Real Estate Agent Vs Realtor Vs Broker: What's The Difference, And Which One Do You Need?
Whether you're selling your home, buying a new home, or doing both at the same time, there is certainly a lot on your mind. In addition to thinking about the ideal home size and location, FortuneBuilders points out that buyers should also consider their debt-to-income ratio and mortgage rates before they decide to purchase a new home. Similarly, they should also think about their job security and their monthly budget before committing to a mortgage payment.
According to HomeLight, sellers have a lot to do to get their homes ready to list and get themselves ready to move to a new home. They'll need to make sure that their house is partly packed up and clean before potential buyers can walk through. They should also be considering the value of their home and deciding which, if any, repairs or upgrades should be addressed before listing the home.
While many of the items on the to-do lists for buyers and sellers are very different, there is one big thing that both parties should do — find an agent to help them through the process. With real estate agents, realtors, and brokers out there, you may not know exactly what each type of agent does or who you should contact. Read on to learn about the similarities and differences between these three types of agents so that you can make an informed decision about who you should work with.
What is a real estate agent?
According to Investopedia, real estate agents act on behalf of buyers or sellers during a real estate purchase. These professionals — who must be licensed by the state in which they work — help their clients negotiate the terms of the real estate contract. Rather than being paid directly by their clients, they receive a commission. The commission for each sale will vary because it is dependent on the purchase price of the home. Real estate agents are typically required to be connected with a broker.
The specific duties each real estate agent is responsible for will vary based on whether they are working with the sellers of a home or individuals looking to purchase a new home. Those working with the sellers of a property provide advice regarding listing prices and list the home for sale. They also host open houses and network to increase interest in the home. Once an offer is received, the seller's agent should negotiate on behalf of the sellers to help them maximize their profits.
Buyers' agents work with their clients to find out more about what they are looking for in a home, show properties that meet these needs, and help their clients decide on an offer price. When a potential buyer makes an offer, the agents will share information about the offer and any counteroffers with their clients until an agreement is made or one party withdraws.
Many real estate agents will act as both buyer's and seller's agents with different clients. For example, they may be helping one couple buy a home at the same time that they are working with an individual to sell their home. While sometimes they can represent both the buyers and the sellers on the same transaction, this isn't too common and is even illegal in some states, as each party should have a dedicated agent working with their financial interests in mind.
What is a realtor?
Realtors hold all the same licenses that real estate agents hold. They also perform the same duties for buyers or sellers during a home transaction. Realtor shares that the difference between realtors and real estate agents is that agents with the official realtor title belong to the National Association of Realtors (NAR). To become a member of the NAR, agents must agree to abide by their Code of Ethics.
Choosing to work with a realtor over a real estate agent means that your agent will be held to higher ethical standards, which can only benefit you as a client. Moreover, realtors also belong to a local professional network of other realtors, in addition to the larger National Associations of Realtors. Networking is key in many real estate transactions, so working with someone connected could benefit you — whether you're looking to buy or sell a home.
As a member of NAR, your realtor will also have access to high-quality continuing education courses. This can help you feel more confident that they are up to date with the latest information to better help you close a deal. Some of their training will also focus on negotiating, which is also essential to make sure that you're getting the best deal as a buyer or earning the most profit as a seller.
What is a broker?
Now that you understand the distinction between a real estate agent and a realtor, let's take a look at what a broker is. Real estate agents may decide to become real estate brokers after gaining some expertise and experience in the field. Rocket Mortgage explains that brokers can perform all the same duties that real estate agents can, but hold additional licensing that allows them to oversee transactions. They monitor these transactions, along with the actions of the agents working under them, to ensure that laws and ethical standards are being adhered to. Ultimately, they are responsible for paperwork being properly completed and money being recorded following regulations. When you work with a real estate agent, you're also working with the broker that oversees that agent.
Because of the additional licensing they hold, brokers have some additional responsibilities and capabilities than real estate agents. They are able to hire real estate agents to work for their brokerage. Brokers can also serve as a mediator when there is a legal dispute associated with a real estate contract.
