At one point in our lives, we may have encountered or heard the word broker. In the past, there was a little tinge in its definition and how people look at their nature of work. At a certain point, the word “broker” was likened to individuals who take advantage on the opportunities to make money from certain individuals or companies. Today, however, people are much more open to the idea and are starting to accept the importance of what brokers do and their importance in making business or personal decisions. Brokerage definition has come a long way from what it is known in the past to what it is and how they are used as an advantage in how people do business now.
What is brokerage?
Simply put, a brokerage is a firm or group of individuals who works an intermediary between sellers and purchasers. They do not own the products or services being traded, instead, they are merely an “instrument” that facilitates the deals and takes on any paper works and other matters in between so that a business closure can be achieved. Brokerage is most likely referred to as a brokerage firm, which has the capacity to handle and intermediate all types of deals.
Brokerage Fees
According to the widely accepted brokerage definition, brokers prepare and complete all the necessary paper works needed to close out the deal. They obtain signatures from both the sellers and buyers and they even collect the money from the buyer and hands them over to the seller.
The broker will then be paid for his services in 3 different ways:
The broker may collect a portion of the money that was paid by the buyer to the seller.
A broker may charge both the seller and the buyer for a service charge.
A broker will earn commission based on the amount of sale from the seller.
The fee may also vary depending on the extent of work or service offered by the broker. In some cases, the broker is given the full responsibility by the business owner to decide and perform everything for the company. In this case, he or she is paid by a huge amount and gets paid regardless if the company is making money or losing some.
Types of Brokers
Here are some of the types of brokers and basic definition on what they do.
Employment brokers – these are individuals or a firm that links a person that is looking for a job to companies who are actually looking for the specific work or skills he offers. In the vague term of the word, employment agencies can be considered as employment brokers due to their nature of work.
Merchandise Brokers – These are people who facilitate movement of stocks and supplies between manufacturers and producers of raw materials. At times, brokers also offer a link between two manufacturers who are working together to come out with a product.
Insurance Brokers – Insurance in itself can be very intimidating and hard to understand. Looking for a company that best suits your needs could be lengthy and takes too much research on your part. Insurance brokers come equipped with all the knowledge about the industry and the fact that they have multiple contacts from different insurance companies, make them valuable assets in finding the right insurance for you. They could also facilitate fast release of funding should there be a need for insurance claims.
Real Estate Brokers – handles everything in the real estate field from buying or selling of houses, businesses or buildings. A broker has a ready list of available houses or establishments that a buyer can seek rather than going around town and reading newspaper ads in looking for one. With brokers facilitating the sale of a certain property, it will only be in a matter of time before buyers move in to their dream houses.
Loan Brokers – these type of brokers work closely with banks and lending institutions. Individuals who are looking to secure a loan whether for business purposes or other financial expenditures will need to prove to the bank or lending institutions that they are legit and qualified to get a loan. A loan broker sees to it that the borrower will have the needed papers as well as capacity to pay, and then looks for a lender that caters to the specific needs of the client.
Ship Brokers – if you ever find the need to ship containers and cargoes, these shipbrokers keeps you updated with the movement of ships from almost any port in the world. They have control on the cargo space available as well as rates for shipment. This information is then given to shippers to decide whether to push through with the shipment or not.
Stock Exchange Brokers – deals with the stock market and the buying and selling of stocks. They either work for an individual or company active on the stock market exchange. Their functions ranges from being a floor broker who performs the actual buying and selling on the trading floor working on what the owner wants them to do, or they could work as a all out brokers where they are given the responsibility of taking the business in their hands,
The brokerage definition as well as its nature of work has significantly changed now that most individuals have access to the Internet where they can gather information freely. There are even sites where people can trade in stock market or foreign exchange markets online by themselves without the need for actual brokers. Most companies like insurance or banks have also tapped into the online world enabling individuals to secure loans and insurance right off the Internet.
Whatever the case may be, brokerage definition will continue to evolve and will help reshape the brokerage world. As of today, millions of brokers have maximized the use of the Internet to their advantage rather than disadvantage. Today, more than ever, they have the capacity to do better in their field of work and further give enhanced assistance to those who need their services.
I provide an online informational resource on a wide variety of today’s top brokerage careers, such as Stock Broker Training, Customs Broker Training, Insurance Broker Training and many more.
Visit my Broker Training website to find out which brokerage career suits you best!
- Giovanni Pugliese
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