The Differences Between Real Estate Agent vs Broker vs Realtor

Anbarasan Appavu

 Intent on buying or selling a home? There is a good chance that you will work with an agent, broker, or Realtor. Despite the fact that all of these real estate professionals are authorized to help you buy, sell, or rent a home, they are distinct from one another in terms of their credentials and professional standing.

Real Estate Agent vs Broker vs Realtor

• Real estate agents are licensed professionals who assist with the purchase, sale, and rental of real estate. They must work for a broker or brokerage firm that sponsors them.

• Brokers are licensed real estate agents who have completed additional training and certification requirements. They can work independently and employ additional real estate agents.

• A Realtor is a member of the National Association of Realtors and a licensed real estate agent or broker (or other real estate professional) (NAR). Members must adhere strict to the NAR Code of Ethics.

You can also read our other article about How to Become a Real Estate Agent

Real Estate Agents

Real estate agents are licensed individuals who help people buy, sell, and rent property. They are ultimately responsible for bringing together buyers and sellers and are compensated with a commission, typically a percentage of the property's selling price. Real estate agents are also referred to as real estate salespeople and real estate associates.

The requirements for obtaining a real estate license vary from state to state (there is no federal license). However, in general, real estate agents must:

• Minimum age of 18 years old

• Legally reside in the United States

• Take the state-required per-licensing course

• Pass the state real estate license examination

• Conduct a background investigation

• Be backed by a licensed real estate agent

• Complete the required continuing education courses to maintain a license

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What does a real estate agent do?

Agents of real estate coordinate transactions between buyers and sellers, as well as between landlords and tenants. Real estate agents are responsible for conveying offers and counteroffers between parties, as well as any questions. When an offer is accepted, one agent will collaborate with another agent to guide clients through the paperwork filling process. In addition, they ensure that their clients are aware of all sale requirements, including home inspections, moving, and important dates such as the closing.

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Listing agents are individuals who represent sellers. These agents assist with setting listing prices, recommending home improvements that will increase the home's value (and the likelihood of a successful sale), assisting with home staging, and marketing the home via the local Multiple Listing Service (MLS) as well as other channels too. In addition, they negotiate sales prices, closing costs, and other fees and assist with document preparation, submission, and filing.

Agents who represent purchasers are referred to as buyer's agents. These agents locate properties that meet the buyer's criteria (also known as the "wish list") and price range, as well as arrange home inspections and appraisals. As with listing agents, buyer's agents negotiate terms and assist with document preparation, submission, and filing.

Dual agency allows agents to act as both listing and buyer's agents, though typically not for the same transaction due to the potential for a conflict of interest.

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How do real estate agents get paid?

Real estate agents are typically compensated on a commission basis and work for brokers or agencies. This means that they receive a commission based on a percentage of the sale price, so the higher the sale price, the higher the commission.

Commissions are occasionally negotiable, but typically range between 5 and 6 percent of the purchase price. Obviously, the real estate agent does not receive the full commission. Typically, the commission is split between the buyer's agent, the listing agent, and the firms for which the agents work. Consider, for instance, a home that sells for $400,000 with a 6% commission. A typical split might appear as follows:

• Listing agent: 1.5% ($6,000)

• Buyer's agent commission: 1.5% ($6,000)

• Listing agent's broker: 1.5% ($6,000)

• Buyer's agent's broker: 1.5% ($6,000)

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Real Estate Brokers

A real estate broker is a real estate agent who pursues additional education and obtains a state license as a real estate broker. Brokers, unlike real estate agents, can work independently, establish their own brokerage, and employ real estate agents.

What do real estate brokers do?

Real estate brokers perform many of the same duties like real estate agents. Typically, brokers who work with buyers search for properties that meet the criteria established by their clients, conduct negotiations, prepare offers, and assist buyers with any other issues leading up to the closing. On the other hand, seller's brokers determine the market value of their clients' properties, list and show properties, communicate with sellers regarding offers, and assist with the offer process.

There are three primary tiers of real estate brokers, each with differing levels of responsibility:

Associate brokers are licensed brokers who choose to work under the supervision of another broker. Associate brokers typically do not supervise other agents.

Managing brokers supervise transactions and daily office operations. In addition, they recruit agents, train new hires, and manage administrative personnel.

Principal/designated brokers oversee real estate agents to ensure compliance with state and federal real estate laws. Each office of real estate has their own designated broker.

How do real estate brokers get paid?

Real estate brokers make money by receiving a portion of the commissions earned by the real estate agents they supervise. They also earn commissions from their own transactions, but unlike real estate agents, they are not required to share their commissions with "the office."

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Realtors are members of the National Association of Realtors (NAR), which is the largest trade association in the United States. Although "Realtor" is commonly confused or misunderstood with "real estate agent," the designation is always open to a variety of professions within the real estate industry, such as:

• Residential and commercial property agents

• Salespeople

• Real estate managers

• Appraisers

How to Become an Agent

Anyone wishing to become a Realtor must satisfy four prerequisites:

1. Possess an active as well as valid real estate license

2. Participate actively in the real estate industry

3. Not have a history of official sanctions for unprofessional behavior

4. Not have recently or currently filed for bankruptcy

Next, the individual must join one of the local real estate associations affiliated with the National Association of Realtors, pay a one-time application fee, and pay annual membership dues to maintain their Realtor status. Realtors must adhere to the strict Code of Ethics established by the National Association of Realtors.

Realtors are obligated by the NAR's Code of Ethics to uphold the best interests of their clients throughout all transactions.

As of August 2021, the NAR had nearly 1.5 million members in the United States, of which 65 percent were licensed sales agents. In addition, 15% of these individuals held broker associate licenses. Members of NAR are authorized to use the Realtor trademark as part of their name. However, it cannot be used to indicate the professional's license status.

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Is a Real Estate Broker or Real Estate Agent Preferred?

Typically, the distinction is of little importance to the buyer or seller of a home. However, an independent broker may have access to additional properties listed by different agencies. A broker may also be able to offer slightly flexible fees because they do not have to split commissions with an agency.

What differentiates buyer's agent from seller's agent?

Simply put, a buyer's agent aids a prospective homebuyer in his or her housing search. Typically, a buyer's agent will have access to properties listed for sale by other agencies in addition to their own. A seller's agent (also known as a listing agent) advertises and sells a property. The seller's agent may stage the property, host open houses, or promote the home online. When a home is sold, the seller's commission is typically divided equally between the buyer's and seller's agents (with their cuts potentially split with their respective agencies).

Can a real estate broker be used to rent a property?

Yes. In addition to assisting with purchases and sales, real estate agents and brokers assist with listing rental properties and finding qualified tenants. When a property is rented, the tenant typically pays a fee to the tenant's broker, which is split with the listing agent. This fee is normally equal to one or two months' rent.

Can You Sell Your Own House?

There are ways for sellers who wish to avoid paying hefty commissions to for home as "for sale by owner" (FSBO). These can range from a simple "for sale" yard sign to discount listing services that, for a flat fee, will post the home's listing and basic photos on the Multiple Listing Service (MLS). Other than the online listing, there will be no professional staging or marketing to promote and generate foot traffic to view the home. In addition, you may still be required to pay the buyer's agent's commission upon the sale of your home.

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