A wine broker will usually work for one party exclusively, which is usually a wine shop or winery.
Oil broker—they are a paid intermediary that arranges transactions involving the sale and purchase of crude oil. Usually the brokers are licensed security traders.
Grain broker—this person facilitates the sale and purchase of grain. They work as a point of connection between the sellers and buyers working to get the best deal for all involved. They may work at a large commodity exchange or at local markets.
Customs broker—this professional facilitates the export and import of goods with foreign countries, which are subject to customs restrictions and inspections. The broker will usually serve as the liaison between government agencies, importer, and exporter.
Finance broker—this a type of commercial broker who assists their clients in evaluating their current financing needs and then identifying the best way to meet those needs.
Mortgage broker—this is the person who offers the loan products of different lenders. They are a liaison between the lenders and borrowers.

Conclusion about the career

As you can see, there are many different broker careers that you can explore and work in. Each one has their own requirements to be that particular broker. Some require a bachelor’s degree, some require on-the-job training, and some require both. Most broker positions do require that you obtain a license in order to work in that field. The two fields that were covered in this article, insurance broker and real estate broker, you can see that one gets paid a salary plus commission while the other is generally commissions, which can be significant but it may take a while to get that commission. It will only materialize when the property or house is sold. With an insurance broker there is suppose to be a 10% job growth while only a 3% job growth in real estate brokers. The market is still apparently a little shaky but with insurance many of the aging population are looking at planning their future so they can retire and are also looking at health insurance because when they retire they may lose their health insurance from where they worked. If a broker career is what you would like to do, take your time to do your research on salary, job growth, license requirements, and educational requirements before making your final decision.