Understanding the Difference between a Real Estate Agent, a Broker, and a Realtor
Are you browsing for a new place to live or interested in selling or renting your property? Inevitably during this process, you will meet with one or all of the following: a real estate agent, a broker, or a realtor. The three words are usually used interchangeably, but there actually is a difference among them.
All three roles fall under the category of real estate professional, but they vary in their qualifications and, oftentimes, years of experience and expertise. Thus, it’s important to understand the distinction so that you’ll know which among the three professionals you might consider hiring to help you out with your real estate needs.
Read on to learn more about the differences between the three.
What is real estate agent?
Real estate agents are individuals who have a professional license to help people buy, sell, and lease real estate. A real estate agent cannot operate alone and usually works for a broker or a real estate firm. The requirements to attain a professional real estate license can vary per state, but real estate agents typically need to log training hours and take an exam.
Common requirements across the United States include being at least 18 years old, a legal resident of the United States, completion of the state required pre-licensing class, a passing score on the state real estate license exam, submission to a complete background check, and a sponsorship by a licensed real estate broker. In addition, after passing the exam, real estate agents must complete continuing education classes in order to keep the validity of their license.
The primary role of a real estate agent is to help connect buyers and sellers and assist in the closure of the transaction. They typically take a commission fee on the sale price of a property.
What is a real estate broker?
A real estate broker has done further education on real estate and completed additional licensing requirements and levels of exams to become a broker. An individual typically needs to practice as a real estate agent for at least three years before they can apply to become a real estate broker. The advantage of becoming a real estate broker is that brokers can work independently. Unlike real estate agents, they do not need to be attached to a real estate firm.
Typically, there are three kinds of brokers
1. Associate brokers – They have a broker license but prefer to report to another broker or be part of a real estate firm. It is notable that within the hierarchy of the firm, associate brokers do not supervise any real estate agents.
2. Managing brokers – They run the day-to-day operations and real estate transactions that take place within their firm. This can include hiring, training, and overseeing other staff members, including real estate agents and associate brokers.
3. Principal or designated broker – Each firm has an individual who serves as the principal or designated broker. They are tasked with the role of ensuring that all agents who are members of the real estate firm comply with local and national real estate laws.
Brokers earn money from the commission on their own real estate transactions and also take a portion from the real estate agents they supervise.
What is a realtor?
A realtor can be a real estate agent, who can be a broker or other real estate professional, that is a member of the National Association of Realtors (NAR). The NAR is the largest real estate trade association in the United States. Members of the organization must subscribe to its standards and code of ethics. Traditionally, realtors who are members of the NAR hold themselves to a higher measure of professional conduct and prioritize their client’s financial well-being in transactions. The savvy once use lockboxes and showing feedback for realtors.
To become a realtor, members must have a valid and active real estate license, be actively engaged in the real estate business, have a clean record with no unprofessional conduct, and not have any recent or pending bankruptcy claims. If an individual meets these requirements, they can apply at their local NAR association and pay the application fees and membership dues. Once accepted, they may put the realtor trademark with their name but cannot use it as a professional designation.
Knowledge is power especially when it comes to the real estate market. Now that you know the distinctions between a real estate agent, a broker, and a realtor keep them in mind for your next meeting with a real estate professional so that you understand the scope of how they can assist you with your real estate needs.