The real estate industry is vast and complex, particularly for new homeowners and investors. Real estate jargon is complex, and there’s plenty of moving parts to consider. One of the most common questions people ask is what is a real estate broker and what’s the difference between a real estate broker and an agent?
With so many different positions in real estate—and with some having overlapping responsibilities—the lines between different positions can be blurred. Understanding how different real estate roles are used within the industry can help save time during your search. So here’s what you need to know:
What is a real estate agent?
A real estate agent is an individual who has passed all required real estate classes and passed the real estate licensing exam in their state. A real estate agent can work with buyers and sellers. Real estate agents are responsible for listing and marketing properties, acquiring their own leads, and working with the best interest of the client in mind.
They help buyers by analyzing their needs and wants and working within their budget to come up with a viable list of properties that align with what they’re looking for. And they help sellers by marketing their property, pricing accurately, streamlining the selling process. Furthermore, they help negotiate to price for both sellers and buyers. Among the primary three real estate roles, real estate agents have the most diverse set of skills and responsibilities.
What is a real estate broker?
A real estate broker is a real estate professional that continues their professional career development beyond real estate level exams. From here, they can become an independent agent under another broker (called a real estate associate broker) or have other agents work under them.
What is a realtor?
You may hear the terms real estate agent and realtor used interchangeably. This is because they share many of the same qualities. A realtor is merely a real estate professional who has become a member of the National Association of Realtors (a real estate trade organization) by abiding by its code of conduct and ethics.
There are several professions under the real estate agent that can hold the title of a realtor, including appraisers and brokers. Because they have committed themselves to go above and beyond for their call of duty, realtors are considered the best in their field. Members of NAR also have access to transaction management services and valuable real estate market data.
Working arrangement. Brokers can work for themselves, but an agent is required to work under a licensed broker. Real estate agents are required to work for a brokerage firm, acting merely as a representative of that firm when they provide service. This doesn’t affect the buyer or seller in terms of service.
Brokers are more highly trained. Because they take additional courses, they learn about topics like contracts, taxes, insurance, and ethics at a more in-depth level than real estate agents. They also have a thorough understanding of how real estate laws affect the industry from a local and national level.
Real estate brokers are, on average, paid more than real estate agents. Typically, the agent/broker commission doesn’t change for the client, even if the broker takes a higher piece of the commission pie. However, in some states, broker fees apply to rental agreements.
Three Types of Brokers
There are three types of brokers. Here’s how it breaks down:
Designated Real Estate Broker
A designated broker, or a principal broker, oversees everyone at the firm—brokers and agents—to ensure the office is run in complete compliance from a state and national level.
Managing Real Estate Brokers
A managing broker is hired by the designated broker to manage a team of real estate agents. They handle the daily operations of the brokerage and play an active role in hiring and training agents. They’re also tasked with minimizing legal risk to the firm by overseeing transactions, documentations, and listings.
Associate Real Estate Brokers
Associate real estate brokers are brokers who have met the qualifications to become a broker but act as a real estate agent. Broker agents don’t oversee other agents and work under the managing broker.
Types of Real Estate Agents
There are five primary types of real estate agents.
A buyer’s agent is what you might typically think of when you hear the term “real estate agent.” They represent the buyer in the transaction and help them find a property that meets their needs. They negotiate the best price for the buyer and put the buyer priorities first.
A listing agent represents the seller during the sale of their home. They analyze the market to determine the most competitive price and work in the best interest of the seller.
As previously mentioned, a realtor is someone who has become a member of the National Association of Realtors. They pay annual dues and have access to career development resources and other educational materials.
A transaction agent assists a buyer who isn’t represented by an agent of their own. This is typically only necessary in states where a dual agent isn’t allowed.
A dual agent represents the buyer and the seller in a transaction. Because it can create a conflict of interest, these arrangements are usually very carefully planned out. A dual agent has to maintain full disclosure across both parties and is limited in the financial advice they can provide as a result. In some states, dual agency isn’t allowed.
We hope these terms and definitions help you better navigate the real estate arena as you work to achieve your goals. If you have any questions, don’t hesitate to reach out to us.