Who's a Broker, Who's a Dealer, and What's a Broker-Dealer? (2023)

Most people in the real estate industry know what a “broker” is. But what about a dealer? And a broker-dealer? Do they have different roles in the industry, or are they all just different names for the same thing? It might not be apparent to know who does what. This article will explain the distinctions between brokers, dealers, and broker-dealers. We will also cover the responsibilities played by these real estate – and financial services – professionals. Knowing the distinctions between these terms will make you better equipped to work with the appropriate specialist while growing your real estate investment portfolio.

What is a Broker?

“Broker” and “dealer” are U.S. regulation terminology that, as is frequently common with legal jargon, are unclear to many individuals. Although the terms are often used in tandem, they refer to two different things. On the client’s behalf, a broker executes custom orders. This refers to the brokerage firm through which investors keep an account.

Generally, it refers to a person who assists investors in purchasing and selling stocks. As well as “financial adviser” and “investment advisor”, the industry has a variety of other titles.

A real estate broker is a professional who assists buyers, sellers, and lessees in property transactions. Typically, a real estate broker collaborates with a real estate agent to assist customers in locating the ideal investment property, negotiating the price, and closing the sale or lease. A licensed real estate broker may choose to operate individually or for a real estate brokerage business. There are real estate agents that specialize in property types, such as commercial real estate.

At first glance, it may seem that real estate brokers and securities brokerages are similar. Both types of businesses help their clients to buy and sell property. However, there are some important differences between the two. Real estate brokerages typically represent buyers or sellers in transactions, while securities brokerages typically act as middlemen, buying and selling securities on behalf of investors.

Brokers of real estate are subject to different restrictions than brokers of securities. In the United States, real estate brokers must get a license from the state where they do business. In contrast, securities brokers must obtain a license from the Financial Industry Regulatory Authority (FINRA). These distinctions demonstrate that while a stocks broker and a real estate broker are both essential professions, they perform distinct market functions.

Related: Best Real Estate Investment Options for Accredited Investors

Discount Brokers vs. Full-Service

In general, there are two types of real estate brokers: discount brokers and full-service brokers. Full-service brokers provide a comprehensive suite of services, from helping you find the right property to negotiating the sale price. They may also offer additional services, such as home staging and marketing.

In-person sessions and frequent progress reviews may provide ongoing help. For those who are very busy, full-service brokers can help to save you more time.

A discount real estate broker is a type of real estate broker who charges a lower commission than a traditional real estate broker. Discount real estate brokers typically work with buyers looking for investment properties that are not listed with a real estate agent. In some cases, discount real estate brokers may also help sellers willing to list their property at a lower price. While discount real estate brokers can save buyers and sellers money, it is essential to note that they may not have the same experience or knowledge as a traditional real estate broker.

Some companies provide research and online tools to assist DIY investors in creating ideas and exploring stocks. Discount brokers’ limited service is cheaper than full-service brokers.

What are Dealers?

A real estate primary dealer is a corporation or other entity that buys real estate directly from developers and sells it to investors for a profit. The real estate primary dealer typically takes on the risk of ownership and management of the property while it is being developed and until it is sold to an investor.

What Are Broker-Dealers?

Who's a Broker, Who's a Dealer, and What's a Broker-Dealer? (1)

Industry authorities use the term broker-dealers to refer to investors who serve as both dealers and brokers. These institutions include primary dealers, large commercial banks, investment firms, and even tiny, independent boutiques that cater to high-net-worth individuals.

Because they offer the infrastructure for stock trading, broker-dealers are vital to the financial markets. To purchase stocks, it is necessary to create a brokerage account with a brokerage business.

The brokerage business verifies that you have the cash to complete a trade, facilitates the transaction by creating a link to the stock exchange (or Alternative Trading System, ATS) where the stock is exchanged, provides the computer systems that execute the deal, and maintains trade records. In addition, it controls the exchange of funds between the buyer and seller.

Related: 5 Things Experienced Real Estate Investors Might Not Know About Commercial Real Estate

Brokers vs. Dealers: Key Differences

In contrast to dealers, brokers often serve as agents, bringing together buyers and sellers to satisfy client requirements and assist in achieving financial objectives. When dealers purchase or sell, they usually add a markup to the transaction to produce a profit, while brokers charge a fee whenever they buy or sell on behalf of customers.

