What Do Realtors and Brokers Do — and How Do You Become One?
The dropout rate in real estate is brutal. Somewhere between 80 and 90 percent of people who get licensed are out of the business within five years. That's not a reason to avoid the career — plenty of people build genuinely great livelihoods in real estate — but it does mean you should go in with accurate expectations rather than the income highlight reels you see on social media.
Here's what the different roles actually involve, how the licensing process works, and what the income trajectory looks like for people who stick with it.
Agent vs. Realtor vs. Broker — The Actual Differences
These three terms get used interchangeably but they mean different things. An agent is anyone who has passed a state licensing exam and is authorized to represent buyers or sellers in real estate transactions. They must work under a licensed broker — they cannot operate independently.
A Realtor is simply an agent or broker who is a member of the National Association of Realtors (NAR). For the key distinctions, see our agent vs. Realtor vs. broker breakdown. NAR membership is voluntary. It comes with access to the Multiple Listing Service in most markets and a commitment to NAR's Code of Ethics. Not every licensed agent is a Realtor, though in practice the majority join because MLS access is essentially required to serve clients effectively.
A broker has completed additional education beyond the standard agent license and has passed a separate broker exam. Brokers can operate their own firms, supervise agents, and hold earnest money and escrow funds. Some brokers work independently; others work under another broker (they're called "associate brokers").
What Agents Actually Do Day to Day
Buyer's agents help clients find properties, write offers, negotiate terms, coordinate inspections, and navigate the closing process. Listing agents market properties, price them, manage showings, and negotiate on behalf of sellers. Many agents do both, though some specialize.
Compensation comes from commission — typically 2.5–3% per side of the transaction. On a $400,000 sale, a buyer's agent earns roughly $10,000–$12,000 in gross commission, which then gets split with their brokerage according to their agreement. New agents often start at 50/50 splits or similar arrangements before earning better terms.
Worth noting: the commission structure has been evolving since the 2024 NAR settlement, which changed how buyer's agent compensation gets disclosed and negotiated. The percentages still look similar in practice, but the mechanics of how it's documented have shifted. If you're entering the industry now, understand that this area is in flux.
How to Get Licensed
The process varies significantly by state, but the general sequence is:
- Complete pre-license education. Depending on your state, this is 40 to 180 hours of coursework. California requires 135 hours. New York requires 77. Some states let you do it entirely online.
- Pass the state licensing exam. There's typically a national portion and a state-specific portion. Many people need two attempts to pass.
- Get sponsored by a broker. Check our state-by-state real estate license hub for the exact coursework and exam requirements in your state. You need an active broker to "hang your license" with before you can practice. This is where choosing your first brokerage becomes important.
- Maintain continuing education. Most states require ongoing CE every 1–2 years to keep your license active.
Total upfront cost for licensing typically runs $1,000–$2,500 when you factor in coursework, exam fees, application fees, and initial association dues.
Choosing Your First Brokerage
New agents often focus too much on commission splits and not enough on training and support. A 70/30 split at a brokerage that gives you real mentorship and a steady stream of leads is vastly better than an 85/15 split at a firm that hands you a desk and wishes you luck.
Large franchise brokerages (Keller Williams, RE/MAX, Coldwell Banker) have structured training programs. Independent boutique firms often have more hands-on culture but less formal education. Virtual brokerages like eXp Realty offer high splits but minimal in-person support. There's no single right answer — it depends on how you learn and what kind of support you actually need.
Realistic Income Expectations
The median income for real estate agents in their first year is under $10,000. Many make nothing at all, because the business takes time to build and transactions take 30–60 days to close even when the deal is in progress.
By years 3–5, consistent producers who are actively working the business typically earn $50,000–$100,000 annually. Top producers — agents closing 30+ transactions a year — earn considerably more, but they represent a small fraction of the licensed population.
The Bureau of Labor Statistics data on real estate agents covers employment, income, and outlook across the industry. The agents who make it tend to have one thing in common: a consistent, systematic approach to building relationships and staying in contact with their sphere. The technical skills matter, but they're learnable. The discipline to stay in front of people month after month is what separates the 10–20% who build lasting careers from the majority who don't.
When to Think About Getting Your Broker License
Most states require 2–4 years of active sales experience before you can apply for a broker's license. The additional coursework runs 45–90 hours depending on the state, plus another exam.
Some agents get their broker's license purely to have it — the independence and flexibility are appealing even if they never open their own shop. Others use it as a stepping stone to running a team or office. Either path is valid; just know that the license itself doesn't produce income. The business you build around it does.