There are three types of real estate brokers
According to Bankrate, there are three different tiers under the broader title of real estate broker. These are principal real estate brokers, managing real estate brokers, and associate real estate brokers. There are some key differences in the specific role each of these brokers plays during the house-buying process.
A principal broker is a brokerage's managing broker and can hold the authority to sign off on major financial decisions and client transactions. They are also responsible for providing direction and supervision for the agents and brokers within a brokerage. They make sure all of these agents comply with state and local real estate laws and act in more of a management role.
Managing brokers also take on a supervisory role. However, rather than providing oversight for the entire brokerage, they supervise day-to-day activities and needs. Some of the responsibilities of a managing broker include hiring agents and providing training. Managing brokers often take on the role of a real estate agent as well, showing their clients properties or helping them sell a home.
Associate brokers have completed the necessary requirements to obtain a broker's license. However, rather than operating their own brokerage, they have decided to continue their real estate work under a different broker. Their responsibilities will look the same as those of a real estate agent, as they generally do not act in any supervisory role.
Is a real estate broker the same as a mortgage broker?
Real estate brokers and mortgage brokers are often confused with one another. However, despite the fact that "broker" is included in both of their titles, Investopedia explains that these are actually two distinct positions. As explained above, real estate brokers assist clients in finding a new home or selling their current home.
Mortgage brokers are responsible for helping buyers with getting financing for the home they want to purchase. They are responsible for helping buyers gather the necessary financial documents that will ultimately determine the interest rate for their loan. Mortgage brokers need to keep up to date with current interest rates and loan terms to offer the best assistance and advice as borrowers apply for a loan. Mortgage brokers should also have a good understanding of how a client's credit score and employment history will impact their ability to qualify for a loan.
How do realtors, real estate agents, and brokers get paid?
Realtors, real estate agents, and real estate brokers earn commissions when the sale of a home is finalized. As Ruby Home Luxury Real Estate shares, typically between 5 and 6% of a home's selling price is reserved to cover this commission. However, the agent you're working with won't get all of the commission. Rather, the total commission from the sale may be split between the buyer's and seller's agents. Remember, though, that real estate agents work under a broker or brokerage. Therefore, part of their commission goes to the broker overseeing the transaction.
Because real estate agents, realtors, and brokers all work for commissions, they do not actually earn any money until the sale of a home is finalized. They may end up working for free for several months as they show properties to their clients or wait for someone to make an offer on a home they've listed. It also means that they could end up earning nothing for their work if clients end up not buying or selling, or they switch to a different realtor.
What is a rental broker?
Rental brokers, also called rental agents or apartment brokers, work much like real estate agents. However, as Moving.com explains, rather than helping their clients buy a home, they are working to help them rent a home or apartment. Rental brokers typically work with landlords or management companies to help them find tenants. Most are compensated by management companies or landlords, enabling them to offer free support to those looking to rent a property. However, some rental agents may charge their clients fees on top of what they are paid by landlords, so confirm this before signing any contracts.
Working with a rental broker can simplify the process of finding an apartment, townhouse, or home to rent. They often have connections, which may help them find properties that you wouldn't be able to find on your own. Because of their connections and familiarity with what is available in the area, a rental broker can also help you find the best property to meet your needs. Working with a rental broker can be especially helpful if you live in one location, but need to secure housing in a new location prior to moving. Brokers know the area well and can offer suggestions to match your desires. They'll be able to steer you in the right direction, even if you're not able to meet with them in person.
Can you sell a home without an agent?
If you're getting ready to sell your home, you may be wondering whether you really need to hire an agent. After all, the commission you'd have to pay your real estate agent can add up when you're talking about a couple hundred thousand dollars. You can sell a home yourself without an agent. However, once you learn more about for-sale-by-owner (FSBO) listings, you may decide that you'd prefer to work with a pro.
Rocket Homes shares that FSBO properties are not listed on the local multiple listing service (MLS). This is a big downside since most agents and buyers who are looking for properties check here. There are some websites and listing services dedicated to FSBO properties, but they don't see as much traffic as the MLS.
