Realtors vs. Real Estate Agents | The Differences and Similarities
In the sprawling landscape of the real estate industry, two terms often interchangeably used are realtor and real estate agent.
However, many may not realize that these titles represent distinct roles with their qualifications and responsibilities.
Understanding the differences and similarities between realtors and real estate agents is crucial for anyone navigating property transactions.
Whether you’re a prospective homebuyer seeking professional guidance or an individual considering a career in real estate, this article will give you a clearer understanding of the differences and similarities between realtors and real estate.
Table of contents
What are the Difference Between Realtors and Real Estate Agents?
Who is a Realtor
A member of the National Association of Realtors (NAR), a trade association establishing guidelines for moral behaviour among real estate brokers, is called a Realtor.
As an NAR member, you must abide by a stringent Code of Ethics to ensure they operate in their client’s best interests.
What are the Roles of a Realtor?
Realtors are essential to the real estate industry as middlemen between buyers, sellers, and other parties involved in real estate transactions. As a realtor, your main duties will consist of:
Listing Properties:
Realtors list properties for sale on behalf of sellers and advertise them to prospective purchasers using various media.
Finding Buyers:
Realtors assist purchasers in locating homes that suit their requirements and preferences by setting up house tours and offering information about the property and surrounding area.
Negotiating Offers:
Realtors serve as go-betweens in the bargaining process, defending the rights of their customers and attempting to get a deal done between purchasers and sellers.
Facilitating Paperwork:
Real estate agents manage the intricate transaction paperwork, ensuring all legal documentation is done correctly and on time.
Offering Guidance:
Realtors provide knowledgeable counsel and direction From the first consultation to the closing. In addition, they might help with finance, house inspections, and other relevant services.
Realtors may specialize in particular facets of real estate, such as residential, commercial, or investment properties, in addition to their primary duties. Additionally, they could specialize in a certain region or work with a certain clientele, such as first-time homeowners or investors in luxury real estate.
A Realtor must possess various information, skills, and interpersonal talents due to the varied nature of their work. They need to be adept at negotiating, have a solid understanding of the real estate industry, and be able to interact with clients from various backgrounds.
Realtors must also abide by the NAR’s Code of Ethics and uphold a high standard of professionalism and moral behavior.
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Who is a Real Estate Agent?
A licensed professional who assists people and organizations with the intricacies of purchasing, selling, renting, or investing in real estate is a real estate agent, sometimes called a Real Estate agent.
They ensure their client’s interests are safeguarded, and their objectives are met since they understand the real estate market, legal requirements, and negotiation techniques.
What a Real Estate Agent Does
Real estate brokers have a broad range of duties that are part of their complex role:
Property Listing and Marketing:
Real estate brokers list properties for sale or rent to attract prospective buyers or tenants. They do this by crafting engaging descriptions and marketing collateral. They employ a variety of platforms, including social media, open houses, and internet listings, to increase visibility and connect with more people.
Buyer Representation:
Throughout locating a suitable property, real estate agents represent and assist buyers. After evaluating the buyer’s needs, preferences, and financial capacities, they pair them with properties that meet their demands. They also set up property showings, give information about the community and the property, and help prepare offers.
Negotiation:
Real estate brokers are skilled negotiators who can navigate the complexities of counteroffers, contingencies, and closing terms to mediate agreements between buyers and sellers. They advocate for their clients’ best interests, ensuring they get results they’re happy with and fair times.
Transaction Management:
Contracts, disclosures, financing documents, and other copious amounts of paperwork are handled by real estate agents during real estate transactions. To guarantee a seamless and punctual closing procedure, they collaborate with multiple stakeholders, including lenders, inspectors, and title agencies.
Market Knowledge and Expertise:
Real estate agents are highly knowledgeable about the local real estate market, trends in real estate, and industry laws. They advise their clients on pricing tactics, market dynamics, and possible risks and opportunities.
Professionalism and Ethical Behavior:
Real estate brokers follow stringent professional and ethical rules. They ensure their clients’ best interests are met by upholding transparency, honesty, and integrity throughout the transaction.
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Networking and Building Client Relationships:
Real estate brokers cultivate close bonds with their clients by getting to know their particular requirements and goals. To give their clients full support, they build a network of industry experts, including appraisers, lenders, and inspectors.
What is a Real Estate Agent’s Licensing and Qualifications?
Becoming a real estate agent involves a specific process that includes educational requirements, licensing examinations, and professional membership. Here’s a breakdown of the licensing and qualification steps:
Educational Requirements
- High School Diploma or GED: A high school diploma or equivalent General Education Development (GED) credential is typically the minimum educational requirement to enter the real estate industry.
- Pre-Licensing Education: Most states mandate that aspiring real estate agents complete pre-licensing courses to gain fundamental knowledge of real estate principles, practices, and laws. These courses cover property law, contracts, finance, appraisal, and fair housing.
- Continuing Education: Real estate agents must complete continuing education courses periodically to maintain their licenses and stay updated on industry trends, legal changes, and emerging practices.
Licensing Examinations
- National Real Estate Exam: The National Association of Realtors (NAR) administers the National Real Estate Exam, a comprehensive assessment of real estate knowledge and skills. This exam is a requirement for licensure in many states.
