“Real estate agent” and “Realtor” are two terms that often get used interchangeably as if they’re one and the same. While those in the industry know that’s not quite the case, this subtle distinction seems to be insider knowledge – leaving many clients scratching their heads, wondering if there’s any difference between a real estate agent and a Realtor, or if they’re just synonyms in a property glossary.
Don’t worry, we break it all down in this article so you don’t have to. Keep reading for a helpful guide you can share with your clients to clear up any confusion.
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What’s the difference between a Realtor and a real estate agent?
Alright, let’s delve into the heart of the matter, the crux of the confusion – what actually sets a Realtor apart from a real estate agent?
Firstly, all Realtors are real estate agents, but not all real estate agents are Realtors. Sounds like a bit of a riddle, doesn’t it? But it’s actually quite simple when you break it down.
You see, a real estate agent is anyone who has earned a license to sell property, which involves taking 100+ hours of coursework and passing a state exam. Real estate agents can help people buy, sell, or rent all sorts of properties, and they have to hang their license with a broker who oversees their transactions and takes a cut of their commission.
On the other hand, a Realtor is a real estate agent who is a member of the National Association of Realtors (NAR). It’s like a club with membership perks and a strict code of ethics. Realtors must uphold the standards set forth by the NAR, which often exceed those required by law. This means when you work with a Realtor, you can expect a high level of honesty, integrity, and market expertise.
Another difference? Realtors have a trademarked title. The term “Realtor” should always be capitalized because it’s a registered trademark owned by NAR. If you see it in lowercase, someone’s not playing by the rules.
So, in essence, while the roles of a real estate agent and a Realtor overlap considerably, Realtors are held to a higher ethical standard and have access to more resources through their membership in NAR.
What is a real estate agent?
Let’s shift gears for a moment and get a closer look at the role of a real estate agent. You might be wondering, “What exactly does a real estate agent do?” Well, for starters, it’s much more than just showing pretty houses and putting up ‘For Sale’ signs.
A real estate agent is a licensed professional who represents buyers and sellers in real estate transactions. Think of them as the middlemen (or middlewomen!) between buyers and sellers. They’re the ones who guide clients through the dizzying process of buying or selling a home, making it as smooth as possible.
Real estate agents have a wide array of responsibilities. They evaluate property value, advertise listed properties, negotiate and close deals, and help clients throughout the entire purchasing or selling process. They must have a deep understanding of the real estate market, providing clients with key information, including market conditions, prices, mortgages, and legal requirements.
Becoming a real estate agent isn’t just about deciding to do it one day. It requires passing a state-specific exam after 100+ hours of approved real estate coursework. It’s a profession with real credentials.
The daily life of a real estate agent can be a whirlwind of activity, from hosting open houses and making cold calls to meeting clients, negotiating contracts, and filling out paperwork—lots of paperwork.
At the end of the day, a real estate agent’s goal is to ensure their clients’ real estate transactions are successful, whether that means helping them find their dream home or selling their property at a price they’re happy with.
How to become a real estate agent
Next, let’s dig into how one becomes a real estate agent. First and foremost, it’s essential for aspiring agents to check the real estate licensing requirements in their state. Each state has its own set of rules and regulations, so a little research upfront can save a lot of headaches later.
After they’ve familiarized themselves with their state’s specifics, it’s time to hit the books. Before one can become a licensed real estate agent, they need to complete pre-licensing coursework from an accredited real estate licensing school. We’re talking about 60 to 90 hours of studying, so yes, there will be a test. Actually, make that two tests: a national exam that covers general real estate principles and practices, and a state-specific exam that covers real estate laws in their area.
Once they’ve passed, the next step is to find a real estate brokerage where they can work. A real estate brokerage is an agency or office where real estate agents work. You see, new real estate agents have to “hang their hat” with a sponsoring broker. They guide agents, help them navigate their first transactions, and take a cut of the commissions from the properties they sell.
Now, this is the fun part. Once an agent is settled with a broker, they can finally start building their client base. They’ll start showing and listing homes, negotiating deals, filling out contracts – all the things real estate agents do in their bustling day-to-day lives.
Check out these articles for a more comprehensive look at becoming a real estate agent:
- How to Become a Real Estate Agent in California in 2023
- Everything You Need to Know About Becoming a Part Time Real Estate Agent in 2023
How do real estate agents earn money?
Real estate agents primarily earn their living through commissions. Now, a commission is a percentage of the sale price of a property, and it’s paid by the seller at the closing of a transaction. This means that if no sale happens, no commission is earned. That’s right, real estate agents operate on a “no sale, no pay” principle.
The exact commission percentage can vary, but it typically falls between 5 to 6 percent of the property’s selling price. But before you start calculating, remember that this commission is usually split between the buyer’s agent and the seller’s agent.
