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Realtors, Real Estate Agents and Brokers: What’s the Difference?

In most people's minds, "Realtor®" and "real estate agent" are interchangeable terms.  The truth, however, is quite different, and the distinctions are important to both real estate professionals and the buyers and sellers they represent.

Real Estate Agent Defined

In the strictest sense, a real estate agent is the intermediary between a buyer and seller.  They assist buyers and sellers throughout the transaction process, helping buyers to find a home and sellers to market their homes.  The job of a real estate agent also includes:

  • Handling contracts and paperwork
  • Consulting and advising their clients
  • Previewing homes
  • Arranging the home appraisal and home inspection
  • Acting as a point of contact between their clients and other parties involved in the transaction

Almost all states have licensing requirements for real estate agents, however they vary greatly. Typically agent candidates must complete a certain coursework that ranges from 40-90 hours and they must also pass a state exam. The exam covers real estate law and best practices specific to the state as well as the Real Estate Settlement Procedures Act and Fair Housing Laws.

Some states also mandate that agents complete additional coursework each year in order to keep their license in good standing. The agents are usually allowed to choose between a number of courses and the amount of continuing education required may depend on how many years the real estate agent has been practicing.

A real estate agent does differ from a real estate salesperson.  In most states, different licensing requirements and different education and coursework are required for an agent (versus a salesperson). In some jurisdictions, though, an attorney can serve the same functions as a real estate agent in a transaction, with no licensing required.

Realtors® Defined

A Realtor® performs all the same duties in a transaction that a real estate agent does, and has the same licensing requirements and education.  A Realtor®, however, is a member of the National Association of Realtors®; "Realtor®" is, in fact, a trademarked name belonging to NAR.  

Founded in 1908, the National Association of Realtors® has more than 1.3 million members and is designed to help maintain a code of standards industry-wide.  According to the National Association of Realtors®, Realtor® members must pledge to a tightly-monitored code of ethics.  

The pledge to upload the organization's ethics code is the most significant difference between a Realtor® and real estate agent. Buyers and sellers can find solace in the fact that NAR practices strict oversight to make sure their members are acting ethically and in the best interest of their clients. If not, the Realtor® can be penalized for violating the 17-point ethics code.  

NAR members must also pay an annual fee to be part of the organization.

 Real Estate Broker Defined

Broker is another term that gets tossed around and can further confuse those not familiar with real estate practices. Like many other things in real estate, the exact role of brokers can vary from state to state but are generally similar across the board.

Most often the label "broker" is reserved for those who can legally practice real estate on their own independently and also those that oversee the work of other agents within a real estate brokerage. The distinction here is that in many states agents can't practice real estate unless it's under the supervision of a broker who will take responsibility for their work.  

Brokers themselves are also considered real estate agents because they must be licensed and due to the definition of agency. Technically when dealing with a broker and their agent, the real estate agent is an agent to the broker they are working under and the broker is the agent of the seller and buyer.  

Note: in some states real estate agents are referred to as real estate brokers and brokers are called qualifying brokers.

To become a broker an agent must have practiced real estate for a certain number of years, though some states don't require such experience under special circumstances. In addition broker candidates are also required to complete additional coursework and pass the broker exam for their state.

 

 

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