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An outside broker represents one of the parties involved in a securities or real estate sales transaction. Someone wishing to become an outside broker must gain some industry-relevant sales experience. Additionally, laws in many nations require both real estate and investment brokers to obtain licenses that are usually awarded to individuals who successfully pass examinations that are administered by the regulatory agencies.
If a single investment or real estate firm has been hired to represent the interests of both the buyer and seller involved in a specific transaction then that firm may ask an outside broker to assume the responsibility for representing one of those parties to as to avoid a conflict of interest. Therefore, an outside broker may be an employee of a financial firm or a self-employed individual. Many investment firms prefer to hire brokers who have completed undergraduate college degree programs in topics such as finance, economics or accounting. Likewise, someone wishing to become an outside broker for a real estate firm may benefit from completing a degree course in a finance related topic.
Laws in many areas require prospective investment brokers to attend a series of regulatory training classes. During these sessions, class attendees are familiarized with investment procedures and securities laws. At the end of the training course, they must successfully pass a licensing exam and in some nations, brokers have to pass both a national and a regional exam before becoming eligible to apply for a license. Having passed the exam, the prospective broker must pay a fee to obtain a license that generally remains active for a number of years. Real estate brokers often have to go through a similar licensing process, although in many instances real estate brokers do not have to take an actual examination.
Aside from fulfilling licensing requirements, someone wishing to become an outside broker must gain some sales experience. An effective broker must be able to negotiate the best possible deal for his or her own client. Many firms prefer to contract negotiation roles to outside brokers who have several years of experience as traders or real estate agents. Additionally, the client whose interests the broker plans to represent may prefer to hire a broker who has experience in dealing with a particular type of securities transaction or real estate property type.
Both real estate transactions and investment sales can be complex procedures that involve lengthy sales contracts. Consequently, someone wishing to become an outside broker may benefit from taking a law degree since many firms prefer to deal with brokers who fully understand local contract laws. If any issues arise in relation to the sale then a broker with a background in law can more easily defend the interests of their client than someone who lacks such expertise.
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