Differences Between Real Estate Agents, Realtors, and Brokers
One of the questions I often get is if there is a difference between a Realtor, Real Estate agent, and broker.
Hiring someone to help you with a real estate transaction can be confusing at times since there are so many different professionals out there vying for your services. To make things more confusing, there are various real estate terms for what seems like the same thing.
You have real estate agents, Realtors, and brokers. Are there differences between the three? And if so, how do those differences impact you as a buyer or a seller?
It is not uncommon at all to see the words agent, Realtor, and broker; all used interchangeably. You could compare this situation to certain words becoming standardized in our vocabulary. For example, people use the term whirlpool tub interchangeably with “Jacuzzi” even though Jacuzzi is a brand.
Below you will see a comprehensive review of the differences between Realtors, Real Estate agents, and brokers. You’ll even learn that it’s possible to be an owner of a real estate company without being involved in the day to day operations or even be licensed.
Without a doubt, lots of people wonder what the difference is between a real estate agent and a Realtor.
Real Estate Agents
What is a real estate agent?
A real estate agent is a professional in the real estate industry that serves as the facilitator of real estate transactions. Their job is to help buyers and sellers come together and make transactions. They get paid through commission, usually an agreed-upon percentage of the sale price of the property.
There is no standard real estate commission – it is negotiated between a real estate agency and clients.
Real estate agents work for real estate brokerages. In essence, the brokerage is who you are hiring, and the agent is the brokerage’s representative for your transaction.
What does it take to become a real estate agent?
To become a real estate agent, you need to take and pass the classes and exams required by your state. There are no federal requirements for real estate agents – it all happens at the state level. It can take between 30 and 90 hours of classroom instruction to get ready for the exam, depending on the state. Real estate agents also have to pay an annual licensing fee and may need to complete continuing education.
What are the responsibilities of a real estate agent?
Real estate agents are responsible for representing the best interests of their clients, whether they are buyers or sellers. They will help buyers find the home they are looking for and negotiate the best price. They also help sellers find buyers and negotiate the best price for the market.
There is a long list of tasks that real estate agents handle on behalf of their clients, tasks that ensure that the clients get the best possible results from their transactions. Some of the most vital roles of a real estate agent include:
- Setting the correct price of a home.
- Marketing properties, both online and offline through various proven methods.
- Negotiating offers when they are received either from a client or a buyer’s agent.
- Keeping an open line of communication with clients before and during the time of a transaction.
- Helping buyers find and close on a home.
- Numerous other tasks to help the successful completion of a purchase and sale.
It should be understood that buyer’s agents and seller’s agents can have very different tasks in their normal business operations. Many consumers do not realize there are different skill sets for real estate agents. Here are nine things a buyer’s agent does for their clients. On the flip side, you can see what a seller’s agent does for their clients. Both have significant roles in the transaction by doing different tasks.
Without a doubt, there are differences between what a buyer’s and seller’s agents do for their clients.
To summarize, here are key responsibilities of a buyer’s agent:
- Help a buyer get pre-approved for a mortgage, including suggesting a lender or lenders to interview.
- Helping you find a house including advising on neighborhoods, schools, and communities.
- Provide assistance on what to offer for a home and then negotiating the said offer.
- Recommend a professional home inspector and attend the inspection to have an in-depth understanding of the findings.
- Help negotiate any inspection repair requests from the buyer.
- Communicate with the seller’s agent and buyer’s attorney throughout the transaction.
- Monitor the buyer’s loan commitment to ensure the financing is on track.
- Finalize all loose ends before the closing and attend a final walk-through of the property.
To summarize, here are the key responsibilities of a seller’s agent:
- Do market research to price a home accurately based on current market conditions.
- Provide a real estate marketing plan designed to get a home sold quickly for the most money possible.
- Communicate property before and during the sale.
- Ensure that the buyer is qualified before accepting an offer.
- Negotiate the best terms possible for the seller.
- Attend the home inspection to represent the best interests of the seller.
- Attend the home appraisal to provide the appraiser with essential information about the property.
- Help the seller finish up any necessary tasks to be able to close as planned.
In some states, it’s possible to become both the buyer’s and seller’s agent. This situation is what’s referred to as dual agency. If you are smart, you will not use a dual agent. When you accept dual agency, the real estate agent becomes a neutral party. They can no longer perform the regular tasks they would if they were a buyer’s or seller’s agent. To be blunt, the agent cannot give you any counseling or advice – one of the vital reasons you hire a real estate agent in the first place.
