Brokerage is the term used for the company or firm that performs the functions of a broker.
This means that the firm acts as a mediator between the buyer and the seller, and helps both parties reach an agreement on the price of property or other items being sold.
To perform this function, it is first necessary for the brokerage to gather all legal documents required. This includes securing necessary signatures.
Brokerages are also tasked with the collection of payment from the buyer to give to the seller. Brokerages make money from the facilitation of these transactions, which is usually paid by the seller alone.
There are some cases, however, in which both the buyer and the seller are charged for the transaction. Both the buyer and seller benefit from employing the services of the brokerage firm because doing so may save much time.
On the other hand, since turning to a brokerage firm involves added cost, some buyers and sellers may find it more practical to deal with each other directly. Doing so involves certain added risks, though.
For instance, if the buyer does not know the seller very well, the assurance that he will be compensated should the seller defraud him depends on whether the services of a brokerage firm have been employed or not. Such firms can also take legal action against the seller in case of illegal activity.
There are different kinds of brokerage. Full service brokerage involves giving advice and other information to clients. Discount brokerage gives more responsibility to the client and does not include as many services.