Navigating the complex world of real estate can be daunting, especially when it comes to understanding the roles of professionals involved. A common point of confusion is the difference between a Realtor and a real estate agent. While these terms are often used interchangeably, they represent distinct qualifications. This article clarifies the Realtor vs. real estate agent question to help you make informed decisions in your real estate transactions.
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Realtor vs real estate agent
The terms “real estate agent” and “Realtor” are often treated as equivalent, but they have distinct meanings and differences:
- Real estate agent:
- A real estate agent is a professional who is licensed to assist people in buying, selling, or renting properties in their particular state. The requirements for becoming a real estate agent vary by state but typically include completing a certain number of hours of real estate coursework, submitting to a background check, and passing an exam.
- Real estate agents can represent buyers, sellers, or both and may work in various capacities, including residential, commercial, rental, or industrial real estate.
- Realtor:
- A Realtor is an active member of the National Association of Realtors (NAR). To become a Realtor, a real estate agent or broker must join NAR and adhere to its strict Code of Ethics and Standards of Practice.
- Not all real estate agents are Realtors. The term “Realtor” is a trademarked designation, and only those who are NAR members can use the title and logo.
- NAR provides Realtors with additional resources and tools, which can benefit their clients. This includes access to certain multiple listing services (MLS), professional development opportunities, and marketing assistance.
In summary, while all Realtors are real estate professionals, not all real estate agents and brokers are Realtors. The main difference lies in NAR membership and adherence to its ethical guidelines.
What do real estate agents and Realtors do?
Real estate agents have a wide array of responsibilities. They evaluate property value, advertise listings, 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 and provide clients with key information, including market conditions, prices, financing details, and legal requirements.
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 an acceptable price.
How real estate agents are paid
The primary source of income for real estate agents is the sales commission they receive on the sale of a property. This commission is usually a percentage of the property’s selling price.
Commission rates vary but are currently around 5% to 6% of the sale price. This total commission is often split between the buyer’s agent and the seller’s agent. However, this is subject to change under the proposed NAR settlement.
Real estate agents work under a supervising real estate broker. The commission earned is often split between the agent and their broker. The brokerage split can vary based on the agreement between the agent and the broker, commonly ranging from a 50-50 split for newer agents to more favorable splits for top producers, such as 70-30 or 80-20.
For more, check out our breakdown of the average real estate agent salaries for each state.
Why join NAR?
Founded in 1908, NAR is America’s largest trade association, with more than 1.5 million members. It stands as a symbol of professionalism and integrity in the real estate industry.
Here are some reasons why a real estate agent might want to join NAR and become a Realtor:
- Realtors are aligned with a respected organization that has 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.
- 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.
- NAR membership 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.
What is NAR’s Code of Ethics?
The association’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. 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.
Realtors must regularly complete ethics training and reacquaint themselves with the code to ensure that these principles remain front and center in their practice. The Code of Ethics consists of 17 articles, each defining 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
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?
The word “Realtor” was coined by NAR in 1916 to identify its members and distinguish them from non-member real estate professionals. Because Realtor is a registered trademark, it’s always capitalized — similar to brand names like Nike or Apple. It signifies that the individual is not just a licensed real estate professional, but a member of NAR who abides by its strict Code of Ethics.
How to become a Realtor
Anyone interested in becoming an NAR member must already be a licensed real estate agent or appraiser. This means they’ve completed their state’s education requirements, passed the licensing exam, and are legally authorized to practice real estate. Once licensed, an agent can apply to become a member of NAR by first joining their local association.
NAR membership dues
NAR dues cover membership in local, state, and national Realtor associations. The funds from 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, and research into housing trends.
In 2024, annual dues came to $154, but a special assessment covering a consumer ad campaign brought the total up to $201 per Realtor. You can find a full breakdown of how NAR uses membership dues here.
NAR in 2024
NAR has faced significant headwinds in the past few years. In 2023, President Kenny Parcell resigned amid a barrage of sexual harassment complaints. Additionally, numerous class action lawsuits claimed that the trade organization was complicit in antitrust violations. A jury in the now famous Sitzer-Burnett case agreed with these allegations, which resulted in NAR negotiating a large settlement that has been preliminarily approved by the U.S. District Court for the Western District of Missouri.
The settlement stipulates the following:
- Offers of compensation cannot be presented on the MLS.
- Buyer’s agents must complete a buyer agency agreement with their clients (something that was already required in 18 states).
- NAR will pay $418 million over approximately four years.
- NAR, its members, its state and territorial associations, MLSs, and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below will be released from further liability.
These changes go into effect on August 17, 2024. NAR will not change membership dues for 2025 despite the large settlement payment.
NAR continues to deny any wrongdoing, maintaining that cooperative compensation and association policies benefit buyers and sellers. The association argues that the traditional model, where buyer’s agents’ commissions were paid by the proceeds of the sale (as opposed to coming out of buyers’ pockets) promotes access to property ownership, particularly for lower- and middle-income buyers who may have a difficult time saving for a down payment and agent representation all at once.
Buyer’s agent comp strategies
Get three buy-side compensation structures that will appeal to clients while protecting your paycheck. We also include templates with sample language you can use to amend your current buyer’s agreement.
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