There are still some benefits of selling a home without an agent. You won't have to pay a commission to a seller's agent and you'll have complete control over the process. However, there are several drawbacks of selling your home on your own that you should weigh as well. Unless you're experienced, it can be hard negotiating with buyers. You may also have trouble determining which offers are the best to accept. Many offers are contingent on financing, home inspections, and more, and it can be challenging to figure out which ones are worth considering.
Can you buy a home without an agent?
While you technically could buy a home without an agent, it rarely makes sense to do so. Remember, the sellers — not the buyers — are typically responsible for paying the commissions for both real estate agents. Plus, there are several benefits of working with an agent. Better explains that real estate agents are given additional details from the MLS that aren't shared on real estate apps. These details can include the contact information for the sellers of the home and the instructions for viewing the home. Real estate agents are also experienced and often well-connected. They will be able to network with other agents to find out about properties that will be listed soon that may match your criteria. This could help you get a jump-start on putting an offer on a property over other individuals.
Agents have also viewed multiple properties and have some knowledge about potential problem areas within a home. This, combined with their experience with assessing the value of a home, could help you decide whether to make an offer on a property and for how much. Finally, one of the most important reasons to consider an agent is to have someone in your corner when negotiating the contract after an offer. They've also gone through several negotiations and know what types of concessions to ask for based on needed repairs or other problems discovered during a home inspection.
What are the requirements to become a real estate agent?
If you're interested in becoming a real estate agent, Investopedia shares that it typically takes between four and six months to receive a license. You'll have to meet the requirements set by your state for age and education prerequisites. You'll also need to pass exams and a background check as well as complete the application and pay the necessary fees. These requirements can vary from one state to the next, so you'll want to consult the real estate regulatory office website for your state to learn more.
In many cases, once you meet the licensing requirements, you will only be able to help your clients buy or sell properties in that state. If you want to be able to work in other states, you'll have to go through the licensing process in that one as well. There are, however, some exceptions to this. There are reciprocal licensing agreements between some states, which means they will recognize the license you've earned in another one. Be sure to research this if you will be interested in assisting clients in buying or selling properties in one or more locations.
While the specific requirements can vary from state to state, there are some general requirements that are the same across all of the United States. You'll have to complete a pre-licensing course, which may be in-person or online. After completing the course, you'll have to complete a licensing exam. This exam is broken into two sections. One section covers real estate principles and practices that can apply to transactions in any state. The other section will be specific to the real estate laws in your state. You can apply for your real estate license after you've passed the exam.
What are the requirements to become a realtor?
Earlier, we shared that realtors are simple real estate agents that have joined the National Association of Realtors (NAR). Therefore, the first step in becoming a realtor is to follow the steps outlined above to earn your real estate license. Once you have successfully completed the licensing exam and have received your official license, you can apply to become a member of the NAR.
Aceable explains that in addition to having an active real estate license, individuals looking to apply to the NAR need to be actively working as a realtor. You'll also have to complete an orientation course, pay the membership dues, and have a clean criminal and civil record over the last 7 years. In order to gain membership to the NAR, you'll also have to agree to follow the Code of Ethics. Agreeing to follow this code is what sets realtors apart from other real estate agents. Your clients will feel more confident in their choice to work with you knowing that you're bound by such high ethical standards and ready to make suggestions with their best interests in mind.
What are the requirements to become a broker?
According to HowToBecome, real estate brokers must also begin by earning their real estate license. They'll also need to work as a real estate agent to gain sufficient experience before considering a job as a broker. In most cases, agents will need a minimum of two years of experience before they can apply to be a broker. However, these requirements vary by state with some requiring one year of experience and others requiring a minimum of three years of experience before receiving a broker license.
Beyond gaining sufficient experience to receive a license from their state, real estate agents that are interested in becoming a broker are also required to take a training course. These courses must be approved by the state and typically cover a range of topics like finance, contracts, and real estate law. Taking the course isn't enough to earn a broker's license. Agents must also take — and pass — the broker licensing exam offered by their state.