The Differences Between A Real Estate Agent, A Realtor, And A Broker Explained
Buying a house as a first-time buyer can mean reading a LOT of different terms and acronyms you might be unfamiliar with. From APR to amortization to for sale by owner, or FSBO, deciding to buy a house can be a frustrating but also educational experience. While there can be a lot to learn, perhaps one of the first things you'll want to have a good handle on before starting the process of buying a home is the difference between an agent, a Realtor, and a broker.
For starters, all three terms are essentially the same in that they each refer to a licensed professional able to help you with either buying, selling, or renting a home. The key difference between a Realtor and any other real estate agent is that Realtors are licensed by the National Association of Realtors, or NAR. Another important distinction is that a person known as a Realtor can also be a broker (for both residential and commercial), salesperson, property manager, or even appraiser in addition to a real estate agent.
Being known as a Realtor is actually an umbrella term that could include member professionals in any of the previously mentioned positions. According to NAR data, there are over 1.5 million NAR members across the United States, with licensed real estate sales agents comprising the largest group in its membership (64%). While this membership can add a certain cache to an agent, broker, or appraiser's resume, it's not ultimately a requirement to work in the real estate industry.
Real estate agents
While the process of buying a home generally ends up requiring several different people and roles, it's important to understand what part each role plays in the overall process. Your real estate agent (or Realtor, depending on their membership status) handles all of the back-and-forth communications between buyers and sellers (or owners and renters). For agents serving potential homebuyers, known as the buyer's agent, this can include coordinating home tours, assembling potential offers, working on counteroffers, answering queries, and negotiating prices. A buyer's agent can also be responsible for coordinating things like pre-closing home inspections and any other additional closing details that might be needed.
Agents who work for sellers are known as listing agents. They similarly handle negotiations and communications with potential buyers in addition to helping sellers with the initial listing, including, most importantly, the price. Listing agents often suggest to homeowners specific home improvement updates to increase a home's potential selling value (but watch out for low ROI projects) and are also responsible for the marketing of the home (meaning website listings, photos, and posting the home on the local Multiple Listing Service or MLS). Listing agents can also help coordinate any home staging that might be wanted/needed by the homeowner to best sell the home.
Ultimately, a real estate agent is responsible for ensuring you, as a buyer or seller, are aware of all necessary dates, fees, and required paperwork. They're meant to guide you through the process and ensure that all transactions happen in a legal way. (See Money Digest's roundup of popular myths about buying a home).
Real estate brokers
Real estate agents work for what are called brokers. While brokers are technically also real estate agents, they hold additional licenses that allow them to work either independently or to hire other real estate agents to work for them in a real estate office. Within a real estate office, there are actually three levels of brokers you might see or work with, each with varying degrees of responsibility.
Associate brokers are also licensed brokers, however, they choose to work under another broker rather than independently. Managing brokers handle office operations, which can include everything from hiring and training new agents to managing administrative staff and duties to overseeing the transactions that come through the office. Principal brokers are the singular supervisory agents who not only oversee all agents in the office but also ensure that any and all agents working within the office comply with relevant state and national real estate laws.
While real estate brokers often do many of the same duties as real estate agents, they also handle offer preparation as well as help buyers with any potential issues that might arise ahead of the closing deadline. Brokers working with potential homebuyers will generally seek out properties that match a buyer's preferences (although, according to NAR, 58% of people found their home online as opposed to only 28% who found their home through an agent) while seller's brokers are more involved in the valuation of a property, along with the listing and showing of properties on behalf of their client.