Both real estate agents and Realtors are licensed professionals who assist people in buying, selling, and renting properties. However, there are some important differences between the two.
Realtor vs. real estate agent: What’s the difference?
| Realtors | Real Estate Agents | Brokers |
| Must pass a state licensing exam | Must pass a state licensing exam | Must pass broker’s license exam |
| Must adhere to the NAR Code of Ethics and complete Code of Ethics training | Are not required to adhere to NAR standards | Must have prior experience as a real estate agent and/or college credits |
| Are members of the NAR | Are not members of the NAR | May or may not be members of the NAR |
Difference explored
The primary difference between a real estate agent and a Realtor is that a Realtor is a member of the National Association of Realtors (NAR).
Real estate agents who join the NAR and adhere to its strict Code of Ethics can use the trademarked term “Realtor” to describe themselves.
Confusing the terms
Some people confuse the term Realtor with real estate agent because the words are often used interchangeably, but the word “Realtor” is trademarked to a specific brand.
In this sense, the term Realtor is akin to the word Band-Aid. Band-Aid is a brand name representing a specific line of adhesive bandages.
Yet people often say “band-aid” when referring to adhesive bandages made by other companies.
The same applies to real estate agents. A lot of people call them Realtors, although real estate agents who are not members of the NAR cannot use the title of Realtor.
The NAR Code of Ethics
Established in 1913, the NAR’s Code of Ethics was created to maintain a high standard of conduct among Realtors and ensure that they provide excellent service to their clients.
As you can see from the chart above, Realtors must adhere to the NAR’s Code of Ethics.
Real estate agents who are not Realtors are not bound by this specific code, although they must still follow state and federal laws related to real estate transactions.
How much does it cost to join the NAR?
The NAR’s national dues are $150 per year, with an additional $35 assessment for the Consumer Advertising Campaign.
Please note that the total cost to join the NAR varies based on local association fees in addition to the NAR’s national dues.
Educational requirements for real estate agents and Realtors
While both real estate agents and Realtors must complete pre-licensing education and pass a state licensing exam to become licensed, Realtors have the option to receive additional training and certifications from the NAR.
What is a real estate agent?
A real estate agent is a licensed professional who represents buyers, sellers, or renters in real estate transactions. It’s your real estate agent’s job to make the market more accessible by guiding you to the best deals.
The job of a good real estate agent is much more than just making a commission off your transaction. It’s to make your life better.
Becoming a real estate agent
After completing a pre-licensing course and passing a licensing examination, a real estate agent must obtain a real estate license in the state where they plan to practice.
Once licensed, a real estate agent has to follow the laws and regulations in their jurisdiction.
Some of the key responsibilities of a real estate agent include:
- Property listing – Real estate agents help sellers list their properties for sale or rent by taking photos of the property, listing it, and advertising it.
- Property search – Real estate agents help buyers and sellers identify suitable properties based on their budgets, needs, and preferences. Real estate agents also arrange virtual and in-person showings.
- Negotiation – Real estate agents assist in negotiating the price and terms of sale agreements and/or rental agreements on behalf of their clients. A skilled real estate agent feels out the market and secures you the best deal possible while maintaining strict ethical standards.
- Transaction management – Real estate agents guide their clients through the transaction process, help with paperwork, set up home inspections, and ensure that all legal and financial requirements are met.
- Closing – Real estate agents facilitate the closing process and help finalize the sale or rental agreement.
How does a real estate agent get paid?
A real estate agent typically gets paid through commissions, which are a percentage of the sale price of a property.
Commissions are paid by the seller or the landlord after the successful completion of a transaction.
Here’s an overview of how the commission payment process works:
- Commission agreement – When a seller hires a real estate agent to list and market their property, they sign a listing agreement. This agreement outlines the terms and conditions, including the commission rate the agent will receive when the property has been sold.
- Commission split – In most cases, the commission is split between the listing agent (who represents the seller) and the buyer’s agent. Usually, the arrangement is a 50/50 split between the two agents.
