What’s the Difference Between Real Estate Agents, Brokers and Realtors?
Most people work with a real estate agent, a Realtor or a broker when they buy or sell a home. Although all of these individuals are licensed to provide real estate services, and their functions overlap, they’re actually not the same thing.
Keep reading to learn the difference between a real estate agent, a Realtor and a broker and what the requirements are for each.
What Is a Real Estate Agent?
A real estate agent is an individual who is licensed to help consumers buy, sell or rent a home. All agents advise their clients as the clients explore their options, and then represent them in the transaction. The agent’s job ends when the sale or lease closes.
An agent who holds a salesperson’s license must work under the supervision of a broker. They are an agent of the broker and work on their broker’s behalf. However, agents are usually independent contractors, not employees.
The agent’s specific duties depend on whom they’re representing in a given transaction — the buyer or the seller.
Buyer’s agents represent the homebuyer. To begin, a buyer’s agent helps their client establish a budget and set realistic expectations for their home search. And although most buyers search for properties online, the buyer’s agent also searches for suitable properties, and then schedules showings and brings the buyer to tour the home.
When the buyer finds a property they’d like to buy, the buyer’s agent provides the information they need to prepare an offer and then submits the offer to the seller’s agent.
Upon the seller’s acceptance, the buyer’s agent represents the buyer in the transaction, making sure they understand their rights and obligations and honor their deadlines. In the event that a conflict arises, the buyer’s agent will negotiate a solution on the buyer’s behalf.
The seller’s agent, or listing agent, represents the seller in the transaction. Their first responsibility is to help the seller establish a realistic list price based on the recent sale prices of similar homes. Once the property is listed, the seller’s agent markets it to potential buyers and buyer’s agents.
After a buyer submits an offer through their agent, the seller’s agent presents it to the seller and helps them evaluate the offered price as well as other terms of the offer. It’s up to the seller to accept, decline or counter offers the seller’s agent presents to them, and the seller’s agent notifies the buyer’s agent of the decision.
The seller’s agent stays apprised of the buyer’s progress as the transaction moves from offer acceptance toward closing. Just as the buyer’s agent negotiates on the buyer’s behalf in the event of a conflict, the seller’s agent negotiates on the seller’s behalf. The seller’s agent’s job is finished when the sale or lease closes.
Good To Know
A buyer’s agent can represent either a homebuyer or a tenant — “buyer” and “tenant” are interchangeable terms where agent representation is concerned. Likewise, a listing agent can represent either a seller or an investor offering a property for rent.
What Is a Real Estate Broker?
A real estate broker is an experienced real estate agent who has completed advanced coursework and passed a broker’s exam. Although a broker has the same duties as a sales agent when they’re representing a client in a transaction, some brokers have additional responsibilities.
An associate broker is a real estate agent who has fulfilled all the requirements necessary to be a real estate broker, but rather than open a brokerage of their own or work in a supervisory capacity at a brokerage, they work as an agent for another broker.
A managing broker is responsible for the day-to-day operations of a real estate office. In addition to recruiting, training and supervising agents, a managing broker oversees unlicensed staff members.
Broker of Record
A broker of record is the broker who has ultimate accountability for the actions of the agents affiliated with the brokerage. They are responsible for ensuring that the brokerage complies with federal and state real estate laws. Each brokerage has one broker of record.
A managing broker can be a broker of record and vice versa.
What Are the Requirements To Become a Real Estate Agent or Broker?
Real estate agents need a real estate salesperson’s license issued by their state. Eligibility requirements vary by state but generally include:
- Age 18 or older
- Successful completion of state-mandated coursework in real estate practice and law
- Passing a state real estate exam
- Affiliation with a real estate broker
Requirements for an associate broker or broker license are similar but usually require additional hours of coursework plus a minimum number of years of experience and/or completed transactions.
Depending on the state, attorneys might be exempt from the education and experience requirements but could still be required to sit for the exam.
Agents and brokers must renew their licenses periodically. To make sure they’re current on the law and on issues affecting consumers within the realm of real estate, states usually require real estate professionals to complete a certain number of hours of continuing education before they can renew their licenses. Some CE courses, such as ethics, fair housing and legal reviews, might be required each renewal period. Agents can choose others based on their areas of interest or specialization.
How Do Real Estate Agents and Brokers Get Paid?
Agents and brokers usually work on commission — a set percentage of the sale price of the home the client buys or sells. The broker’s commission is the amount the brokerage charges the client. The agent gets a portion of that, as determined by the agent’s independent contractor or employment agreement with the broker.
It’s customary for the seller to pay the listing broker’s commission, and for the listing broker to pay the buyer’s broker. However, commission is always negotiable, and it’s not uncommon for buyers to pay their buyer’s broker directly, at closing.
State laws prohibit real estate salespeople and associate brokers from accepting compensation from anyone other than their broker.
What Is a Realtor?
A Realtor is a licensed agent — either a real estate salesperson or broker — who is also a primary member of the National Association of Realtors. Although all real estate agents and brokers must comply with federal and state laws, Realtors are also bound by the association’s standards of practice and code of ethics.
What Are the Requirements To Become a Realtor?
Agents become Realtors by joining their local real estate board. That membership automatically grants them membership in their state association and the National Association of Realtors.
In order for an agent to join the association, a principal of the brokerage they’re affiliated with must already be a member. This principal is referred to as the designated Realtor.
If the principal of a brokerage is a NAR member, all agents and brokers affiliated with the brokerage must be members, too.
About one-third of Realtors are brokers or associate brokers. The rest are sales agents. Across all license types, Realtors have an average of eight years of experience and conduct an average of 10 transactions per year.
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