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Buying or selling a home involves a great deal of money, so having the right real estate professional to guide you through it all can make a big difference. But there are many kinds of real estate pros out there — how do you know which kind you need?
For example, real estate agents and brokers are both licensed professionals who can help you buy or sell property. Becoming an agent involves pre-license training and a written licensing exam. Brokers engage in additional education, above and beyond what is required to become a licensed real estate agent, and must pass a broker’s license exam. Here’s more on the differences between a broker and an agent — including how Realtors fit in.
- An agent is a real estate pro who is licensed to help clients buy or sell property.
- Brokers are also licensed real estate pros — earning a broker license is typically more rigorous and enables holders to broker deals. Many brokers are also licensed agents.
- Realtor is a name given to agents or brokers who are also members of the National Association of Realtors.
What is a real estate agent?
Real estate agents are licensed salespeople who help their clients buy or sell homes. An agent must work under a real estate broker and is typically compensated through commissions shared with that broker. (Some agents might work on a flat-fee model rather than a commission-based model.)
There are two main types of real estate agents:
- Buyer’s agent: A buyer’s agent helps people who want to purchase a home. This means helping buyers find appropriate homes in their desired area, touring the home with them and helping them prepare and submit offers to purchase a home.
- Listing agent: By contrast, a listing agent, also called a seller’s agent, helps people who want to sell their home. This means pricing the home appropriately for the market; listing the home on the local MLS, a database of homes for sale; marketing it to potential buyers, including staging and open houses; and helping the homeowners negotiate offers.
Before they can start working, real estate agents must take classes and pass a licensing exam in the state they plan to work in. When agents first get their license, they “have to practice or begin with another individual that has received a broker’s license,” says Jeffrey Hicks, an associate broker with Apollo Associates Realty in Atlanta and a past president of the National Association of Real Estate Brokers.
What is a real estate broker?
Real estate brokers own and manage real estate brokerages (sometimes called agencies). These firms work with a title company and others to facilitate real estate transactions and manage real estate agents. Like real estate agents, brokers must take classes and pass an exam to become licensed. Typically, the broker exam is more rigorous than the one for agents and involves additional coursework. Many brokers are also licensed agents, but not all.
There are a few different types of real estate brokers. Here are some common titles, and what they mean:
- Broker associate: Broker associates typically work as real estate agents but also have the training and licensure to broker a real estate transaction. This is often the first step that real estate agents take toward advancing their career, as brokering their own transactions can increase their commissions.
- Designated broker: Designated brokers typically own or manage real estate firms. They hire real estate agents to work with clients to buy and sell properties, and they help their agents resolve client issues. They might also develop and offer training materials to teach their agents skills that can help them make more sales.
- Broker of record: The responsibilities of brokers of record can vary from state to state, but typically they oversee the activities performed on behalf of the firm by its agents and other employees (such as office staff). This includes making sure all employees comply with real estate law, keeping accurate records, managing trust and escrow accounts, reviewing paperwork and distributing commissions.
Managing broker: Managing brokers, like brokers of record, oversee the day-to-day operations of a real estate firm. They often train and mentor real estate agents and supervise the marketing and listing of homes. Managing brokers also keep an eye on legal compliance, ensuring that client interactions and transactions are properly documented and that the firm follows all relevant state laws.
What is a Realtor?
A Realtor can be either an agent or a broker (or both). Realtor is a trademarked term — hence the capitalization — for real estate agents or brokers who are also members of the National Association of Realtors (NAR), an industry trade organization. All Realtors are agents or brokers, but not all agents or brokers are Realtors — to be called a Realtor, you must be a member of NAR.
As members of the trade group, Realtors agree to follow NAR’s code of ethics. That doesn’t mean brokers and agents working outside of NAR are unethical, however; every licensed agent and broker must adhere to state standards. All licensed agents and brokers are qualified professionals, whether they are Realtors or not.
Which should you work with?
A real estate broker, a real estate agent and a Realtor can all provide highly professional services, so your decision might come down to the types of services you need and the amount of experience you’re looking for. In general, if you’re buying or selling a home, you’ll work with a real estate agent or broker associate (who may or may not be a Realtor).
Don’t make assumptions about experience, however. Some agents might have years in the game but decided against becoming a broker. Likewise, some brokers might have just a couple years under their belts. When deciding who to work with, it can be wise to ask for testimonials from past clients to gauge their track record. What it comes down to is who you click with best: Interview several candidates before deciding on who to work with.