Real Estate Agents: Employees vs. Independent Contractors

Instructor: Heather Vann
When starting a career in real estate, it can be confusing to figure out if you are considered an employee or an independent contractor. While both styles of employment are beneficial to you in different ways, the majority of agents are considered independent contractors.

Employee or Independent Contractor

An employee is a person working for another person or business for pay. An independent contractor is a person who provides services to a company but is not an employee of that company. These are two categories someone could fall into when they start working. In real estate, agents are usually considered independent contractors working under the owner of the agency they are affiliated with. There are benefits and downsides to both of these categories.

Work Hours

When you got your first job as a restaurant or retail worker, you had a manager that set your schedule, right? If you couldn't come in to work, you had to call off or possibly even find someone to cover your shift. As an employee, you have to take all of those things into consideration.

Life as an independent contractor is a little easier when it comes to your schedule. There are no set hours that you have to report in for work. As a real estate independent contractor there are also no required number of hours to work a week. If you need to take time to go to the doctor or take your kids to school, the schedule is flexible enough to allow that. One very important thing to remember is that you get out what you put in. It is very important to make sure you are able to work without much supervision.


When a company decides to hire employees, they must purchase an insurance policy to make sure they are covered as well as the employee or consumer. This insurance coverage can range from covering an injury on the job to covering a mistake made by the employee where the consumer was adversely affected. The employee may face further discipline from the company depending on what happened later but the insurance protects the company from liability.

A real estate agent acting as an independent contractor is required to carry an Errors and Omissions insurance policy. This covers the agent if a buyer or seller were to come back and say that they were not treated fairly or if they say the agent misrepresented information. Errors and Omissions insurance is required by law. The good thing is that a broker/owner of an agency usually provides this to all the agents that work for his agency, including contractor. It is up to the broker/owner if they charge the agents for their portion of the insurance or if they will cover it completely.


As an employee you generally get paid on a set schedule. Your pay is based either on the number of hours worked or a base salary. When your check comes the employer has taken out the required taxes and any benefits that are offered. At the end of the year your employer provides you with a W-2 form that outlines your earnings for the year.

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