Every business comes stocked with a vocabulary completely unique to that industry or office. And as if industry-specific lingo isn’t challenging enough, there are usually several acronyms thrown in for good measure. This is also true of real estate. Terms and titles that are commonplace to those within the real estate world are often unfamiliar to the rest of us. Such is the case with the titles broker and realtor. These two terms are often used interchangeably when, in fact, they are two very different roles. Wondering whether you need to work with a broker vs. realtor for your next real estate opportunity? Here’s the difference and how to choose the best representative for your home purchase or sale.
The Key Roles in a Real Estate Transaction
Before diving into the difference between a realtor and a broker, it may be helpful to differentiate another essential real estate role. For instance, consumers often wonder if a real estate agent is the same thing as a realtor. Are brokers agents? Are the realtors? As you can see, it can get confusing.
The truth is, all three roles—agent, realtor, and broker—are distinct. An yet, they also can experience crossover.
Real Estate Agents
Real estate agents are individuals who are licensed to buy and sell real estate. Licensing is done by the state, rather than nationwide, as real estate agents need to know about insurance, lending, sales agreements, and other state-specific aspects of real estate.
Licensing and Responsibilities
Licensing varies from state to state, but agents are expected to fulfill pre-licensing coursework and pass a real estate exam. Agents can choose to be licensed in residential and/or commercial real estate, and they often choose to specialize in certain transaction types. For example, some agents will specialize in selling luxury homes, listing hard-to-sell properties, or negotiating great deals for buyers.
Real estate agents work directly with clients to help them list and sell their home or find the perfect property for their next purchase. These professionals often have hyper-local knowledge of the area, home prices, and local laws. They serve as sales representatives to their clients while working under a real estate brokerage.
Types of Agents
Like other professions in the real estate industry, there are several types of agents that you can work with depending on your needs.
A listing agent, also known as the seller’s agent, is responsible for helping a homeowner list and sell his or her home. While agents can serve any number of roles, many listing agents specialize in helping owners price their home, decide which improvements (if any) will help them sell, and they navigate tasks such as professional photos, getting the home listed on the MLS, and hosting showings and open houses. Listing agents are also well versed in price negotiations and closing requirements.
On the other end of the real estate transaction is the buyer’s agent. These agents help home buyers find properties that are relevant to their needs and goals. A buyer’s agent will have a thorough knowledge of the area, specific neighborhoods, and comparable sales. They work on the buyer’s behalf to negotiate a purchase price for a new home, as well as provide professional support and connections to recommended lenders, insurance providers, and other important homeownership requirements.
Real Estate Broker
According to the U.S. Census Bureau, there are over 86,000 real estate brokerage firms in the United States. You’ve likely heard of some of the top firms, including Keller Williams, RE/MAX, Coldwell Banker. In fact, when you get matched with your real estate agent, you may discover that they work for one of these, or other, familiar brokerage firms.
So what is the difference between a broker and an agent? Real estate brokers are agents who decided to pursue further licensing. Brokers, unlike agents, can buy and sell real estate independently, or they can own their own real estate firms, hiring agents to work for them.
Brokers have an in-depth knowledge of the business of real estate, including investing, property management, and housing construction. They also maintain a thorough knowledge of national and local real estate laws so that they can help their agents stay compliant with continually changing legislation.
How to Become a Broker
Prior to sitting for brokerage licensing, most states require that a broker spend at least three years as a licensed real estate agent. In some cases, a broker—once licensed—will still perform the functions of a real estate agent. The further training received for their broker license helps set them apart from other agents. In many cases, however, a licensed broker will take on a new role in the real estate process.
The Different Roles of a Broker
Brokers perform a number of tasks within a firm. Principal brokers will oversee the real estate agents, manage transactions, and monitor compliance. Managing brokers are often responsible for hiring new agents and they also help oversee the day-to-day running of the firm.
Every state has a different approach to licensing brokers, so it is important to understand how your state operates. For instance, some states require a real estate professional to first become a broker associate before pursuing further licensing to own and operate their own brokerage.
Realtor
The designation of realtor applies to real estate professionals who are also members of the National Association of Realtors (NAR). This title can apply to any number of professionals, including agents, brokers, appraisers, and property managers.
The NAR is a trade association. Boasting nearly 1.4 million members, it is one of the largest trade associations in the industry. What makes realtors—NAR members—stand out from other real estate professionals is their adherence to the NAR code of ethics and standards of practice. Maintaining status as a realtor requires professionals to treat all parties in a transaction fairly, perform ethical business practices, and pursue the client’s best interests.
Becoming a Realtor
NAR membership varies widely, but the most recent statistics indicate that 68% of realtors are licensed real estate agents. Apart from the standards in business that realtor membership represents, real estate agents and brokers will choose to pursue NAR membership for a series of other benefits to them professionally.
In order to become a realtor, real estate professionals must apply for NAR membership. They pay an annual fee and willingly submit themselves (and their firm, if they are the principal of a real estate business) to the ethical standards of the association. Local and state offices will monitor each member to ensure they comply with the code of ethics.
Once accepted, realtors gain access to market research, data, and tools provided by the NAR. Such tools include a national database of properties called the Realtors Property Resource (RPR), as well as extensive research reports like existing and pending home sales and housing affordability statistics.
Choosing the Right Real Estate Professional
Finding the right professional to represent your real estate transaction has often been a source of stress for home buyers and sellers alike. Do you need a broker, agent, or realtor? Which representative is the best fit for your needs?
With tools like LemonBrew’s proprietary matching technology, we take the guesswork out of finding the right real estate professional. Instead of worrying about credentials and titles, you can focus on your needs. By highlighting your budget, goals, favorite areas, and housing needs, we can easily match you with a LemonBrew agent that has the best qualifications to help you buy or sell your home.
Regardless of whether our partner agents are also realtors or brokers, they are all highly qualified local real estate agents who have specialized market knowledge about your specific area.
In traditional real estate transactions, home buyers and homeowners are left navigating the process alone. In many cases, consumers end up hiring a professional who has great credentials but doesn’t have the unique knowledge or expertise needed to make the process quick, smooth, and effortless.
Our matching tools, on the other hand, bring the most experienced and qualified professionals straight to your inbox. You can filter, interview, and hire your LemonBrew agent with just a few calls or clicks of a button. Rather than waste valuable time researching brokers, realtors, and local agents, we take the guesswork out of hiring the right real estate agent, so you can get back to the important process of buying or selling your home.
Get matched with a real estate professional today, or contact us to learn more about our rebates, insurance, and other leading real estate tools.