Real Estate Agent vs. Mortgage Broker: An Overview
A real estate agent helps buyers and sellers find or sell a physical property, and a mortgage broker helps buyers find the financing to purchase a property. They share similar job attributes—as licensed professionals in the real estate industry, both help their clients obtain residential or commercial properties. But their specific duties are quite different.
Key Takeaways
- Real estate agents put buyers and sellers together; mortgage brokers put buyers and lenders together.
- Depending on whom they represent, real estate agents help their clients purchase a property or sell a property, and mortgage brokers help their clients find financing for the property.
- Mortgage brokers must study credit reports and lending contracts; real estate agents are less concerned with financial details (other than purchase prices).
- Both jobs may require working nights and weekends; compensation for both careers is based on productivity.
- Both jobs require obtaining the proper state license to practice and keeping the license up to date via renewals and further education and testing.
Real Estate Agent
Because the real estate industry can be extremely competitive, if you want to become a real estate agent, an outgoing personality, a desire to be helpful, maturity, and trustworthiness are essential qualities. A residential real estate agent also should be able to present a house and sell the features it provides in a pleasing manner. A creative eye for design and detail can be a strong asset in this profession.
Depending on whether an agent is acting on behalf of a buyer or seller, the following responsibilities are typical:
- Show properties and homes
- Find properties and homes to sell or for buyers
- Negotiate between and act as a liaison between buyer and seller
- Follow the local real estate market
- Provide financing guidance (in some cases)
The qualifications for becoming a real estate agent may include a background in sales or marketing and, at minimum, a high school diploma. Every real estate agent must have a license. Depending on the state and agency, additional education in financing and housing laws may be required.
The job often requires long hours, and many days of showing houses or commercial property to prospective buyers without making a sale, so patience is also a must. If you like events to move quickly and need a paycheck every week, a commission-based real estate agent's job may not be for you.
People with jobs or other obligations are often occupied during the day and do their house-hunting on nights and weekends. As a result, real estate agents must be willing to make themselves available on short notice whenevertheir clients need them.
A real estate agent may move from location to location during a typical workday, while a mortgage broker may spend most of the workday on the computer or phone in an office.
Compensation
| Real Estate Agent Compensation | |
|---|---|
| Item | Range Of Compensation |
| Base Salary | $29,000 - $122,000 |
| Bonus | $1,000 - $43,000 |
| Profit Sharing | $9,000 - $40,000 |
| Commission | $1,000 - $238,000 |
| Total Pay | $30,000 - $148,000 |
Cited above are real estate agent compensation ranges in various categories from PayScale.com as of late July 2024. The numbers reflect a range of averages for real estate agents in the U.S. Some agents may earn less; others who are very good (and perhaps lucky) may earn more.
Some agencies may pay a nominal salary on a weekly, biweekly, or monthly basis, but most agents are compensated with commissionafter a sale, based on a predetermined percentage of the sale price. Earnings as a real estate agent tend to increase with experience.
Mortgage Broker
Mortgage brokers act on behalf of clients to find them the best interest rate and terms for a mortgage, either on a private residence or a commercial property. Researching the latest interest rates and loan terms is an essential and ongoing part of a mortgage broker's job of securing the best rates for a client. Some brokers may develop relationships with favored lending institutions, but a good broker will look out for his or her clients' best interests.
Given the job's key component of finding the best loan options for their clients, a deep knowledge of lending institutions, lending rates, and terms is a must. Familiarity with creditworthiness criteria and credit reporting is important, as is a strong proficiency in math, verbal, and writing skills.
Mortgage brokers must accommodate their customers' schedules, and a friendly, outgoing personality can go a long way with clients. Being a mortgage broker often requires long hoursand many days of searching for a lender willing to work with the prospective borrower, so patience is just as critical in this field. This quality will also serve brokers well when they have to accept several rejections from lenders when trying to put a loan together.
Compensation
| Mortgage Broker Compensation | |
|---|---|
| Item | Range of Compensation |
| Salary | $39,000 - $152,000 |
| Bonus | $2,000 - $50,000 |
| Profit Sharing | $1,000 - $18,000 |
| Commission | $12,000 - $178,000 |
| Total Pay | $32,000 - $178,000 |
Shown above are the mortgage broker compensation ranges from PayScale.com for 2024,in various categories.
Many mortgage brokers have a sales, marketing, or finance background, especially in banking. If you want to be a mortgage broker, you will need a high school diploma at the very least, and to obtain your broker's license. To do so, you must take the national SAFE Mortgage Loan Originator Test, and a test on the rules and regulations for the state you plan to work in.
Mortgage brokers may earn a salary as well as additional compensation in the form of a commission based on a predetermined percentage of the mortgages secured. The numbers reflect a range of averages for mortgage brokers in the U.S. Some brokers may earn less, while better, more experienced brokers may earn more.
What's the Difference Between a Mortgage Broker and a Mortgage Agent?
A mortgage broker can be a firm or individual with a broker's license who matches borrowers with lenders and employs other mortgage agents. A mortgage agent works on behalf of the firm or individual with the broker's license.
What's the Difference Between a Mortgage Broker and a Lender?
A lender is any financial institution that makes loans and mortgages. Mortgage brokers don't lend money directly: They find lenders for their clients, or, in other words, they work as an intermediary between the lender and the borrower.
What's the Difference Between a Real Estate Agent and a Realtor?
Real estate agents are licensed professionals who help their clients buy, sell, or rent real estate. A realtor is a real estate professional who is a member of National Association of Realtors (NAR), the largest trade association in the U.S. This designation is open to a variety of professions within the real estate industry: salespeople, property managers, appraisers, etc.
The Bottom Line
Although they work in the same industry and serve the same market, real estate agents and mortgage brokers have different duties. In a nutshell, a real estate agent helps their clients buy, sell, and rent real estate, whereas a mortgage broker helps their clients find financing to purchase a property.
