Housing

Realtor vs Real Estate Agent: What Is the Actual Difference?

Caitlin Lamb Jefferson

Published: May 31, 2024 3:19 pm

If you’re getting ready to purchase a home, one of the first things that you’ll likely do is search for a real estate agent. While you can purchase a home without one, almost 90 percent of home buyers purchase their home through a broker or real estate agent. Using an agent can make the home-buying process easier, as they’ll not only help you navigate the paperwork and legalities of purchasing a house but also have a comprehensive knowledge of properties that are available or soon to be and can help you find a place that fits your budget and requirements.

When you start your search for a real estate agent, you’ll quickly notice that some have an additional word in their title. Many people use the names “Realtor” and “real estate agent” interchangeably. But the reality is that the two terms are actually different. It’s important to understand the differences between the two and how they could impact your experience before you choose an agent to help you navigate the process of buying or selling a home.

Why This Matters

Before you hire a real estate agent or Realtor, you’ll need to understand the difference between the two. This distinction comes down to certifications. While both a real estate agent and a Realtor will provide similar services to home buyers and sellers, there are additional requirements that they must meet. This distinction could have an impact on your overall experience working with them.

Put simply, all Realtors are real estate agents, but not all real estate agents are Realtors. So what does this mean for you as a home buyer or seller? Let’s take a deeper look at what each title means, and how it can impact your overall experience working with a real estate professional.

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What Is A Real Estate Agent?

“Real estate agent” is the term for a professional who has obtained a real estate license, allowing them to assist in buying and selling properties. With their license, a real estate agent can work with commercial properties, residential properties, or both. Some real estate agents opt to focus on specific areas of real estate. For instance, an agent might typically work as a listing agent, or they could even work to help find and place renters in cities where finding housing is a challenge. However, with a real estate license, agents are legally certified to work in any kind of real estate.

In order to earn a real estate license, individuals must pass a state examination in the state where they plan to work. These examinations vary by state, as do the licensing requirements. Depending on the state where they are located, real estate agents may have to complete anywhere from 30 to 90 hours of coursework. The exam will test not only their skills as real estate agents but also the local, state, and national laws surrounding real estate. Some states, like Florida and Texas, require agents to renew their license as often as every two years, while others, like Ohio, require it less frequently.

The Process of Becoming a Real Estate Agent

The process of becoming a real estate agent varies slightly by state but is relatively straightforward. Most states require you to be at least 18 to get a real estate license, and some require you to have at least a high school degree. You’ll start by enrolling in real estate education courses, which are available in person or online. After completing your course, you’ll submit an application to take the exam to get your license.

The next step is to take the real estate license exam and meet the minimum score set by your state. If you pass the exam, you may opt to work with a licensed real estate broker to gain experience before applying for your real estate license. In some states, you’ll not only need to renew your license every few years but also be required to take continuing education courses to maintain your license and be eligible for renewal.

Who Pays a Real Estate Agent?

One big question that first-time home buyers often have is how they will pay a real estate agent for their services. But as a home buyer or seller, you won’t directly pay your real estate agent for the work they’ve done for you. Instead, real estate agents earn commissions on the homes that they help to sell. 

The total amount of commission earned on a sale can vary anywhere from four to six percent of the total sale value of the property. A real estate agent does not receive this full commission. Instead, it is split by several parties that participated in the sale of the home or property. If a real estate broker was also involved in the transaction, they would receive a portion of that commission. Additionally, the buyer’s agent, and a broker if he or she used one, will also receive a cut. For example, if the total commission on a home is four percent, and there is both a real estate agent and a broker for both the buyer and the seller, each party would receive a one percent commission.

What is a Realtor?

While the term “Realtor” is often used interchangeably with “real estate agent,” this is actually a common mistake. While all Realtors are real estate agents, not all real estate agents are Realtors. To earn this distinction, individuals must be active members of an organization called the National Association of Realtors, or NAR. To join this organization, real estate agents must hold both a valid real estate license and a perfect professional conduct record. Once they’ve joined NAR, they have to follow a strict Code of Ethics. This is what helps ensure that Realtors are not only knowledgeable but also dedicated to supporting their clients and providing excellent care while working with them.

For Realtors, joining NAR has a number of benefits. Because of this strict Code of Ethics, the organization has a good reputation among consumers. As a result, earning the Realtor designation could help an agent grow their career, meet new clients, and better serve their existing ones. Belonging to NAR also provides additional legal protections and benefits for Realtors. For instance, NAR has bargaining power in state and federal governments, which could help a Realtor facing legal issues.

What is the Code of Ethics?

The Code of Ethics that all members of NAR must follow is a set of guidelines that dictate how Realtors should operate. The Code was adopted by NAR in 1913, and features 17 articles that cover a variety of areas of practice for real estate agents. Some examples of the guidelines outlined in the articles include requiring Realtors to submit counter offers as quickly as possible and that they must not mislead clients on any potential savings or other benefits that they can provide for them.

