Agents, Brokers, & REALTORS®: Understanding Real Estate Titles
Are you interested in a career as a real estate professional? Though it may mean working irregular hours at times, the flexible schedule, independence, and an average annual salary of $82,107 make real estate highly lucrative. In this industry, you can perform in various capacities such as a real estate agent, real estate broker, or REALTOR®.
Though these terms are often used interchangeably, they have subtle yet significant variations in meaning. More importantly, the requirements to become a broker vs. REALTOR® or a broker vs. agent are different. Therefore, understanding the difference between a real estate agent and broker is key to determining which path best suits you.
Understanding the different titles in real estate can be confusing, but it's not impossible. In your quest to decide between becoming a real estate agent vs. broker, this guide will give you all the insight into the different roles of real estate professionals.
What Is a Real Estate Agent?
When it comes to real estate professions, the starting point is as a real estate agent. A real estate agent is an individual licensed to assist people in selling, purchasing, or renting all kinds of real estate property. Real estate agents are salespeople; they aren’t brokers, and in fact, must work under a broker to practice real estate. This difference distinguishes a real estate broker vs. salesperson. A real estate salesperson’s income is based on commissions from the sales that they facilitate. The commissions, which are a percentage of the sales price, are agreed upon by the agency and clients.
There are no federal requirements that one has to meet to become a real estate agent. Instead, each state has its own set of requirements. The first step is to take the required Pre-Licensing courses and pass your licensing exam.
Real Estate Agent Responsibilities
As a real estate agent, your number one priority is to represent and safeguard your clients' interests. Depending on whether they are buying or selling, you will help them find suitable properties or clients and negotiate prices on their behalf.
To ensure the best possible results for clients, there are many tasks that real estate agents perform. Depending on whether the client is a buyer or a seller, the tasks you perform on their behalf will vary significantly.
The key responsibilities of a buyer's agent include:
- Helping with mortgage pre-approval as well as recommending lenders
- Advising on suitable neighborhoods and finding a house
- Advise on a suitable offer to make and negotiate with the seller's representative
- Organize a home inspection
- Negotiate on repairs as needed
- Ensure that the buyer's financing is progressing as planned
As a seller's agent, key responsibilities include:.
- Performing thorough market research to price the house accurately
- Marketing the property via online and offline channels
- Negotiating the price with potential buyers
- Attending home inspections
- Supporting the appraisal process to provide the required information
There are different types of real estate agents, such as:
Listing agents are real estate agents who represent individuals who are selling property. Along with the services above, they also advise their clients on improvements that they can make to increase their property's value or marketability.
These are real estate agents who guide and assist buyers through the buying process.
It's not always about buying and selling property. In some cases, clients may need to find somewhere suitable to rent either for residential or commercial use. Once you find a suitable property for the client, you should help them understand its lease requirements.
In some states, you can perform as a dual agent. This role allows one real estate agent to be both the buyer's and seller's agent.
Did You Know?
The National Association of Realtors was established on May 13, 1908. The NAR now boasts over 1.4 million members.
What Is a Real Estate Broker?
One of the main differences when it comes to a real estate broker vs. agent is their level of education. Real estate agents who want to advance further in this industry can often take and pass additional state-mandated courses to earn a Broker License.
The difference between broker vs. agent courses is the depth of the coverage of topics. Such topics include contracts, ethics, insurance, and taxes. Therefore, real estate brokers have a greater knowledge base on real estate matters than real estate agents. Before you can make the transition to a real estate broker, you must have been licensed as a real estate agent for at least three years.
There are different types of real estate brokers based on the roles they perform.
- Principal/designated broker - All real estate brokerages must have a principal/designated broker. Their role is to oversee and ensure the licensed real estate agents under them observe state and national real estate regulations. As a designated broker, you will earn a commission from the sales that your agents complete. However, it is also common for principal brokers to have a base annual salary.
- Managing broker - In some setups, principal brokers also perform the functions of a managing broker. These functions include overseeing operations and transactions, training and hiring new agents, and managing administrative personnel.
- Associate broker - This role is also referred to as a broker associate, affiliate broker, or broker-salesperson. Though they have a Broker License, they work under the managing broker and do not have a supervisory role over agents.
Real Estate Broker Responsibilities
Brokers are not only more qualified real estate professionals than agents, but they are also more experienced. As such, brokers handle higher-level aspects of real estate transactions, including addressing the legal requirements of a deal and overseeing their agents.
Real estate broker key responsibilities include:
- Managing the real estate firm
- Managing real estate agents
- Property management
- Recruiting and training agents
- Reviewing contracts
- Distributing listings and leads to agents
Real Estate Broker Vs. Salesperson
Becoming a real estate broker is an optional step forward in this industry. Therefore, if you enjoy the art of selling and dealing directly with clients, you can remain a real estate agent. On the other hand, if you want a more managerial or business-like approach to your career, the broker route may be more suitable.
Real estate agents work under brokers, but they are not their employees per se. Their arrangements see agents work more like independent contractors. As such, when it comes to matters of income taxes, agents file them independently. The brokers' role in this relationship is to ensure that all their agents comply with real estate laws.
Other notable differences between the two roles that may help settle the real estate agent vs. broker debate include:
Ownership of Listings
When a transaction is taking place, real estate agents are the ones who deal directly with the client most of the time. However, in actuality, it is the broker who owns the listing. Should there be a dispute in the contract, it will be between the client and the broker.
Structure of Commissions
Both brokers and agents earn commissions from the sales. It is often assumed that the real estate agent receives the commission from which the broker gets a cut. However, the broker receives the commission and then splits it with the agent directly involved in the transaction. Experienced agents can receive higher commissions from their brokers.
What Is a REALTOR®?
For prospective real estate professionals, one of the biggest questions is what is the difference between a broker and REALTOR®. It is important to note that both real estate agents and brokers can be REALTORS®.
A REALTOR® is any licensed real estate professional who becomes a member of the National Association of REALTORS®. In doing so, they subscribe to the high standards, codes, and ethics that each of the association's members are expected to uphold.
Other professionals who may join the association include:
- Property managers
Of the 1.4 million members, 65% are sales agents, whereas 22% are brokers. This title comes with a lot of respect and gives real estate professionals access to transaction management services, data on the real estate market, and other benefits. In turn, REALTORS® are expected to run their operation honestly and transparently.