- Closing the deal – Once a property is sold or rented, the transaction is considered closed. At this point, the commission is paid out to the agents.
- Broker’s share – Real estate agents typically work under the supervision of a real estate broker or brokerage. A portion of the agent’s commission will usually be shared with the broker.
Real estate commission example
Let’s say a property is sold for $300,000, and the agreed-upon commission rate is 6%. The total commission for the transaction would be $18,000.
$300,000 x 0.06 = $18,000.
If the commission is split evenly between the listing agent and the buyer’s agent, each agent will receive $9,000.
From there, each agent would share a portion of their commission with their respective broker. Simple, right?
Commission based income
It’s important to note that real estate agents are generally not paid a salary or hourly wage. Instead, their income is entirely commission-based, which means their earnings depend on the number and value of the transactions they complete.
Some people avoid becoming real estate agents for this reason. Others find the lure of earning large commissions an enticing challenge.
Can you negotiate a real estate agent commission?
Yes, you can. Although the commission is usually 6% of the home’s price, ultimately, your real estate agent can make the decision to work for less commission.
In a highly competitive market, agents may be more open to reducing their commission to secure your business. In a slow market, real estate agents will likely be less flexible.
Additionally, newer real estate agents may be willing to offer you a lower commission. More experienced agents are likely to charge higher commission rates due to their expertise.
How does a Realtor get paid?
Realtors, like real estate agents, primarily get paid through commissions earned from successful real estate transactions.
Since a Realtor is both a real estate agent and a member of the NAR, their payment process is similar to that of a real estate agent.
Should real estate agents become Realtors?
This really depends on the individual. Becoming a Realtor has both pros and cons.
Pros
NAR offers a number of educational opportunities, resources, and tools to push Realtors to the next level and improve their marketability.
Members of the NAR also have access to a substantial network of real estate professionals, making it easier to collaborate, find referrals, and otherwise receive support.
Furthermore, Realtors benefit from brand recognition, which can lend credibility to the agent’s practice.
Cons
With all this in mind, joining the NAR does require annual membership fees and local association dues. Realtors also have time commitments they must fulfill, such as attending meetings and participating in continuing education.
Additionally, although the NAR Code of Ethics is a good thing, some well-meaning real estate agents find that it is too restrictive and can limit their flexibility in certain situations.
What’s a real estate broker?
A real estate broker is someone who has obtained a higher level of real estate licensing than a real estate agent.
Brokers have more experience, education, and responsibilities than real estate agents and are authorized to manage their own real estate business or brokerage.
They can also represent clients in buying, selling, or renting properties, just like real estate agents.
Becoming a real estate broker
To become a real estate broker, a candidate must meet the following requirements:
- Experience – Generally, a candidate must have a certain number of years of experience as a licensed real estate agent. This ensures a solid understanding of the real estate industry and its regulations.
- Education – Brokers are required to complete a state-approved broker pre-licensing course, which covers advanced topics in real estate law and other related subjects.
- Examination – Candidates must pass a state-specific real estate broker licensing examination, which tests their knowledge of real estate at a higher level than the agent exam.
- Licensing – Upon passing the examination, the candidate can apply for a broker’s license, allowing them to practice as a real estate broker in their state.
Real estate broker responsibilities
Brokers can own or manage a real estate brokerage, where they oversee the operations and supervise the activities of real estate agents working under them.
Brokers are also responsible for providing training, guidance, and mentorship to their agents, ensuring that they adhere to ethical standards and comply with relevant laws and regulations.
Representing clients
Like real estate agents, brokers can represent buyers, sellers, or renters in real estate transactions. They can assist with property listing, search, negotiation, and closing processes.
Compliance
Brokers ensure that their brokerage and agents follow all state and federal real estate laws and regulations, including proper record-keeping and handling of client funds.
Financial management
Brokers are responsible for managing the financial aspects of their brokerage.
Should I work with a real estate agent or a Realtor?
Both real estate agents and Realtors are licensed professionals who can assist with buying, selling, and renting properties. Who you work with depends on your needs, preferences, and priorities.
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