The dictionary definition of a broker is “one who acts as an agent for others in purchases, contracts, or sales, in return for a fee or commission.” Far from being just a professional middle-man, a broker is also typically in possession of some financial expertise in the field in which they practice. They can advise you of the best course of action in your transaction, help gather and provide paperwork on behalf of their clients, and generally help smooth the path for whatever transaction you engage them to undertake. Depending on what type of purchase, sale or contract you are planning to make, there are different types of brokers who you can work with in the process.
- Mortgage brokers assist their clients with choosing and acquiring a mortgage package from prospective lenders. A mortgage broker will typically help a borrower put together their paperwork for the bank loan, help them shop among various lenders, and advise them on what sort of loan terms they will qualify for. A broker can sometimes also get you better rates on a loan than you could get for yourself, due to their existing relationships with certain lenders.
- Real estate brokers are different than mortgage brokers: their job is to help sellers find prospective buyers for their real estate properties. There are also real estate brokers who work for real estate buyers, in which case they will strive to help the buyer find a suitable property at a reasonable price. Real estate brokers are paid on commission at the close of the sale, usually around 6% of the transaction value. If there is a listing agent involved, that commission is traditionally split between the two.
- Stockbrokers are either individuals or companies who are licensed to buy or sell stocks on the stock exchange on behalf of your investment objectives. These types of brokers can provide advice on portfolio management, make discretionary buys and sales, or simply execute the demands of clients. A stockbroker that operates on the foreign exchange marketplace is called a Forex broker.
- Insurance brokers help their clients to choose the best insurance package for their needs, whether it’s life insurance, auto insurance, renters insurance or any other type of insurance program.