However, there are circumstances in which dealers serve as brokers, resulting in the broker-dealer position. Broker-dealers can perform both roles and fulfilling both obligations. They range in size from tiny businesses to giant financial institutions and do business in one of two ways:

Wirehouse broker-dealers have access to vast market knowledge and research, which they may utilize to offer customers vital investment information. Additionally, they may provide customers with securities and items from their own inventory.

Independent broker-dealers act similarly to wirehouse dealers but often link their customers to other sources for further market information and to acquire and sell securities.


Most dealers begin their careers as brokers. To become a broker, you typically must meet the following requirements:

  • Earn a bachelor’s degree. To become a broker, FINRA often demands a relevant bachelor’s degree. Most institutions do not provide a single major or field of study to become a broker; instead, he or she will likely seek a business or finance degree.
  • It is essential for prospective brokers to complete an internship to network and get the necessary professional experience. Consider employment in a financial advising, broker-dealer, and venture capital firm while searching for an internship.
  • Find a sponsor: To take FINRA-administered exams, he/she must get sponsorship from a financial institution that will conduct a background check and pay for testing expenses. The completion of an internship may aid in securing a sponsor.
  • Pass FINRA examinations: Once sponsored, he or she will be required to pass several FINRA exams that assess your knowledge of financial concepts, market comprehension, and securities trading.
  • Pursue more education: Earning a master’s degree in finance or business administration will help expand his or her abilities as a broker, bolster credentials for a possible promotion in a brokerage company and open the door to new employment prospects as an investment dealer.


Different SEC and FINRA regulations apply to dealers and brokers:

Regulating Brokers

Brokers are required by the SEC and FINRA to conduct their business under Regulation Best Interest (BI), which stipulates that when recommending specific goods and investments to customers, they must have a solid rationale. It also requires you to take particular actions to better comprehend clients’ financial situations and aspirations, such as requesting their financial information, tax status, and investment ambitions.

Regulating Dealers

Dealers must immediately execute customer orders, divulge any research and market information they’ve obtained, and inform clients of any trading conflicts of interest. The Securities and Exchange Commission (SEC) also requires dealers to join the Securities Investor Protection Corporation (SIPC), which may enforce rules and regulations independently of government authorities.

What Are Examples of Brokers-Dealers?

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Charles-Schwab, E-Trade, and TD Ameritrade are some of the most well-known broker-dealers. Some of them, such as Charles-Schwab, are comprehensive financial services organizations, while E-Trade and TD Ameritrade specialize in online brokerage services. LPL Financial, Northwestern Mutual Investment Services, and Lincoln Financial Network are some examples of broker-dealers.

SecondRE is a licensed broker-dealer and leverages it license for secondary real-estate trade. We partner with sponsors to provide liquidity for real estate and then offer secondary investment opportunities to thousands of accredited investors on SecondRE Marketplace, with the flexibility to buy and sell their holdings as they please. SecondRE operates its technology platform as an ATS, allowing sponsors to continue to hold onto strong assets, while enabling investors to exit early.

“Real estate investment is a serious business involving large amounts. The regulators rightly demand that individuals, companies, and technology platforms that deal with financial investments would be regulated and conform to certain standards. At SecondRE, we’re proud to have an affiliate that is a licensed Broker-Dealer and operate our website as an Alternative Trading System (ATS), reflecting the robustness of our business and Marketplace.” – Gil Siedner, VP of Biz Dev at SecondRE

Deciding on Brokers, Dealers, and Broker-Dealers

Real estate dealers and brokers are integral to growing your real estate portfolio. They can provide advice, connect investors with opportunities, and help manage the process from beginning to end. That’s why it’s crucial to have a trusted broker or dealer who can help you navigate the market and find the best deals.

Sometimes, a technology platform can operate with a “Broker-Dealer” and allows you to grow your investment portfolio and conduct trading on your own. Such platforms, which operate with Broker-Dealers, like SecondRE, are regulated to ensure investors’ best interests when trading.

Our team of experts will work with you to help you reach your financial and real estate investment goals. Contact us today!

Related: Top Ways Experienced Real Estate Investors Can Grow Their Net Worth

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