Would you believe that one of my closest friends only became my friend because she Googled this search term over ten years ago?
True story!
She was looking to get into the real estate business and, not knowing anything about industry, the very first thing she thought was, “Which real estate brokerage should I work at?”
But then, she thought,
“Wait a minute…..what does a real estate brokerage actually do?”
After a little bit of Google-Fu, she eventually stumbled upon Toronto Realty Blog, read a few articles about the industry, business models, and the different types of brokerages, and after joining Bosley Real Estate, we became friends.
My point is quite simple: people ask this question because they don’t actually know!
In the province of Ontario, real estate agents are licensed through the Real Estate Council of Ontario (RECO). Every real estate agent must have their license held by a brokerage, which is also licensed by RECO. While agents are “independent contractors” by definition, and they don’t work for a brokerage, their license is held by that brokerage, and thus so is their affiliation.
Do you have more questions about the real estate industry as a whole? Check out these posts next:
- Real Estate Terms Every Buyer and Seller Should Know
- How to Avoid Real Estate Scams in Toronto
- How Often Does the Real Estate Market Change?
If a “brokerage” is the company itself, then what is a real estate “broker?”
When an individual first obtains his or her real estate license, that person becomes a “sales representative.” Many agents remain at this level and with this title, but some agents elect to take continuing education and eventually a series of courses required to gain the “broker” designation.
To most consumers, a sales representative and a broker are essentially the same, and for all intents and purposes, they might be. But there is one major difference: in order to open a real estate brokerage, an individual must have his or her broker designation. A “sales representative” cannot open a real estate brokerage.
So then what is a “Broker of Record?”
Every real estate brokerage must have a Broker of Record, who is the de facto head of the company, not necessarily a president or CEO by title, as brokerages can choose to have different individuals with those titles. But in the eyes of the real estate regulator, the Broker of Record is responsible for the operations and management of the brokerage as well as the ensuring that every agent within the brokerage complies with real estate legislation and legal obligations. A brokerage can choose to have a Chief Financial Officer or a Legal Counsel, but the Broker of Record is the figurehead of the brokerage who acts as the point of contact for regulatory issues.
In an industry that’s always innovating, like real estate, there’s bound to be some disruptors and changes, but is an alternative brokerage model fixing a problem that doesn’t exist?
What is a “Realtor?” you might ask.
The term Realtor is used interchangeably with both sales representatives and brokers alike, as “Realtor” is a trademarked by the Canadian Real Estate Association (CREA) and used to describe all real estate agents.
Now, back to the concept of a brokerage.
What does a brokerage actually do?
What does a brokerage actually do, above and beyond “holding” a real estate agent’s license?
The answer spans from “nothing” to “everything,” as there are so many different types of brokerages with drastically different business models.
A more “traditional” brokerage would see a physical location where Realtors keep desks and offices, much like you would expect them to, but on the complete opposite end of the spectrum, there are “virtual” brokerages who have no physical location, no staff, and no support.
Considering I have worked for the same brokerage, which is a family-run, traditional brokerage, founded almost one century ago, I see the value in a traditional, full-service brokerage. I’m happy to compare and contrast, however.
A traditional brokerage model’s physical location would have a multitude of staff, management, support, and training, which is not only valuable for new agents, but for experienced agents looking to keep sharp.
Traditional brokerages are likely to have Realtors who believe in full-service, ie. staging and renovating a listing coming to market, whereas the virtual and/or discount brokerages often attract agents who lack the experience, education, or skills to provide “full service” to begin with.
Do you really need to work with a Realtor when buying or selling a home? What do Realtors even do? How do you find one that works for you? Here are a few more posts that answer these questions and more:
- Do You Really Need a Buyer’s Agent?
- How to Find the Right Real Estate Agent
- What Buyers and Sellers Need to Know About Real Estate Fees in Toronto
A traditional brokerage might have a Broker of Record, branch manager, office manager, director of education, relocation director, general counsel, VP of finance or CFO, and even a director or chairperson.
Considering just how fast-paced, dynamic, complex, and ever-changing the real estate market is, a successful brokerage will likely have most or all of these individuals on their leadership team.
To answer the question, “What does a real estate brokerage actually do?” we can simply fill in the blanks from here.
- A real estate brokerage trains agents, educates them, and keeps them informed and up-to-date on regulations and legislation.
- A real estate brokerage provides constant support for agents via services that can be passed along to the agents’ buyer and seller clients.
- A real estate brokerage draws on many years of collective experience of management and ownership to instill professionalism in the agents who work there.
Individual agent vs. brokerage
It’s up to the individual agents to decide how and where they want to work. They are independent contractors, of course, and every agent runs his or her own business. The agent doesn’t work for the brokerage, but rather pays a fee or provides a split of revenue to that brokerage, but every agent is essentially his or her own boss.
As a result, many agents choose to work in a physical office location, whether 30-hours or 80-hours per week, whereas some choose to work from home, on the road, or on a hybrid model, but the type of brokerage might influence how and where agents ultimately work.
Some brokerages in the GTA have 3,000 real estate agents licensed by an office that’s only 1,000 square feet. Suffice it to say, these brokerages aren’t running a model that expects agents to collaborate in person, exchange information and ideas, and constantly learn and evolve.
On the flip side, I work for a brokerage that offers hundreds of desks and private offices for agents, and which is a true beehive of activity as a result. I’ve always felt that successful agents thrive on this collaborative environment, and for the life of me, I can’t understand why any new agent (or an agent looking for a change) would choose to work for a brokerage offering anything less.
So, is it a good idea to work with a discount real estate agent or brokerage?
Does the brokerage matter to home buyers and sellers?
As a home buyer or home seller, you might not think you need to concern yourself with the type of real estate brokerage that your agent works for, but ultimately, it’s going to affect your agent’s business acumen and strategic thinking, which is going to affect how he or she works for you.
Don’t be afraid to ask your agent about his or her designation (sales representative versus broker), the business model of their brokerage, and the relative experience of both the brokerage and your agent.
Do you have questions about Toronto real estate? Thinking about buying or selling in the near future? Get the conversation started today by filling out the form on this page, calling us at 416.642.2660, or emailing us at admin@torontorealtygroup.com.
Ready to Get Started?
It all starts with a conversation. Whether buying or selling, TRG can help you achieve your real estate goals. Get in touch with our team today to start the process.
