Real Estate Agent, Broker, Realtor: What’s the Difference?

Who are those people who help you sell and buy homes? Consumers often have trouble understanding the nuances between a real estate agent vs broker vs Realtor®. This post will help you understand the meaning of each of the titles commonly used to describe real estate agents, what each does, and how they are paid.

What Is A Real Estate Agent?

A real estate agent is a state licensed professional who assists with the buying and selling of real estate. Real estate agents assist homeowners, homebuyers, real estate developers, business owners, and landlords. A real estate agent forms an agency relationship with his or her clients. Therefore, the agent owes the duties of a fiduciary ascribed by agency law to the client.

Most states require people to complete a pre-licensing course, testing, and background checks before issuing a license to a real estate agent. Each state has its own requirements. Most states also require real estate agents to participate in ongoing continuing education, too.

What Does A Real Estate Agent Do?

A real estate agent’s duties vary depending on whether the agent is a listing agent representing a seller or a selling agent representing a buyer.

Listing Real Estate Agent

The listing real estate agent represents a seller. When representing a seller the real estate agent values, markets, advertises, and responds to inquiries about the property. Additionally, the real estate agent should be delivering feedback to the seller. Once a buyer submits an offer the real estate agent advises the property seller about the offer. The real estate agent will continue to advise the seller throughout the phases of the property sale.

A listing agent is paid by the property seller. The property seller and the listing real estate agent will come to an agreement on the commission rate to be paid once the listing agent sells the home.

Selling Real Estate Agent

A selling real estate agent represents a buyer. When representing a buyer a real estate agent will look for properties matching the buyer’s needs. Upon finding those the real estate agent will show the properties to their buyer. After seeing a property the real estate agent is likely to get answers to the buyer’s questions about the property and a fair value for it. If the buyer wants to make an offer the agent will assist with writing a competitive offer. The real estate agent will continue to work with and advise the buyer throughout the stages of the property purchase.

A selling agent is typically paid by the listing agent’s brokerage. The listing agent offers to pay a portion of the commission agreed upon with the seller to any cooperating broker. In the U.S. real estate agents utilize a multiple listing service and membership with local real estate associations to manage these arrangements. It is an efficient and effective system which benefits both property buyers and sellers. In the happenstance a home is not listed in an MLS the selling agent may be paid by the property seller. This is a more common occurrence with homes for sale by owner.

Real Estate Broker

In Indiana, a real estate broker is the same as a real estate agent. You can absolutely replace the term real estate agent with real estate broker because there is no difference. Today, in most states there is no longer a difference between real estate broker vs agent.

Real Estate Salesperson

Again, in Indiana and many other states a real estate salesperson is the same thing as a real estate agent or a real estate broker.

Real Estate Managing Broker

Indiana and many other states still require each real estate brokerage company to have a managing broker. The managing broker is the principal of the brokerage house or agency.

A managing broker can perform all the same functions as a real estate agent, broker, or salesperson. The difference for the managing broker is the added responsibility of the managing broker. Basically, at the end of the day the managing broker is the responsible person for the activities of all agents within a real estate brokerage.

Real estate agents complete work on the behalf of their managing broker. All of the work completed by the real estate agent is done for the managing broker. This benefits consumers because at the end of the day regardless of the actions of a real estate agent, good, bad, or down right ugly, it is the managing broker’s responsibility to step in and correct the situation.

What Is A REALTOR®?

A Realtor® is a real estate agent. But, a real estate agent is not automatically a Realtor®.

The difference between Realtor® and real estate agent is a Realtor® is a real estate agent who belongs to the National Association of Realtors®. The same thing is true for understanding the difference between Realtor® and broker.

The National Association of Realtors® (NAR) has its own professional standards which are often above those required by state law. The purpose of NAR is to bring to consumers a higher standard of professionalism to real estate sales and practices. A notable feature of NAR is its Code of Ethics.

In order to be a member of the National Association of Realtors® a person must be a licensed real estate agent in good standing in their state.

What Does A Realtor® Do?

A Realtor® performs all of the same functions as a real estate agent. Realtors® represent homebuyers, home sellers, landlords, real estate developers, and business owners. The difference is Realtors® work within the even stricter professionalism guidelines set out by the National Association of Realtors® including its Code of Ethics.

What Caused All The Confusion Between A Broker, A Realtor, A Real Estate Agent?

Many years ago, in practice and in the speech patterns of real estate professionals and consumers there were really only two roles with a title. These were the managing broker and the real estate agent.

Managing brokers are the overall responsible party for the brokerage. This means when something goes wrong, they are held responsible. On the other hand, real estate agents more often work directly with clients in buying and selling homes.

Somehow and at some point, real estate agents, real estate associations, and state regulatory bodies started using all these different words to describe real estate agents. These include Realtors, real estate agents, real estate salespeople, licensees and brokers. All of those are describing the same professional with the same abilities.

The one role that is different is the managing broker.

A great example is a restaurant because we have all been to one of those. There are hosts, wait staff, and kitchen staff. They are all allowed to be there making the food, handling the food, and getting the food to the customers. Floating about keeping an eye on everything is the manager. If there is a problem, someone asks for the manager who addresses the situation. It’s the same thing in real estate sales.

The managing broker is ultimately responsible to see to it that agents and the brokerage are following all of the local, state, and federal laws and regulations required of a real estate brokerage and real estate agents. Also, the managing broker gets involved if a problem arise

Conclusion

The differences between real estate agent and broker and Realtor® are minor. A real estate agent and broker are the same thing. A Realtor® is a real estate agent who belongs to the National Association of Realtors® and adheres to the association’s higher professional standards.

A real estate agent is a licensed professional who helps with real estate purchases and sales. This includes helping buyers find and purchase homes, land, and industrial or commercial buildings. Real estate agents also help property sellers price, market, advertise, and navigate the sale of their property.

In many states including Indiana real estate agents, real estate brokers, and real estate salespeople are all the same things. What remains different in many states is the role of the managing broker. The managing broker is where the buck stops. The managing broker is the responsible party for the actions of the real estate agents at a brokerage house. The key difference is the role of the real estate agent.

Listing agents represent and are paid by property sellers. Selling agents represent real estate buyers who are often paid by the listing brokerage for acting as the cooperating agent who brought the buyer for a property.

A Realtor® is a real estate agent who is also a member of the National Association of Realtors®. Membership in the association includes adherence to the association’s heightened professional standards including the NAR Code of Ethics.

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