Brokerages

A brokerage is most simply a firm that is an intermediary between a buyer and a seller. A brokerage firm is employed by the parties making the deal and may receive money from one or both parties. The brokerage is responsible for completing legal paperwork, collecting signatures and the money.

Brokerage firms are most commonly thought of in terms of buying and selling stock shares. In one type of brokerage arrangement, a broker may be given power of attorney to trade stocks on behalf of a client.

This arrangement involves a large fee for the brokerage firm. Other arrangements may involve the client doing more research on their own and employing the brokerage to merely conduct the transaction.

There are other areas of business which use brokerage firms. Real estate is one common area. However, brokerage firms can be employed to purchase all types of items, including furniture, restaurant supplies, art or antiquities. In these types of situations brokerage fees may differ and items purchased may be marked up in order to account for these fees.

Employing a brokerage is an added expense, however, in some cases the expense is well worth it as there are benefits to a brokerage firm. First, a brokerage firm generally assumes liability for claims made by the seller and if necessary may take legal action against the seller. Also, working with a brokerage firm may save time since they are able to review products and suggest only products which meet the buyer’s needs.