Definition of "Principal broker"

To understand what a principal broker is, we have to go back up the family tree of real estate.

You do understand all brokers can be real estate agents, but not every real estate agent can be a broker, right? That’s because, to obtain a broker’s license, the real estate agent has to attend additional broker’s classes and, in some states, have some proven experience in the real estate market.

Ok, with that in mind, you must also understand that most of the states prohibit real estate agents from working without brokerage supervision. They can do everything, but once a deal is set in place, the real estate agent will need a broker to close things properly. However, there are some individuals that do possess a broker license but still work as real estate agents under another broker. They are brokers that prefer not having the heavy costs of running an office and/or the responsibilities of having their name on the billboard.

So, finally, the Principal Broker is the fearless one who puts his name on the billboard and carry the burden of maintaining a business. The big boss. El Jefe. The Principal Broker.

Also known as managing broker or qualifying broker, the principal broker is the one with the legal authority to sign agency contracts with a home buyer or a home seller and the one who supervises all agents working on a brokerage firm. He/she is the supervisor, and sometimes the home buyer or home seller doesn't even get to meet him/her! 

How does the principal broker earn a living?

Well, because his/her existence allows the real estate agent to close deals and profit from it, the principal broker normally receives an override on the sales of all the licensees working under his/her license.


Comments for Principal Broker

Sharice Williams Sharice Williams said:

Are Real Estate agents in Arkansas automatically Brokers? Also, how would I search to find out if someone is a licensed broker in the state of Arkansas?

Feb 17, 2020  19:45:42

Real Estate Agent

Hi Sharice! 


the answer to your question is no, not necessarily. In Arkansas, a person can be a real estate agent without a real estate broker's license, as long as they are under the auspices of a licensed broker. 

Feb 21, 2020  10:56:44
image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.


Popular Real Estate Terms

Founded in 1908 and located in Washington, DC, BOMA has 7,500 members and 10 regional groups and 6 state groups. It consists of managers, owners, investors, and developers of commercial ...

An organized group of ethical behavior guidelines governing the day-to-day activities of a profession or organization. ...

Legal proceeding to exercise a right in a disagreement between private individuals or businesses. One party seeks a remedy against the other. It does not involve a criminal situation. ...

Claim of a person or business to real property such as by exercising an option. ...

Transfer of the title of land, real estate, or personal property from one person or entity to another. This transfer is typically made via a trust deed, mortgage, sales contract or similar ...

Same as term REIT: Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive ...

Tenant that stays in the leased property after the expiration date if the lease. He can be evicted or given a new rental agreement. ...

Wires, such as for electricity, places beneath the floor of a structure. ...

Bottom frame of wood supporting a window. It should be strong in order to support something put in the window such as an air conditioner. ...

Popular Real Estate Questions