Let’s walk through an example. Suppose a house sells for $500,000 and the commission is 6%. That’s a total of $30,000 for the commission. This sum is then divided between the buyer’s and seller’s agents, leaving each with $15,000. But wait, there’s another cut to be made. Each agent has to split their share with their sponsoring broker, the agency or office they work for. The broker’s cut can vary, but a common split is 70/30. So, if the agent gets to keep 70% of their $15,000, they end up with $10,500.
Sounds pretty good, right? Just keep in mind that as independent contractors, agents have to cover their own business expenses – things like licensing fees, association dues, marketing costs, and more.
In the end, how much a real estate agent earns can depend on many factors, like the local real estate market, the price of the homes they sell, how many transactions they handle, and their split with their broker. But, with tenacity and a solid network, a career in real estate can certainly be profitable.
What is a Realtor?
A Realtor is a real estate agent who’s a member of the National Association of Realtors (NAR). Founded in 1908, NAR is America’s largest trade association and stands as a symbol of high professionalism and integrity in the real estate industry. With over 1.5 million members, it’s no small club!
Now, why the title “Realtor?” The term Realtor is a registered trademark of NAR, coined in 1916 to identify members of the association. “Realtor” wasn’t just a fancy title – it was a badge of honor, signifying a commitment to the association’s strict Code of Ethics.
And that brings us to the big question – what’s the draw for real estate agents to join the NAR and become Realtors?
The answer is threefold. Firstly, being a Realtor means aligning yourself with a respected organization with a reputation for upholding high ethical standards. For consumers, working with a Realtor can offer an extra layer of confidence and trust in their agent’s competence and ethical conduct.
Secondly, NAR offers a wealth of resources to its members, including educational opportunities, research and data, and networking events. This can give Realtors a competitive edge, helping them stay informed, up-to-date, and connected in the industry.
Finally, being a Realtor gives agents a voice in shaping the industry’s future. NAR is a powerful advocate for real estate professionals and property owners, lobbying on important policy issues related to real estate.
In essence, a Realtor is a real estate agent who has committed to a higher level of professionalism and ethical behavior, backed by a powerful association.
What is NAR’s Code of Ethics?
The National Association of Realtors’ (NAR’s) Code of Ethics is the North Star guiding Realtors in their professional conduct, and it’s what sets them apart from other real estate agents.
The Code of Ethics is presented to members when they join NAR, forming the foundation of their professional behavior. It’s not a one-time read-through, either. Realtors are required to complete ethics training and reacquaint themselves with the Code regularly. The goal? To ensure that these ethical principles remain front and center in every Realtor’s practice.
It was first adopted in 1913 and has been amended and updated over the years to reflect changes in the industry and society. The Code is written with a clear purpose – to elevate the standards of real estate practice and ensure fair, ethical treatment for all parties involved in a property transaction.
The Code of Ethics consists of 17 Articles, each articulating a different standard of conduct and professionalism. These articles are grouped into the following three categories:
- Duties to clients and customers
- Duties to the public
- Duties to Realtors
The Code of Ethics goes beyond simply guiding Realtors’ interactions with clients. It also outlines their responsibility to maintain competency in their practice, accurately represent their professional status, and avoid denigrating competitors.
In essence, the Code of Ethics represents the commitment Realtors make to operate with integrity, competency, and transparency. It’s a roadmap for professional behavior that builds trust between Realtors and their clients, and it’s a significant part of what gives the title “Realtor” its weight and distinction.
Is the word Realtor always capitalized?
Now, you might have noticed the word “Realtor” always seems to appear with a capital “R.” Is that a typo? An overzealous autocorrect? Not at all. In fact, there’s a good reason for this consistent capitalization, and it ties back to what we’ve been discussing.
‘Realtor’ isn’t just a job title – it’s a trademarked term owned by the NAR. It was specifically created by NAR to identify its members and distinguish them from non-member real estate professionals. Because ‘Realtor’ is a registered trademark, it’s always capitalized to recognize its status and importance.
Think of it like this: just as we capitalize brand names like ‘Nike’ or ‘Apple,’ we also capitalize ‘Realtor.’ It signifies that the individual is not just a real estate agent, but a member of the NAR who abides by its strict Code of Ethics.
So, the next time you see a real estate agent proudly identifying themselves as a Realtor with a capital ‘R,’ you’ll know it’s not a case of pressing the shift key too hard. It’s an affirmation of their commitment to a higher standard of professional conduct, a sign of their membership in a respected industry organization, and a nod to the history of real estate practice in the U.S.
How to become a Realtor
Anyone interested in becoming a NAR member must already be a licensed real estate agent. This means they’ve completed their state’s requirements for education, passed the licensing exam, and are legally authorized to practice real estate.
