The Difference Between Real Estate Agents, Brokers, and RealtorsⓇ
The terms agent, broker, and RealtorⓇ all fall under the same real estate umbrella, but that doesn’t mean that they can be used interchangeably. Each profession has distinct differences that anyone entering the market should understand. This post will look at these key players, and when you may encounter these unique real estate professionals.
Real estate agents are responsible for helping buyers and sellers complete transactions. This can include everything from finding properties that match the buyer's criteria to setting listing prices, suggesting home updates that will increase value, negotiating sales prices, and assisting in the offer process. Agents are typically paid on commission after a sale is completed, frequently 6% of the sale price. Agents normally represent only one side of the transaction- the buyer or the seller- and are thus referred to accordingly. Buyer's agents work exclusively with buyers to find properties that meet their needs and budget, while seller's agents work with sellers to market and sell their properties.
Real estate brokers have additional training and licensing requirements beyond what it takes to become an agent. They are also able to open their own brokerage firm and manage other agents. Brokers earn a share of the commissions made by agents they employ, in addition to their own commissions from deals they close. This means that they receive a percentage of the sale price from both their own deals and the deals made by the agents they manage.
RealtorsⓇ are part of the National Association of RealtorsⓇ (NAR), a group that supports consumers by creating the NAR Code of Ethics. In order to become a RealtorⓇ, individuals must pay a one-time application fee and annual dues to maintain their status. The NAR Code of Ethics lays out specific guidelines for ethical behavior, and requires that their members hold to honesty and integrity in dealings with clients and customers.
Whether you work with a broker or an agent will depend entirely on your individual needs. Neither one is inherently better than the other, so this is where doing your research and considering your budget will have to weigh in.
Real estate brokers can save you time by serving as a one-stop shop. They can handle all aspects of the buying or selling process, including finding properties, preparing offers, managing the closing process, moving money into escrow accounts, and resolving contract-related disputes. Additionally, brokers can provide extra manpower if necessary and help with delicate legal issues. Not to mention they have a wealth of knowledge about local market conditions.
However, don't mistake real estate brokers for mortgage brokers. Real estate brokers deal with financing purchases, while mortgage brokers handle other aspects of real estate transactions. It's not a bad idea or uncommon for buyers to work with both a real estate and a mortgage broker, so they can make sure that all of their bases are covered.
If you're not interested in working with an agent or broker, you might consider the FSBO (For Sale By Owner) option. This option includes a yard sign and basic online listing, and allows you to handle the process of selling your home on your own. However, keep in mind that going the FSBO route means you'll have to handle all of the details of the sale yourself, including finding buyers, negotiating offers, and handling paperwork.
Each real estate professional has their own definitive set of responsibilities and benefits, so choosing the right one revolves around your exact needs and circumstances.
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