As you can see, real estate agents play a large role in the successful completion of a sale. One of the most significant complaints among consumers towards real estate agents is a lack of communication. Obviously, this kind of behavior is extremely unprofessional. Real Estate Agents and Realtors need to understand they are typically dealing with someone’s most significant financial asset.
RE/MAX, the franchise I work for has a humerus video worth a look. For many consumers, this video will be spot on with what they have experienced in a real estate transaction. Agents should take special note not to be like the person portrayed in the video.
What is a Realtor®?
A Realtor is a professional in the real estate industry who is a member of the National Association of Realtors (NAR). It is a federally registered membership mark. Real estate agents and brokers are just some of the professionals who can join the organization. Property managers and real estate appraisers can also join, among other professions. All members of the NAR pledge to abide by the standards and code of ethics of NAR.
NAR attempts to hold its members accountable for their professional behavior. Because of the higher standards of NAR, Realtors believe they can offer a better experience for their clients than the everyday real estate agent.
What does it take to become a Realtor®?
A Realtor must meet all the professional requirements of their position, as well as passing a course on the NAR Code of Ethics every four years. The NAR Code of Ethics is strictly enforced by local real estate boards. Realtors must uphold the Code in their professional lives to maintain membership.
Members must also pay a yearly fee, which is currently $150 for 2019 and 2020.
What are the responsibilities of a Realtor®?
Realtors have the standard responsibilities of their professions, like serving buyers and sellers as a real estate agent or broker. Realtors, however, are held to a higher level of business standards and ethics. They must adhere to and follow the NAR Code of Ethics. Following the code of ethics is the most significant difference between being a Realtor and a real estate agent.
Below is an excellent summary of the 17 Articles of The Code of Ethics Realtors must adhere to. Keep in mind this is just a shorted summary with the basics behind the code. Each article in the code has additional sub-codes detailing what rules Realtors are required to follow.
The code is considered a living document that can be amended as necessary. It has been changed many times throughout its history so that it remains in lockstep with today’s best real estate practices.
NAR has also changed the code when necessary to reflect changes in fair housing laws and standards. NAR has some interesting statistics on Realtors.
The 17 Articles of The Realtor Code of Ethics
- Protect and promote the best interests of buyers and sellers ahead of their own, as well as treating all parties honestly.
- A Realtor shall not exaggerate, misrepresent, or conceal any material facts about a property. They shall investigate and disclose when situations reasonably warrant it. REALTORS® shall only be required to find and disclose adverse factors reasonably apparent to a person with expertise in those areas required by their real estate licensing authority.
- Realtors shall cooperate with other real estate agents and brokers when it’s in the best interests of their clients to do so.
- Realtors are required to disclose if they represent family members who own or are about to purchase real estate, as well as if they are a principal party in a real estate transaction.
- Realtors cannot provide professional services in a transaction where the agent has a contemplate or present interest without disclosing that interest to all parties involved.
- Realtors shall not collect a commission, rebate or profit from the transaction without the seller’s knowledge, nor recommend third parties from which they will profit from without the seller’s express consent.
- A Realtor shall refuse fees from more than one party even if permitted by law without all parties’ informed consent.
- Realtors shall have a dedicated financial account holding clients funds always from the agents’ own funds.
- Realtors will attempt to ensure that all written documents, including listing and purchase contracts, are easy to understand, and a copy of all materials are signed and delivered to the appropriate parties.
- Realtors will not discriminate in providing services for any reason based on race, color, religion, sex, handicap, familial status, sexual orientation, gender identity, or national origin.
- Realtors will be competent to conform to standards of practice and not provide services outside the scope of their expertise.
- A Realtor must be truthful in advertising and marketing. Realtors also shall never quote pricing other than the agreed-upon listing price unless expressly permitted by the seller.
- Realtors cannot practice law and therefore give legal advice unless the Realtor is also an attorney.
- If charged with unethical practices, a Realtor shall cooperate and present all evidence as requested by law.
- Realtors shall not make false accusations about another Realtor, discredit them in any way, and also file unfounded ethics complaints.
- A Realtor cannot solicit another Realtor’s client, nor can they interfere in their contractual relationship. Realtors are prohibited from intentionally marketing to another Realtor’s client.
- Realtors are required to submit disputes to the real estate board for mediation if the board requires it. If the argument isn’t resolved through mediation, or if intervention is not required, a Realtor will submit the dispute to arbitration by the policies of their board rather than litigate the matter.
As you can see, a Realtor is held to a higher standard than a non-member real estate agent. It should be becoming clear there is a difference between a Realtor and Real Estate agent.
