The real-estate industry has its share of terminology, and sometimes they can get a bit confusing. In particular, real-estate brokers vs. real-estate agents come to mind.
There are some fundamental differences between the two roles. It boils down to the real-estate requirements involved and the kind of services each position provides.
The Key Distinctions
Simply put, a real-estate agent is a person that has a professional license. Real-estate broker requirements are higher, however. These professionals have passed the broker’s license exam and other conditions.
Brokers can work as agents, but agents can’t work as brokers without first receiving a broker’s license.
A broker can own a real-estate firm and hire agents; real-estate agent can’t. Also, Brokers are the only real-estate professionals qualified to open their own brokerage or property-management firms.
While most brokers have more experience and have undergone more training than real-estate agents, they aren’t necessarily superior to agents. There are agents with years of experience yet opted not to obtain a broker’s license and there are brokers who have only spent a couple of years in the industry.
Types of Brokers in Real Estate
There are a few different types of real-estate brokers with varying titles and responsibilities. They’re often owners or managers of real-estate agencies and provide the same buying and selling services as a real-estate agent. They also work with title companies and real estate lawyers to process real estate transactions.
Designated Real-Estate Brokers
Every real-estate firm is required by law to be overseen and managed by a designated real-estate broker who bears the legal responsibility for all the transactions completed by the agents working at the agency. If a designated real-estate broker also owns the brokerage, he/she is often called the broker-owner.
Although designated real-estate brokers are legally responsible for the brokerage, how they participate in the day-to-day operations of the firm varies. Some are more hands-off and hire others to run the brokerage. Others play a more active role in the daily operation of the firm and are more involved in hiring and training agents, managing staff, and working with clients on real estate transactions.
Managing Real-Estate Brokers
Managing real-estate brokers have a very active and hands-on role in running a brokerage, managing a group of real-estate agents and associate brokers. Some designated brokers also work as the managing broker in their agencies while others would hire a managing broker to handle the day-to-day operations.
Managing real-estate brokers are responsible for the bottom-line aspects of running their firms, such as marketing, overhead cost, and company policies. They need to supervise their agents’ activities to ensure that they’re buying and selling ethically and legally, as well as meeting the terms of their employment.
Associate Real-Estate Brokers
Also referred to as broker associates, associate real-estate brokers are real-estate agents who have completed the coursework, accumulated the necessary work experience, and passed the state-required broker licensing exam to become a licensed real-estate broker.
Their license allows them to become designated or managing real-estate brokers, however, associate brokers chose to work for another broker for a variety of reasons. While they have the same roles and responsibilities as other real-estate agents in the firm, they’re often more experienced and better educated about the industry.
Types of Agents in Real Estate
There also are various types of real-estate agents, each with different specializations and responsibilities. In general, they’re licensed salespersons that rent, buy, or sell properties on behalf of their clients and receive a commission for their service. They must work for a real-estate broker and can’t operate independently. Here are the four main types of real-estate agents:
A listing agent, also known as a seller’s agent, represents clients in the sales of their properties and can be either real-estate agents or brokers. They have a fiduciary responsibility to represent the sellers’ best interest by getting the best possible contract terms.
In the event that the buyers don’t have their own agent, a listing agent can act as a dual agent or, in some states, a transactional agent.
Buyer’s agents represent people looking to purchase property. These agents are required to prioritize the buyers’ interests throughout the process and help them negotiate the best possible price and contractual arrangement. The buyers’ agents are also responsible for assisting clients through due diligence and closing.
Dual agents represent both the buyer and the seller in a real estate transaction. In some cases, dual agency arises when the listing agent and the buyer’s agent work for the same real-estate brokerage firm. However, dual agency isn’t legal in all states. In addition, because of potential conflicts of interest, many buyers and sellers prefer to use an exclusive agent to ensure that their best interests are represented.
When buyers aren’t represented by their own exclusive agents, the listing agent often writes an offer on their behalf. In states where dual agency is not permitted, a listing agent can become a transaction agent that doesn’t represent either the buyer or the seller. Instead, the agent acts as an impartial facilitator of the transaction.
What’s a Realtor?
The terms Realtor and Realtors are registered trademarks used to identify a licensed real-estate agents or brokers who are active members of the National Association of Realtors (NAR).
As a NAR member, Realtors can access discounts, educational materials and other resources to support their career development. However, they don’t have any legal privileges beyond those of a licensed agent or broker. A Realtor also belongs to state and local trade associations. (The local board is responsible for handling complaints filed against a Realtor.)
Realtors can take on many roles in residential and commercial real estate transactions, working as real-estate brokers, salespeople, property managers, appraisers, counselors, etc. Also, Realtors aren’t limited to working in the U.S. and can help clients buy and sell properties around the world.
Keep in Mind
“Realtor” and “real-estate agent” aren’t interchangeable. Although both are licensed to sell real estate, not every real-estate agent is a Realtor. A real-estate agent can’t legally use the title Realtor unless she’s a member of the NAR and abides by the association’s code of ethics.