The Process of Becoming a Realtor

While the requirements of being a Realtor are strict, the process of becoming one is simple. After becoming a registered real estate agent, you can join the local chapter of NAR, and pay the required dues. Next, you’ll need to take and pass an online course. This course mainly focused on the Code of Ethics. 

To remain a Realtor, real estate agents must follow the guidelines outlined by NAR, and retake the online course every four years.

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How is a Real Estate Broker Different?

Real estate agent and Realtor are common terms that you’ll hear as a first-time home buyer or seller. But another term that you might come across is real estate broker. A real estate broker offers the same services as a real estate agent. But they also have additional training and licensing requirements that allow them to work independently from an agency. It also allows them to hire other real estate agents to work for them.

The additional training that brokers need to complete covers information that goes beyond what a real estate agent must learn. This includes information about construction processes, investments, property management requirements, and in-depth legal issues surrounding buying and selling homes. Before a real estate agent can take the exam to become a broker, they will need to practice as an agent for several years. Real estate brokers not only manage real estate firms and teams of agents, but also ensure that their operations are meeting all legal requirements. They usually review contracts for their firm as well.

What Are the Different Types of Brokers?

There are actually three different types of real estate brokers, including:

• Designated Broker: Nearly every real estate office has at least one designated broker. This individual is in charge of ensuring that all agents are following the laws of real estate. They make sure that the real estate office is conducting their operations properly. In addition to a base salary, brokers are typically paid a commission on every sale as well.
• Associate Broker: An associate real estate broker works under a designated broker. They help ensure that the real estate office is following all necessary laws, but they don’t oversee agents or Realtors directly.
• Managing Broker: A managing broker oversees the daily operations of a real estate office. This usually includes hiring new agents and managing existing ones. They are also responsible for managing administrative work for the office.

While the types of certifications that real estate brokers, agents, and Realtors need are different, the biggest difference between agents and brokers is the work that they do on a day-to-day basis. Realtors and real estate agents work directly with clients to buy and sell homes, while brokers are responsible for more administrative and managerial duties within a real estate office.

Who Pays a Real Estate Broker?

Real estate brokers are often paid a base salary by the real estate office that they work for. But in addition to that, they earn a commission for sales. This includes commissions for their own real estate deals, as well as a portion of the deal of the real estate agents that they oversee. 

Should You Work With a Real Estate Agent or Broker?

When it comes to choosing between working with a real estate agent or broker, the experience of a home buyer or seller will be very similar. Sometimes independent brokers working separately from a real estate office will have access to more properties. Brokers who do not work for a real estate agency may also be able to adjust their fees, as they aren’t splitting those fees with an agency. 

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Frequently Asked Questions

Should you work with a real estate professional?

Whether you’re trying to buy a home or sell one, working with a real estate professional will give you access to their in-depth knowledge, skills, and resources, which can make the overall experience of buying or selling easier. Some of the benefits that you’ll enjoy when working with a professional include:

• Access to advanced experience: Real estate agents have an in-depth knowledge of the buying and selling process. They know what to expect during every step of the process, and can help you navigate this process more easily.
• Knowledge of the area: Working with a real estate professional in the area that you’re buying will give you access to their area-specific knowledge. They’ll know details about the local real estate market, including the school district, crime rates, and the average price of similar properties. 
• Negotiation skills: Real estate professionals are experienced at negotiating to help their buyers or sellers get the best possible deal. They’ll work as the middleman in every transaction, allowing you to negotiate without needing the skills to do so, or having to work directly with the potential buyer or seller.

Is it possible to sell your home without an agent or broker?

Legally, you can sell your home without the help of a real estate agent, Realtor, or broker. First, you’ll need to sell your home under a For Sale By Owner, or FSBO, listing. It’s also important to put a lot of time and research into learning what to expect from the process and what your requirements will be. You’ll also need to handle any marketing of your property, including signage and photography. Homeowners pay a flat fee to get their homes listed on the MLS as well. Even if you sell your home without an agent or broker, you’ll still likely need to pay a commission to the buyer’s agent.

Trying to navigate the process of buying or selling a home without an agent or broker can be challenging, especially in the wake of a market crash or while the current market is volatile.

Why is the word Realtor capitalized?

In 1916, just eight years after the National Association of Realtors was formed, NAR coined the term “Realtor,” and began using it to refer to members of their organization. Since that time, it has been used to set members of NAR apart from other real estate agents. The term was trademarked and copyrighted in 1950.

Final Thoughts

Whether you’re buying or selling a home, understanding the difference between a Realtor vs a real estate agent, as well as what sets a real estate broker apart, is important. While you can work with any of the three to buy or sell a home, your experience may differ slightly depending on which you choose. What doesn’t differ is that working with an experienced real estate professional can make the entire process less stressful, as well as increase your chances of selling your home quickly and for a good price, or buying a home you love that’s within your budget.