Real estate agent vs. Realtor vs. broker: What’s the difference?

Buying or selling a home involves a great deal of money, so having the right real estate professional to guide you through it all can make a big difference. But there are a lot of different pros out there — how do you know which kind you need? Read on to learn about what separates real estate agents from brokers, and why the word Realtor gets a capital R.

Agent definition

Real estate agents are licensed salespeople who help their clients buy or sell homes. An agent must work under a real estate broker and is typically compensated through commissions, which are typically shared with that broker.

Before they can start working, agents must take classes and pass a licensing exam in the state they plan to work in. When agents first get their license, they “have to practice or begin with another individual that has received a broker’s license,” says Jeffrey Hicks, a broker with Apollo Associates Realty in Atlanta and a past president of the National Association of Real Estate Brokers.

There are two main types of real estate agents:

• Buyer’s agent: A buyer’s agent helps people who want to purchase a home. This means helping buyers find appropriate homes in their desired area and price range, touring the homes with them and helping them prepare and submit an offer.
• Listing agent: By contrast, a listing agent helps homeowners who want to sell — in other words, those who want to list their home on the market. This means pricing the home appropriately; listing the home on the local MLS, a database of homes for sale; marketing it to potential buyers, including staging and open houses; and helping negotiate offers.

Agents typically fulfill just one of these two roles in a transaction. In some cases, though, one agent may handle both roles in what is known as dual agency. In this scenario, a single agent represents both the seller and the buyer in the deal. Dual agency is not permitted in every state, so check your local laws.

Broker definition

Like real estate agents, brokers must take classes and pass an exam to become licensed. Typically, the broker exam is more rigorous than the one for agents and involves additional coursework. Many brokers are also licensed agents.

Real estate brokers may own and manage real estate brokerages (sometimes referred to as agencies). These firms manage real estate agents and work with title companies and others to facilitate real estate transactions.

There are a few different types of real estate brokers. Here are some common titles, and what they mean:

• Broker associate: Broker associates typically work as real estate agents but do not need to work under a broker, since they are one. This is often the first step that real estate agents take toward advancing their career, as brokering their own transactions can increase their commissions.
• Designated broker: Designated brokers typically own or manage real estate firms. They hire agents to work with clients, and they help their agents resolve client issues. They might also develop and offer training materials to teach their agents skills that can help them make more sales.
• Broker of record: The responsibilities of brokers of record can vary from state to state, but typically they oversee the activities performed on behalf of the firm by its agents and other employees (such as office staff). This includes making sure all employees comply with real estate law, keeping accurate records, managing trust and escrow accounts, reviewing paperwork and distributing commissions.
• Managing broker: Managing brokers, like brokers of record, oversee the day-to-day operations of a real estate firm. They often train and mentor real estate agents and supervise the marketing and listing of homes. Managing brokers also keep an eye on legal compliance, ensuring that client interactions and transactions are properly documented and that the firm follows all relevant state laws.

Realtor definition

A Realtor can be either an agent or a broker, or both, so long as they are also a member of the National Association of Realtors (NAR). Realtor is a trademarked term — hence the capitalization — and is used only for NAR members.

As members of the trade group, Realtors agree to follow NAR’s code of ethics. That doesn’t mean brokers and agents who aren’t NAR members are unethical, however; all licensed agents and brokers must adhere to state standards and are qualified professionals, whether they are Realtors or not.

Which should you work with?

A broker, an agent and a Realtor can all provide highly professional services, so your decision might come down to the types of services you need and the amount of experience you’re looking for. In general, if you’re buying or selling a home, you’ll work with a real estate agent or broker associate (who may or may not also be a Realtor).

Don’t make assumptions about experience, however. Some agents might have years in the game but see no need to become a broker. Likewise, some brokers might have just a couple of deals under their belts.

When deciding who to work with, it can be wise to interview several candidates and check references from past clients. What it comes down to is who you click with best. Despite the differences between agents, brokers and Realtors, they all share one thing in common: A good one will make your life easier, no matter which side of the transaction you’re on.