Real Estate Agent vs. Broker vs. Realtor: What’s the Difference?
Whether you’re looking to buy or sell a home, you’ll need some help. So, who should you hire? Real estate professionals go by a variety of names, including Realtor, Real Estate Agent or REALTOR®.
So, what is the difference between a real estate broker, real estate agent and agent?
When it comes to the real estate profession, these titles are sometimes used interchangeably, but rest assured there are some important differences, as well as different requirements for using a particular title.
Here is a summary of the professional real estate titles you will encounter, and what they mean.
Difference between a real estate agent and broker: What is a real estate agent?
A real estate broker is a person who has a professional real estate license to help people buy, sell or rent a variety of homes and properties.
In order to obtain this license, states generally have educational requirements, which include pre-licensing training. The amount of training time required can vary greatly from jurisdiction to jurisdiction. For example, in Virginia, real estate agents must attend 60 hours of pre-licensing training, while in California, they are required to take a 135-hour licensing course.
After the training, aspiring brokers take a written licensing exam. This exam is usually divided into two parts: one on federal real estate laws and general real estate principles, and the other on state-specific laws.
Once they pass the exam, they are licensed, with the title “real estate broker,” and they may join a brokerage where they can begin working with home buyers, sellers and tenants to complete real estate transactions.
Broker vs. Realtor, explained
A real estate broker is a person who has received education beyond the broker level and passed the broker’s licensing exam as required by state law.
Similar to the real estate broker exam, each state has its own broker education and exam requirements. Additional courses include topics such as ethics, contracts, taxes and insurance – more in-depth than what is covered in a real estate broker pre-licensing course.
Prospective brokers will also learn about real estate legal issues and how the law applies to running a brokerage, real estate investing, construction and property management.
As a result, “brokers have an in-depth understanding of the real estate business,” says Jennifer Baxter, associate broker at Re/Max Regency in Suwanee, Ga.
To take the broker’s exam and be licensed, a real estate broker must have some experience-typically, three years as a licensed real estate broker.
There are three types of real estate brokers, each with subtle differences in the role they perform:
- Principal/designated broker: Each real estate firm has a principal/designated broker. This person oversees all licensed real estate agents at the firm and ensures that agents are operating in compliance with state and national real estate law. Like real estate agents, principal brokers get paid on commission—taking a cut of the commissions of the sales agents they supervise (although many principal brokers receive an annual base salary).
- Managing broker: This person oversees the day-to-day operation and transactions of the office and typically takes a hands-on approach to hiring agents, training new agents, and managing administrative staff. (Some principal/designated brokers also serve as managing brokers.)
- Associate broker: This real estate professional—sometimes called a broker associate, broker-salesperson, or affiliate broker—has a broker’s license but is working under a managing broker. This person typically is not responsible for supervising other agents.
What is a Realtor?
In the real estate industry, in order to become a real estate broker – a licensed broker with the ability to use this widely respected title – a broker needs to become a member of the National Association of Realtors.
As a member, a person is expected to abide by the association’s standards and code of ethics.
“In essence, NAR holds us to a higher standard,” says Peggy Yee, a real estate broker in Falls Church, Virginia. Becoming a member of NAR also provides access to real estate market data and transaction management services, among other benefits.
A listing agent is a real estate agent who represents home sellers. These professionals help clients who are selling their homes with a range of tasks, including pricing their homes, recommending home improvements or staging, marketing their homes in listing services, hosting open houses, coordinating showings with homebuyers, negotiating with homebuyers, and overseeing the home inspection process and closing procedures.
As the name implies, a buyer’s agent represents the homebuyer and assists the client in every step of the home buying process, including navigating the housing market, finding the right home, negotiating an offer, referring other professionals (such as mortgage brokers, real estate attorneys, settlement companies), and resolving various issues (such as home inspection or appraisal issues).
Fortunately for homebuyers, they don’t need to worry about the cost of hiring a buyer’s agent. Why? Because sellers usually pay the seller’s agent and buyer’s agent commissions out of the listing agent’s fee.
In addition to helping people buy and sell homes, many real estate professionals also help consumers find properties to rent. But the work of these brokers depends on the location – whether it’s a big city or a small town – and the broker.
Sometimes a rental agent will guide your search from the beginning, helping you find the right neighborhood, apartment size and price range, and then go with you to see the property. But more likely, you’ve already identified a lot of information, and the agent will send you listings that might interest you.
Once you’ve decided to rent and have approval from your landlord or management company, your agent should help you read and understand your lease.
“Most tenants can find a place without a real estate agent, but they forget to look for someone who can help them understand what they’re getting into when they sign the lease,” says Dilar Schwartz, a real estate agent in Austin, Texas.
Rental agents also represent landlords and help them find tenants – but the fees agents charge landlords depend on what market they are working in. In many places, landlords pay real estate agents to help find the ideal tenant. However, in more competitive rental markets, tenants may be responsible for real estate agent fees, sometimes referred to as “brokerage fees. These fees can be as low as $50 to $75 for a credit check or application, but more common fees are one month’s rent or 15% of the annual rent for the apartment.
Realtor vs. broker: How to find the right professional for you?
Many people find real estate agents to help them through word of mouth or online. You can search realtor finder database at realtor for a variety of real estate professionals in your area, which includes their sales performance, specialties, reviews and other useful information. It’s a good idea to talk to at least three people in person and ask the broker some key questions to find out if they’re a good fit for you and the deal you’re looking for.