The real estate industry is full of many skilled professionals that assist clients with buying and selling homes, negotiating purchase offers and counteroffers, and more. But despite the wide variety of professionals in this industry, many people use the terms “real estate agent” and “real estate broker” interchangeably. In reality, both of these professions are distinct and have slightly different responsibilities. Although they both work in the real estate industry, real estate agents and brokers are not the same things. Understanding the differences between real estate brokers and agents will help you determine which of the two you need to contact if you're looking to buy or sell a home in the near future. Let’s take a look at the differences between these real estate professionals in detail.
A real estate broker is fairly similar to a real estate agent, although they do slightly different things and have different limitations. In many ways, brokers are managers or leaders for several agents. Agents usually report to brokers and share their commissions with them (and sometimes vice versa, but not always). Real estate brokers come in three types:
As you can see, real estate brokers and agents will often work closely together.
As “brokers,” these professionals work with buyers to look for properties that either completely or closely match criteria set by their clients. Additionally, brokers can:
In other words, real estate brokers are versatile professionals that can help both home buyers and sellers with the entire procedure.
A real estate broker earns money by taking a cut of the commission received from various real estate agents who work beneath them. You can think of real estate brokers as managers or officers of a real estate company in some ways. The agents are the people who actually go out and meet directly with clients or find properties (though brokers can also meet with clients directly). Furthermore, real estate brokers often make their deals and can earn commissions from those. Unlike real estate agents, as described below, they do not have to split the commission from these deals with the rest of their office.
A real estate agent is a professional who carries a license to help people sell, rent, or purchase real estate or other properties. Depending on the licenses they hold, real estate agents can be qualified for assisting with different types of property transactions, although most have a license to help buy or sell homes rather than other pieces of property like farmsteads, commercial buildings, etc. Overall, real estate agents focus on connecting buyers and sellers and are typically paid a commission for their services. Real estate agents may be called real estate salespeople or real estate associates as well, depending on the official titles used at the company where they are employed. Most real estate agents do not work individually (although some do). Real estate agents have to acquire several qualifications in order to acquire licensure. These requirements can vary from state to state, as there are no federal requirements. But most states require qualifications like:
These requirements may seem like a lot, but working for a real estate agency is a viable career opportunity for many types of personalities.
Real estate agents are primarily focused on organizing transactions between buyers and sellers. However, they can also help facilitate transactions or agreements between homeowners and renters. Think of real estate agents as designated officers that communicate between any two real estate transaction parties, particularly if the prospective buyer and seller of a property do not live close together. For example, agents may:
If a real estate agent is a listing agent (an agent specializing in representing home sellers), the real estate agent may also:
If a real estate agent specializes as a buyer’s agent, they may:
Regardless of the exact type of real estate agent, each agent has a lot of responsibilities. But they get paid excellent money if they do a good job.
Real estate agents usually work for agencies or brokerages. As a result, they are paid on a commission basis, so they get paid on a percentage of the sale price for a property. Thus, the more expensive the property they sell or help their client to buy, the higher their potential commission. Commission rates are negotiable but are usually between 5% and 6% of the total purchasing price. Real estate agents also don’t usually take home the entire commission but instead take home a part of the commission. The commission overall is divided between the listing agent, buyer’s agent, the brokerage firm that the agents work for, and others, if necessary. For example, if a listing agent sells a home for $200,000 with a 6% commission rate, they may only see 1.5% of that total sales price. Thus, they would only get $3000 for the sale.
No. But either a real estate broker or agent can be a realtor in addition to their primary job title. To be a realtor, you have to be a member of the National Association of Realtors or NAR, which is a trade commission. Technically, a realtor can be a real estate agent, a salesperson, a property manager, appraiser, real estate broker, and more. A realtor can be any real estate professional provided they have additional licenses. Realtors have their own special licenses and have to pay annual membership dues. In exchange, they get various benefits, such as access to new property listings, better networking capabilities, and more. Many real estate brokers or agents who want to stay in business over the long term may become realtors as they develop professionally.
The differences between real estate agents, brokers, and realtors can be a bit obscure and complex. But the above breakdown should help you identify which real estate professional you need if you want to buy or sell a property for its maximum value. Want to know more about how to get into the real estate market and maximize your profit potential? Or do you need to know how to get a loan to buy a house in the first place? In either case, you should check out Seek Capital’s guides and personal funding options. Sources: Broker vs. Realtor vs. Real Estate Agent | Investopedia Value of NAR Membership | NAR realtor.com, Real Estate Agent, Broker | Realtor.com Salaries & Compensation How To Become a Real Estate Agent | Investopedia