Arizona real estate brokers and agents
- What’s the difference between an Employing Broker, Listing Broker, Selling Broker, Designated Broker, Associate Broker, Salesperson, Sales Associate and Agent?
- And how are they all connected and paid?
Employing Broker … is a business, usually a LLC, that is licensed by the State to engage in specific real estate activities.
Listing Broker … the Employing Broker with whom is associated the agent who lists and sells the property.
Selling Broker … the Employing Broker with who is associated the agent who represents the buyer for the property.
The total transaction commission is paid by escrow to the Listing Broker. The Listing Broker pays some of that commission to the Selling Broker based on the offer of compensation posted in the MLS listing by the listing agent. The listing Broker retains some of the commission to the listing based on an employment agreement with the listing agent. The listing agent gets the remainder of the commission
Designated Broker
- is a person who is licensed as a broker in the State of Arizona and is specifically responsible to the State for all real estate activities conducted by all Employing Broker personnel.
- is “the boss” of operations for the Employing Broker. The Designated Broker must review and approve all documents involved in every transaction and answer to the State for problems and complaints.
- Per the Arizona Department of Real Estate, it is the Designated broker that actually represents all clients of the Employing Broker.
- The Designated Broker may conduct brokerage activities and deal directly with the public
… but much more commonly the Designated Broker oversees activities of others and is not involved directly with the public unless there are “problems”.
Salesperson
- the designation used by the State of Arizona for an “agent” … but … salesperson – sales associate – agent … different terms for same job
- is “hired” as an independent contractor by the Employing Broker to interact with the public and facilitate real estate transactions.
… a sales person is said to be “associated” with the Employing Broker primary because there is no ongoing compensation paid. - as explained above, the Employing Broker pays compensation to the Salesperson based on an employment contract between them
… universally this includes some part of each transaction commission, but no “salary” or any other ongoing compensation.
Associate Broker … is a person who holds a fully qualified Arizona Broker license but is working simply as a Salesperson.
An Employing Broker may have hundreds of both salespersons and “associate” brokers … but only one “designated” broker.
Listing Agent … the salesperson who initiates the Listing Agreement with the property owner
Selling Agent … the salesperson who produces the buyer for the property and writes the offer Purchase Contract
Every listing entered into ARMLS is required to include an offer of compensation to other Employing Brokers for producing the buyer for the property … but that offer is NOT regulated in any way.
Thus, when a home sale transaction is completed, escrow owes the total commission to the Listing Broker who is obligated to split that commission with the Selling Broker, with each broker paying compensation to their respective Salespersons.
To simplify this part of the process, both Listing Brokers and Selling Brokers deliver to escrow “commission instructions” whereby all parties are paid directly by escrow the respective amounts due. The total commission paid to each broker is included on the closing statement delivered by escrow to both seller and buyer.
To participate in ARMLS, both the brokers and salespersons must be members of the National Association of REALTORS® (NAR) as well as members of a local association.
For brokers and salespersons who are not members of NAR … are not REALTORS® … none of the above discussion regarding ARMLS applies. They are the same as the general public with respect to ARMLS and must conduct business in an entirely independent structure.
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