Real Estate Agent vs. Realtor vs. Broker: Key Differences

A real estate broker is someone who has received formal real estate education and has passed a broker exam to earn a real estate broker license. Due to these education requirements, real estate brokers tend to have more in-depth knowledge of real estate transactions. Their education courses include coursework on topics such as real estate law, ethics, property taxes, and insurance. They may either work for a real estate brokerage or start their own brokerage. Real estate brokers may also be licensed appraisers.

Real estate brokers fall into three categories.

1. 1. Designated broker: Every real estate firm employs at least one designated broker. This person supervises all of the real estate agents employed by the firm to ensure they're abiding by state and national real estate law. Designated brokers, also known as principal brokers, are sometimes paid on commission, taking a cut of the commission their real estate agents receive. Other designated brokers receive a base annual pay.
2. 2. Managing broker: This person is typically an office administrator responsible for day-to-day operations of the brokerage firm. They could be responsible for hiring, training, and managing office staff.
3. 3. Associate broker: Sometimes referred to as a broker associate, affiliate broker, broker-salesperson, or real estate salesperson, this person has a broker's license but works under a managing broker. They're not responsible for managing other agents.

Real estate agents are trained real estate professionals who help people buy, rent, or sell their home, apartment, or investment property. Real estate agents are required to undergo training before they can apply for licensure. They'll then take a licensing exam before they can earn their real estate license. Once they pass the license exam, they may then choose to join a real estate brokerage where they'll receive a commission split—part of the commission first paid out to the broker.

There are three types of real estate agents that specialize in different areas of the purchase contract.

1. 1. Listing agent: Also known as a seller's agent, the listing agent represents the homeowner who's selling their house and provides multiple listing services. They help sellers with pricing, staging, listing their home online, and conducting open houses. They also represent the seller during negotiating, home inspection, and closing.
2. 2. Buyer's agent: The buyer's agent is a real estate business professional who represents home buyers through the entirety of the home buying process.
3. 3. Dual agent: Real estate agents enter dual agency when they represent both the seller and the home buyer. However, this is not legal in all states.

"Realtor" is a trademarked term belonging to licensed members of the National Association of Realtors (NAR), the largest trade association in the real estate industry. As a member of the National Association of Realtors, one must adhere to NAR standards of practice and the NAR code of ethics enforced by real estate boards. The NAR collects membership dues in exchange for bestowing its member with the Realtor title.

If you're in the market for a new home, you've likely heard these terms used interchangeably, but there are a few key differences in licensing requirements that make each title unique.

• Agent: Real estate agents have completed the number of training hours required by state laws, taken their state’s pre-licensing course, and passed a licensing exam. In addition to these educational requirements, agents must be 18 or older, legal US residents, and able to pass a background check. Agents cannot work independently of real estate brokers and typically split their commission with the broker sponsoring them.
• Broker: A licensed broker has completed the same requirements to receive a real estate license plus additional education in real estate law, ethics, property taxes, and insurance to receive their real estate broker license. They earn a commission by either facilitating deals independently of an agent or taking a cut of the commission earned by the agent working for them.
• Realtor: A Realtor is a real estate agent who has achieved additional certification and pays membership dues to the NAR.

All investments, including real estate investments, come with inherent risks which may involve the depreciation of assets, financial losses, or legal ramifications. The information presented in this article is for educational, informational, and referential purposes only. Consult a licensed real estate or financial professional before making any legal or financial commitments.

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