Once licensed, an agent can apply to become a member of NAR. But it’s not just a matter of filling out an application and paying membership dues. NAR also requires its members to join a local real estate board or association that’s affiliated with the organization. This requirement ensures that Realtors have a local professional community where they can engage, learn, and grow.
As a part of the application process, agents need to agree to abide by NAR’s strict Code of Ethics. As we’ve discussed, this is a crucial part of what sets Realtors apart from other real estate agents. It’s not just a commitment on paper, either. Realtors are required to complete a Code of Ethics training course every three years to ensure they’re continually aligned with NAR’s standards of professionalism and integrity.
After an agent’s application is accepted and they’ve paid their dues, they can officially call themselves a Realtor. Along with the title comes a wealth of resources and benefits, including access to industry research, education opportunities, networking events, and, of course, the distinction of being part of America’s largest trade association.
What does it cost to become a Realtor? What do membership fees pay for?
Alright, now let’s talk about the financial aspect of becoming a Realtor. After all, joining a professional organization often comes with some costs attached. Here’s the lowdown on what it costs to become a Realtor and where those funds go.
First, there are the membership dues Realtors pay to NAR. NAR dues are $150 per member for 2023 and $156 per member 2024. These dues cover membership in local, state, and national Realtor associations and fund a host of benefits.
So, where does this money go? The funds from the membership dues support a wide range of initiatives aimed at serving Realtors and advancing the real estate industry. This includes lobbying efforts on behalf of real estate interests at the national, state, and local levels, research into housing trends and market data, creation of educational programs and resources, and much more.
But that’s not the end of the story. Remember, Realtors are also required to join a local real estate board or association affiliated with NAR. The cost of this membership varies depending on the association, so members need to check with their local group for exact figures. These fees support the operations of the local association, including local advocacy efforts, networking events, educational opportunities, and other local initiatives that benefit Realtors in their area.
Members are also charged an annual Special Assessment fee of $45 for NAR’s Consumer Ad Campaign. It’s an initiative that was started by NAR in 1997 to enhance public awareness and perception of Realtors. The campaign uses various media channels – think TV, digital, and social media platforms – to highlight the value that Realtors bring to the real estate transaction, underscore the benefits of homeownership, and advocate for public policy issues that impact the real estate industry and property ownership.
You can find a full breakdown of how membership dues are used here.
Broker vs. Realtor
It’s also crucial to understand the difference between a broker and a Realtor. First, let’s chat about what a broker is.
In the real estate world, a broker is someone who has taken their real estate career to the next level by completing additional education requirements and passing a broker’s license exam. Brokers can work independently and hire other real estate agents to work for them, or they can choose to work as an associate broker under another broker.
Brokers have the option to open their brokerage, handling all the fun (read: stressful) parts of running a business, like marketing, hiring, training, supervising agents, and managing all the administrative tasks. Or they can provide a higher level of service to clients with complex transactions, thanks to their extra training and knowledge.
Now, a Realtor, as we’ve discussed, is a real estate agent or broker who is a member of the National Association of Realtors (NAR) and subscribes to its strict Code of Ethics. That means a Realtor can be an agent or a broker – it’s not a separate job role, but rather a professional distinction and a commitment to a high level of professionalism and ethical behavior.
So, while all Realtors are real estate agents or brokers, not all brokers or agents are Realtors. A broker could become a Realtor by joining NAR, but they’re not required to do so. It’s a choice that each professional can make based on their individual business goals and values.
How do brokers earn money?
Like real estate agents, brokers earn money through commissions on the properties they sell. As they manage real estate agents, brokers also receive a share of the commissions that their agents earn. Some brokers charge their agents additional fees, such as desk fees, technology fees, or marketing fees.
Brokers’ earnings often depend on their agents’ performance, so many brokers invest time and resources into training and supporting their agents to boost their performance and, in turn, increase their own income.
Become a real estate market leader with Luxury Presence
Real estate agent, Realtor, and broker – each has its distinct nuances, responsibilities, and commitments. The real estate industry is teeming with professionals dedicated to guiding clients through one of life’s biggest financial decisions. And while all of them are integral to the process, knowing the differences between a real estate agent, a Realtor, and a broker can help ensure a smooth and successful transaction.
As an agent, having this knowledge allows you to communicate your role, responsibilities, and value more effectively to your clients. For consumers, understanding these differences empowers them to make informed decisions when choosing a professional to guide them through the real estate process.
Whether you’re an agent, Realtor, or broker, if you’re looking to grow your business, Luxury Presence offers a full platform of design and marketing solutions that can help you build your brand and attract more clients. To learn more, schedule a free demo with our team.