What Benefits Do the National Association of Realtors Membership Fees Provide?
The dues an agent pays to be a member of NAR include the following benefits:
- Access to information webinars
- Code of ethics training
- A subscription to Realtor Magazine
- Market research and technology reports
- Historical data requests
- Library and research services
- Discounts on certification courses, conference attendance, mobile phones, car rentals, dental and health insurance, and books/brochures.
Real Estate Brokers
What is a broker?
A real estate broker is a real estate professional that has continued his or her education beyond the level of a real estate agent – successfully obtaining a state real estate broker license.
Brokers may work as independent agents or start brokerages and hire other real estate agents and Realtors to work for them. Some of the most recognized real estate agencies in the world include:
- RE/MAX International
- Coldwell Banker
- Century 21.
- Keller Williams
Many of these real estate franchises are not only located in the United States but around the world.
What does it take to become a broker?
A broker must go through all the training and pass all the exams required for a real estate agent, then continue with their education to obtain a broker’s license.
What are the responsibilities of a broker?
As more experienced and qualified real estate professionals, brokers tend to handle the higher-level requirements of a real estate transaction. If they employ real estate agents, the broker may focus more on the detailed paperwork and legal requirements of a deal while the agents focus on the basics of the purchase or sale – like helping buyers find homes and helping sellers find buyers.
Most significant real estate brokers almost always oversee on a daily basis all of the real estate agents they employ. Outside of managing other agents, one of the significant functions of a real estate broker is to hold a buyer’s earnest money deposit in an escrow account that is duly accounted for after a transaction.
The typical difference between a broker and a real estate agent is it usually includes an active ownership role.
How does this all apply to buyers and sellers?
When you are searching for a real estate agent, it can be helpful to know the differences between real estate agents, Realtors, and brokers. Things to think about include:
- Real estate agents work for someone else. There is nothing wrong with this fact – most of the options you choose from when finding an agent will work for a brokerage. But it is worth remembering that you are hiring an agency, not just an individual when you hire a real estate agent.
- Realtors hold themselves to a higher standard. Most Realtors are quite proud of the fact that they are part of such a well-established, highly-respected organization as the National Association of Realtors. They know that they have to try harder and be more careful to adhere to their Code. The first requirement they follow is to ‘honesty,’ something that is worth prioritizing when you choose an agent to handle what is probably the biggest financial transaction of your life.
- Brokers have more qualifications than agents. Many Realtors and real estate agents are plenty qualified to help you buy or sell a home. Of course, if you have the chance to hire a broker, you are justified in feeling some security knowing that your representative has achieved a higher level of education and certification. Many brokers, however, choose not to compete with their agents.
How Does an Owner Differ From a Real Estate Broker?
In many businesses, you have what’s called a “silent partner.” In real estate, this is no different. You can have an owner of a real estate company who does not possess a real estate brokerage license or even be a licensed salesperson. The owner typically remains out of sight from the normal everyday operations of the business.
An owner, however, could be consulted on vital business decisions surrounding the company. Sometimes owners of real estate companies are investors that see it as an excellent business opportunity. It’s also possible that the broker of the company needed funding for the business to be established. Nothing is preventing a non-licensed individual from having a stake in a real estate firm.
Keep Things in Perspective
It is reasonable to want to hire the best person you can find for the job of helping you buy or sell your home. However, it is crucial to maintain the right perspective in your search for the right candidate. Things like local market knowledge, experience, recent satisfied references, a track record of success and a good working relationship are worth considering along with education levels and association memberships.
Do the work of interviewing candidates and asking the questions that really matter – such as how many homes they have sold recently, how close the sale price was to the original price and other vital questions like market time. You may find a real estate agent that fits your needs to a T. Don’t avoid hiring the right person just because they are not a broker or a Realtor.
Whether you choose to hire a real estate agent, Realtor, or broker, it makes sense to do a careful interview process. Hiring someone to represent your interests is one of the most critical aspects of buying or selling a home. Not doing cautious research is just asking for trouble.
Hopefully, you now understand the differences between real estate agents and Realtors.
Additional Valuable Real Estate Resources
- Don’t do these things when selling a home – learn what not to do when selling a house. If you make some of these mistakes, especially with financing, you might lose out on purchasing your dream home.
- What to know about selling high-end homes – get some excellent tips on how to sell a luxury home. There are some additional marketing avenues that should be taken when selling an estate.
Use these additional helpful resources to make smart decisions when you are going to be selling a home.
About the author: The above Real Estate information on the difference between real estate agents, Realtors, and brokers was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 33+ years.
Are you thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.