Understanding the Difference Between a Real Estate Agent, a Broker, and a Realtor®
The process of buying or selling a home can be daunting and quite overwhelming, especially if you’re not sure what to expect. One of the best ways to simplify this process is to work with a professional, but even that can get confusing. There are several types of real estate professionals available to help you throughout the homebuying and/or selling process, so which ones should you choose? For further clarification, here’s some information regarding the difference between a real estate agent, a broker, and a Realtor®.
What are Real Estate Agents?
Real estate agents are individuals who are legally licensed to help people buy, sell, or rent different types of real estate. This licensing is state-specific, as there is no federal license currently available. This means a real estate agent needs to hold a separate license for different states in order to sell homes there. Real estate agents need to be sponsored by a broker to practice in an area. Licensing usually includes both residential and commercial options, but most real estate agents focus on one or the other. The primary goal of a real estate agent is to connect buyers and sellers so a transfer of ownership can occur. Real estate agents are paid a commission, which can vary between 5% and 6% of the property’s sale price. Some people may refer to real estate agents as real estate associates. The different types of real estate agents include the following:
A buyer’s agent, also known as a selling agent, specializes in helping prospective homeowners through the process of purchasing a home. They can help individuals get pre-approved for mortgages, advise on neighborhoods or communities for prospective homes, and help you with the actual process of finding available properties. Buyer’s agents also provide insight on how much your offer should be, they help with the negotiation process, and they can recommend a home inspector. If you’re unable to attend the inspection, they’re legally qualified to stand in for you and can assist with further negotiations based on the results. Essentially, these real estate agents handle everything on the buyer’s side of the process and have the buyer’s best interests at heart.
A seller’s agent, or a listing agent, assists with everything you’d need to do to complete the sale of a property. This includes market research for pricing the home, creating a marketing plan to expedite the sale, listing the property in the Multiple Listing Service (MLS), hold open houses, check buyer qualifications, and more. They focus more on the seller’s side of things and have the seller’s best interests at heart.
Dual or Transactional Agent
Usually, a buyer will have one agent and a seller will have another, but many real estate agents are qualified to act in favor of either party. Some states allow for a dual agent, which is when they become both the buyer’s agent and the seller’s agent. This isn’t always recommended, as the real estate professional can no longer act in your best interest. They have to take a neutral approach to the process so as to not favor one side.
Referral agents are not licensed real estate agents. Instead, they work to find leads and transfer them to a licensed real estate agent. However, if the agent closes the sale, the referral agent will get paid a fee.
All real estate agents, regardless of the type, must meet certain qualifications. They must be at least 18 years old, a legal U.S. resident, pass a background check, complete a pre-licensing class, take and pass the real estate license exam for their state, and be sponsored by a licensed real estate broker. Continued education is required to maintain the license over time.
What are Real Estate Brokers?
Real estate brokers are similar to real estate agents, in that they perform the same actions. Real estate brokers help prospective buyers find their ideal home, negotiate with the seller, help prepare offers, and assist with everything that leads up to closing. The primary difference between real estate agents and brokers is that brokers can work independently—they don’t need to be sponsored. Real estate brokers can open their own brokerage firm and sponsor real estate agents. There are three different types, or tiers, of real estate brokers, each of which is distinguished by their degree of responsibility.
The managing broker, or the broker-in-charge, is responsible for overseeing all of the day-to-day operations and administrative requirements. They act as the HR department and are qualified to hire, train, supervise, and manage all real estate agents practicing on behalf of the firm.
A designated broker, also called a principal broker, has the primary responsibility in overseeing the licensed real estate agents working for a firm. They need to ensure that everyone is acting in line with local and national real estate laws to avoid compliance issues. Every real estate firm needs a broker, as they’re the only ones qualified to hold a license for the firm itself. They’re often paid salary rather than commission.
An associate broker more closely resembles a real estate agent. They can help oversee and represent both buyer and/or seller transactions. However, since they’re a broker, they don’t need supervision from someone else, meaning they’re able to keep a larger percent of the total commission.
What is a Realtor®?
A Realtor® is a real estate professional who is also a member of the National Association of Realtors (Real estate agents). NAR is the largest trade organization with 1.5 million members as of 2022. Their mission is to preserve, protect, and advance the right to real property for all and aim to be a trusted ally in the dynamic real estate environment. In order to become a member of the National Association of Realtors, four distinct requirements must be met. Real estate professionals who want to become a Realtor® must:
- Have a valid and active real estate license
- Be actively engaged in the real estate business
- Have no record of official sanctions regarding unprofessional conduct
- Not have filed for any recent or pending bankruptcy
If these requirements are met, individuals need to join their local associate, pay the application fee, and contribute annual membership dues to maintain their status as a Realtor®. For ongoing membership, Realtors® must follow the guidelines of the National Association of Realtors’ Code of Ethics. This includes a promise to be transparent and act with their clients’ best interests at the forefront of decisions throughout all transactions. Both real estate agents and real estate brokers can become a Realtor® if they meet the requirements.
Which Real Estate Professional Should You Hire?
The type of real estate professional you choose doesn’t necessarily change the way you’ll buy or sell a home. Most real estate professionals work with integrity and your best interest at heart. This means that the real estate professional you choose to hire is entirely up to you. The most important factor to consider is the real estate professional’s character. The best option is to find someone you trust and have a good working relationship with. Every real estate agent and broker is different and it’s important to find someone who has the same style of communication. You should, however, opt for an established professional to ensure you get the most out of your home buying or selling experience.
When you’re looking for a real estate professional to help you find your next home or put your current home on the market, turn to First Star Realty. Our team of real estate professionals have years of practice and knowledge and always work to ensure you have an amazing experience. We uphold a simple philosophy where our clients come first and pledge to be in constant communication, so you’ll be fully informed throughout the entire buying or selling process. We believe that if you don’t have an amazing experience with our realty services, we haven’t done our job. That’s why we only measure success through the satisfaction of our clients. If you’re ready to buy or sell a home in Northwest Arkansas, contact First Star Realty. Our highly seasoned real estate professionals are dedicated to providing exceptional, personalized service to all of our clients. Call us at 479-267-1600 to get started or fill out a contact form today.