What's the Difference Between Real Estate Agent and Realtor?

By
Karen D. Friedman
|
Apr 20, 2021
7 min

Real Estate Agent, REALTOR®, Broker, Broker Associate. There’s enough titles in real estate to make your head spin!

When you’re not familiar with the world of real estate, the titles and designations get confusing.

Real Estate Agent, REALTOR®, Broker, Broker Associate: they all sound like the same job. People who are unfamiliar with the industry really don’t know the difference or why it matters.

But, there’s a big difference between these titles. Especially when it comes to what they actually do while practicing real estate. So, let’s begin by defining these titles and talking more in detail about how they differ.

What is a Real Estate Agent?

A real estate agent is anyone who has completed the three required pre-licensing courses and passed the state exam. That means that they are licensed in real estate. Real estate agents are also known as a real estate salesperson.

But it doesn’t mean that they can legally negotiate a deal and write contracts.

In order to properly represent a buyer or seller, an agent must first join a local board of realtors. The board of realtors is how an agent gains access to the contracts. The contracts are what legally brokers the purchase or sale of a property.

So, let’s back up and talk about what a real estate agent can do if they’re not a member of a local board of realtors.

Becoming a Referral Agent

This is a great way to make money as a real estate agent. When you get a lead, the buyer or seller is given to another REALTOR®. Then the real estate agent gets a “referral fee” for sending the client. Referral fees are typically 20-25% of the sales price but can be negotiated higher.

This is possible because the real estate agent is not writing contracts or negotiating terms.

Licensed Real Estate Assistants

Some people earn their license and decide to work with a REALTOR® or a real estate team as their assistant.

As a licensed assistant, you can do virtually everything related to the real estate deal short of negotiating terms and writing contracts. Licensed real estate assistants are also eligible to receive referrals.

You do not need a license to be a real estate assistant. But, without one, you are limited in what you can help the REALTOR® with. That’s why getting a license as a real estate assistant is recommended.

Becoming a Commercial Real Estate Agent

While each brokerage is different, generally commercial real estate doesn’t require agents to become a member of a local board. The contracts used for commercial deals are different so most commercial agents are considered real estate agents.

With the exception of working in the commercial sector, the main factor about being a real estate agent is not having the ability to write contracts and negotiate terms.

So, what’s the difference between a real estate agent vs REALTOR®?

REALTOR® vs Real Estate Agent

All real estate agents are not REALTOR®. But, all REALTORS® are real estate agents.

Both an agent and a REALTOR® have a real estate license. Agents who are members of the National Association of REALTORS® (N.A.R.) are REALTORS®.

Usually, when an agent joins their local board, fees will include membership to both the California Association of Realtors (C.A.R.) and the National Association of Realtors (N.A.R.).

What is the National Association of REALTORS®?

N.A.R. is a trade association that represents agents across the country. The term REALTOR® is a designation given to agents who have membership. That designation informs the public that they practice real estate with ethics.

Members follow a strict Code of Ethics and pledge to abide by them. There are 17 articles within that Code of Ethics that they follow at all times. They speak to how they treat their client, the general public, and colleagues.

Also, members get access to perks and resources that supplement their career.

Most agents realize the benefit of having the designation of REALTOR® and will become a member of N.A.R.  

So, if you hold the title of REALTOR®, you are able to fully represent a buyer or seller in a transaction. You will also be seen as upholding the ultimate standard of ethics.

Real Estate Broker vs REALTOR®

Let’s talk about what a brokerage is first. A real estate brokerage is a firm that has the capability of legally brokering a real estate transaction.

So what is the difference between a real estate broker vs REALTOR®?

A real estate broker is an independent agent who has the capability of brokering a real estate deal independently. Unlike a real estate agent or REALTOR®, who are required to hang their license at a brokerage firm.

How to Become a Real Estate Broker

To become a broker you must start as a real estate agent or REALTOR®. The Department of Real Estate then requires a certain amount of experience:

  • Either, a minimum of two years full-time licensed salesperson experience within the last five years
  • OR two years of unlicensed equivalent experience
  • OR a four-year degree with a major/minor in real estate is required

After gaining the required experience you will also need to satisfy the education requirement. This is usually the 5 remaining elective courses.  

The last step is to take the brokers exam. Once you pass the exam, you are considered a real estate broker and can run your business independently from a brokerage.  

There are many advantages to being a real estate broker. The title itself lets others know that you have more education under your belt.

Why Become a Real Estate Broker?

As a broker, the biggest benefit is earning commission on all your deals and not splitting them with an office. That means more money in your pocket.

Another advantage of becoming a broker is the capability of having other real estate agents under your license. Why would brokers want to do this? Because as the broker, they are entitled to a portion of their agents’ commission.

Being a real estate broker is a great way to work independently or have a team under their licence to create passive income.

What is a Broker Associate?

A real estate broker associate has the same license as a broker, but works for another broker as a salesperson. While being a broker does have its advantages, it also means having all of the liability as well.

When you are operating on your own as a broker, you are solely responsible. That means handling all the costs associated with lawsuits, compliance, and insurance.

This is why some brokers choose to join a traditional brokerage. When a broker decides to hang their license with an office, the broker is then known by the term broker associate.

While being a broker associate may not have the same freedoms as a broker, there are benefits to joining a brokerage. When a broker associate runs into an issue with a transaction, they have the resources provided by the brokerage firm to help resolve it.

A traditional brokerage will have a broker of record to answer any contract questions. They also employ a risk management company that agents have access to for legal questions. A compliance officer reviews their transaction files to ensure they are in order in case of an audit.

Due to their experience, broker associates may also enjoy a higher commission split.

So, one of the main advantages of a broker joining a brokerage firm is to limit their liability.  

Final Thoughts on Real Estate Agent, REALTOR®, Broker, Broker Associate

As with many industries, there are titles that help differentiate a person’s skill level or education. They also speak to their responsibilities within that role.

In the food industry, there’s a difference between a short order cook, a cook, and a chef.

While each may have a different title, what do they all have in common? They all prepare and cook your food.

Understanding the difference between a Real Estate Agent, REALTOR®, Broker, Broker Associate helps you know what you want in your career. These positions each have different responsibilities or limitations within their title.

The most important takeaway? Whatever the title, each is able to help with buying and selling real estate.

Every week, we release in-depth videos to help viewers become successful real estate agents on our CA Realty Training YouTube Channel. Also, if you enjoyed reading this article, we would love if you could share it with a friend who you think would get something out of it.

By
Karen D. Friedman
|
Apr 20, 2021
Terminology
7 min