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The differences between a real estate agent and a real estate broker are many, and subtle, and sometimes invisible to the average consumer.

An agent' is anyone who acts on behalf of another to fulfill a transaction or obligation. Every state in the United States requires anyone wishing to promote and conduct business as a real estate agent to obtain a license from the state in order to practice. The license is acquired via testing, usually after taking a general course or two on the individual state's laws governing agency and the basics of transactions.

Anyone with the designation of real estate agent is limited in what they can, and cannot, do. They are required to work under the supervision of a real estate broker. They may not sign contracts on anyone's behalf, including the broker. A real estate agent may not accept money in escrow. Only a broker can accept money on behalf of third parties.

A real estate broker has taken advanced course work in real estate principles, such as in appraisal, property management, financing, and real estate law. In addition, a real estate broker has passed a much more extensive examination, as well as demonstrated some time as an agent prior to obtaining the broker license. It can take from one to three years after obtaining an agent license to become a broker, depending on the state.

A real estate broker has a greater responsibility to their clients and to the general public than does a real estate agent. The broker holds' the licenses for any agents working under his or her supervision, and is both legally and financially responsible for their acts. The broker establishes the business guidelines for their agency, and maintains the records. A broker also has a fiduciary responsible for any money placed in escrow.

A real estate broker may work under the supervision of another broker, but has greater freedom of action than does an agent. A broker in this situation is permitted by law to accept funds into escrow and sign contracts on behalf of third parties. This is subject to the contract between the two brokers.

Most states require that a real estate broker maintain professional liability insurance, both for himself, and covering any agents that may be working under him. Generally, this insurance is mandatory for the broker to maintain his license and stay in business. This insurance is to protect the public from illegal and unethical business practices.

Many people confuse a Realtor with a real estate agent or broker. A Realtor is a member of a professional association, the National Association of Realtors. Becoming a Realtor generally requires a person to be either an agent or a broker whose license is in good standing in their state.

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