In New Jersey, there are a few important distinctions in the types of licenses your real estate salesperson may have. These different licenses can make a big impact on your salespersons level of experience, education and ability to provide you certain services or not. Consumers should be informed when choosing who they decide to represent them in their real estate matters, so I’ll talk about the differences between being a licensed real estate agent and a licensed real estate broker, and a few choices in between. This seems to be one of the mysteries of the real estate industry, as I frequently get questions from clients and prospects about these different designations and why they matter. This explanation should clear things up if you’re looking for real estate representation and guide you in making the right decision for your needs.
Just as credentials matter when hiring any other service provider, education and experience should be important factors in choosing your real estate salesperson. Those two categories can be the main differences between an agent and a broker here in the Garden State, and each has their own criteria for a salesperson to act in the respective capacity. For anyone to sell real estate in New Jersey, they need to get their salespersons license first, administered from the Real Estate Commission within the NJ Department of Banking and Insurance. The state sets the standards for the pre-licensing requirements, which are then provided to prospective agents by private companies that have gotten approval from the REC for their structure and curriculum. No matter where someone does their hours and classes, the material is largely universal as dictated by the REC. Below are the primary requirements for licensure in New Jersey:
Be over the age of 18
Hold a high school diploma (or equivalent such as a GED)
Provide documentation of citizenship or legal residence in the US
Completion of the 75 hour pre-licensing course
Pass a state exam covering material learned in the 75 course
With these items met, the salesperson can begin working as a real estate agent under a licensed broker. An agent can not work independently, they must “hang” or affiliate their license with an office that is overseen by a licensed broker, referred to as the broker of record. There has been criticism of the real estate industry given the low barrier to entry to get into the profession; the courses are relatively inexpensive, the class requirement is far lower than other professions with similar responsibilities and earning potential and passing the exam is achievable for most students that can read and recall the material in the course book and possesses a basic comprehension of common business matters. While this may be true, it is also up to the individual once they get their license to continue their education process, sharpen their skills and work their way up to becoming a true real estate professional. To what extent the salesperson develops their abilities comes down to their own efforts and the amount of support provided by the office and broker they work under.
Becoming a broker in New Jersey has additional requirements that can only be attained once an individual is already an agent and meets other requirements set forth by the Real Estate Commission. Because of this, a consumer can expect a certain level of experience from a broker that a regular agent may not have or a new agent simply can’t have as you’ll see below. The primary requirements to become a broker in New Jersey are:
Served 3 years full-time as a licensed salesperson
Successfully completed 150 hours of study, consisting of a 90 hour general broker pre-licensing course, a 30 hour course on ethics, agency law and relationships and 30 hours on office management and related topics.
Pass a state exam covering material learned in the 150 hour course
The additional requirements between a broker and an agent can make all the difference in the experience the salesperson you engage can provide you. Working with a broker ensures that you’re working with someone that has at least 3 years of full time experience in real estate in addition to the additional 150 hours of education required to get a brokers license. If you think of any jobs you’ve had, consider the difference in your knowledge base between your first days and that at the start of your 4th year and beyond; I would guess you’d see quite a difference in your IQ related to that job during that time.
This time period is particularly important in real estate because of how the relationship is structured between the salesperson and the brokerage they work under. Since many people obtain their license to work in the industry part time, the requirement of being full time for 3 years restricts the casual salesperson from obtaining the broker license without putting the time in. In addition, even with a supportive broker/office behind them, someone working full time in real estate will need the discipline, accountability and sales chops to sustain a career that nearly always has no base salary, no required hours and no specific goals to maintain in order to remain employed. Finally, the support of the office and broker can be fickle, some brokers offer great training and support while others let the agents sink or swim on their own, or worse yet, instill poor habits of their own into the new salesperson. These nuances of the salesperson/brokerage relationship further highlight why working with a broker gives additional credibility to that salesperson versus a regular agent.
I mentioned there were a few other options for licensure within the categories of agent and broker. A referral agent is a licensed agent that chooses to simply refer their leads to their licensed broker, they can not provide many of the services of an agent or broker. A broker-salesperson has earned their brokers license, but remains working in a sales capacity only under a broker of record. A broker is the only license authorized to operate a real estate business, hire salespeople and charge the public for real estate services.
I have had my brokers license since 2014 after being a licensed agent for about 3 1/2 years. I used it as a broker-salesperson for several years until 2009 when I was the broker of record and managing director for a real estate office in Hoboken. I put the full power of my broker license to work when I opened William Lawrence Agency in Boonton in 2011. Because of our size and team approach, we ensure each client gets the benefit of an experienced broker, as I work with each client directly or with the agent team member to provide the 20+ years of insight that gets each transaction completed successfully. So, if you’re shopping around for real estate representation, look closely at your representatives credentials and ask questions about their experience, time in the industry and how their office supports the work they’d be doing for you, it will make a big difference in how you are guided in your important real estate dealings.