Real Estate Agent vs. Realtor vs. Broker: What’s the Difference?
These terms – Realtor, Real Estate Agent, and Real Estate Broker – are used interchangeably by most people. But there is a distinct difference between the three of them.
Job duties overlap between these positions. But there are some key differences.
Related: Are You Ready to Buy a House?
Real Estate Agents
Real Estate Agents are the base level of real estate professionals. These agents have taken and passed training classes, and passed the licensing exam in the state they intend to work in.
Agents work for a real estate brokerage firm. They get usually the first point at the brokerage. Real estate agents can represent both buyers and sellers.
They help match buyers on the hunt to a house that matches their wish list. For sellers, they list the house for sale and market it to attract buyers.
Real estate agents communicate offers and counter-offers back and forth between buyers and sellers. Once the offer is accepted, the agent will guide their client through filling out the necessary paperwork to complete the sale.
The vast majority of real estate agents work on commission, receiving a percentage of the purchase price of the house.
Real Estate Brokers
A real estate broker is someone who has trained and worked for several years as a real estate agent. They have furthered their education and passed the real estate broker exam in their state.
Real estate agents work beneath a real estate broker at their brokerage firm. Newly licensed brokers no longer require supervision by another broker. They have the ability to work independently or other agents to work for them.
Other brokers may choose to work for another brokerage firm rather than start their own. They typically carry the title of associate broker. These associate brokers may work in partnership with the managing broker to receive a share of the profits of the firm in addition to their usual commission on their sales.
They carry the same duties as agents, but with some additional responsibilities. Brokers working for buyers will match their clients with houses that meet their criteria, prepare offers, negotiate with the sellers and their agent, and assist their clients through the closing. Brokers representing sellers will list the property for sale, evaluate the fair market value of the property, market the property and show it to potential buyers and negotiate the sale on behalf of their client.
Similar to real estate agents, brokers also work on a commission basis. They receive a percentage of the sale price of the home as compensation.
Realtors are a whole different ballgame. A Realtor is someone working in the real estate industry who is a member of the National Association of Realtors (NAR). It is an organization whose members agree to abide by the association’s code of conduct and ethics.
A Realtor is not a professional designation. No licensing exams are required to become a Realtor; in fact, many different real estate professionals can join the NAR. It can include real estate agents, brokers, salespeople, and appraisers as part of its ranks.
Realtors are expected to be experts in their field. They are required by the NAR to work in the best interest of their clients. They should be transparent and up-front with you in their dealings.
So Which Should I Pick?
Ultimately the choice is up to you. The major difference is that brokers can work on their own. This can have it’s own pros and cons. Brokers who work by themselves may have slightly lower fees as they might have less overhead in running their business.
But working with someone employed by a brokerage means that they have more resources behind them to represent you. You’re essentially hiring the brokerage to work for you.
Realtors are great to look out for whether you choose end up working with an agent or a broker. They can generally be trusted to do what’s best for you rather than trying to bump up their commission.
Scott Marcello is the founder of CleverWithCash. He's gathered experience in several areas of finance having worked in a bank and as a tax preparer. People have been asking him for years how to get their finances in order. So he figured, why not put the advice all in one place? Thus CleverWithCash was born.