- State Licensing Exam: Each state has its licensing exam focusing on state-specific real estate laws, regulations, and procedures. Aspiring agents must pass national and state exams to obtain a real estate license in their respective state.
- Background Check: Real estate applicants undergo a background check to ensure they meet the character and integrity standards required for licensure.
Professional Membership
- National Association of Realtors (NAR): Membership in the NAR is voluntary but highly recommended for real estate agents. The NAR provides its members with professional development opportunities, resources, and support.
- Multiple Listing Service (MLS): Access to the local MLS is essential for real estate agents to market properties and identify potential buyers effectively. MLS membership is typically a requirement for practising real estate agents.
Additional Qualifications
- Local Market Knowledge: Real estate agents should possess in-depth knowledge of the local real estate market, including property trends, neighbourhood dynamics, and pricing strategies.
- Communication and Negotiation Skills: Effective communication and negotiation skills are crucial for real estate agents to interact with clients, understand their needs, and navigate complex negotiations.
- Problem-Solving and Decision-Making Abilities: Real estate agents must be able to identify and resolve issues that arise during the transaction process, making informed decisions that protect their clients’ interests.
- Professionalism and Ethics: Real estate agents must uphold the highest standards of professionalism and conduct, adhering to the NAR’s Code of Ethics and ensuring transparency, honesty, and integrity throughout the transaction.
What is a Realtor’s Licensing and Qualifications?
Obtaining a real estate license to become a Realtor in the United States requires fulfilling specific education, testing, and background check requirements. The process may vary slightly from state to state, but the general steps involved are:
- Complete Pre-licensing Education: Enroll in and complete pre-licensing courses covering real estate principles, practices, and law. The number of hours required for pre-licensing education varies by state but typically ranges from 60 to 90.
- Meet Age and Residency Requirements: Must be at least 18 years old and a legal resident of the state where you plan to practice real estate.
- Pass the Real Estate License Exam: Upon completing pre-licensing education, take and pass the state-administered real estate license exam. The exam covers real estate law, agency, contracts, financing, and property valuation.
- Background Check: Pass a thorough background check to ensure you meet the professional and ethical standards of the real estate industry.
- Activate Your License: Once you have passed the exam and background check, apply for and activate your real estate license with the state licensing board.
- Join a Real Estate Brokerage: As a newly licensed real estate agent, you must join a real estate brokerage to operate under their supervision and guidance.
- Continuous Education: Maintain your real estate license by completing continuing education courses as your state requires.
Additional Qualifications for Realtors:
- National Association of Realtors (NAR) Membership: While not mandatory in all states, becoming a member of the NAR demonstrates professionalism and adherence to the organization’s Code of Ethics.
- Experience and Specializations: Gaining experience in the real estate industry can lead to specialization in specific areas, such as residential, commercial, or investment properties.
- Networking and Building Relationships: Networking with other real estate professionals and building strong client relationships are crucial for success in the industry.
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How Does a Real Estate Agent Get Paid?
Real estate agents, also known as Realtors, typically earn a commission based on a percentage of the sale price of the property they help sell. This commission is typically split between the listing agent, who represents the seller, and the buyer’s agent, who represents the buyer.
Commission Rates:
The commission rate is a negotiable percentage of the sale price, but it typically ranges from 3% to 7%. For example, if a home sells for $500,000, the total commission could be anywhere from $15,000 to $35,000. The exact commission rate is determined by factors such as the property’s location, the property type, and the agent’s experience.
Commission Split:
The commission is usually split between the listing agent and the buyer’s agent. The listing agent typically receives a larger share of the commission, as they are responsible for marketing the property and generating interest from potential buyers.
The buyer’s agent typically receives a smaller share of the commission, as they represent the buyer’s interests throughout the negotiation and closing process.
Additional Compensation:
In addition to commissions, some real estate agents may also earn additional compensation through other means, such as:
- Referral fees: Real estate agents may receive referral fees from other professionals, such as mortgage lenders or home inspectors, if they refer clients to them.
- Bonuses: Real estate agents may receive bonuses from their brokerage if they meet certain sales goals or performance metrics.
- Profit sharing: Some brokerages may offer profit-sharing arrangements to their agents, allowing them to earn a share of the brokerage’s profits.
Average Income:
The average income for real estate agents can vary depending on several factors, including their experience, location, and the type of properties they sell. However, according to the National Association of Realtors, the median gross income for real estate agents was $100,830 in 2023.
It is important to note that real estate agents are not guaranteed a certain income. Their income is directly tied to the number of properties they sell, so there will be fluctuations in their earnings from year to year. However, for successful people, real estate can be a lucrative career.
Here are some additional factors that can affect how much a real estate agent gets paid:
- The market: In a hot market with high demand for homes, real estate agents may be able to command higher commission rates.
- The type of property: Luxury properties typically command higher commission rates than less expensive homes.
- The agent’s experience: More experienced agents may be able to command higher commission rates than newer agents.
- The agent’s reputation: Agents with a good reputation may be able to attract more clients and command higher commission rates.
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Similarities: Realtors vs Real Estate Agents
There are similarities between a realtor and a real estate agent. These similarities are in their code of ethics, principles, and roles.
Code of Ethics and Standards
The Realtor’s Code of Ethics is a set of professional standards that all National Association of Realtors (NAR) members must uphold. The Code of Ethics is designed to protect the interests of consumers and promote fair and honest dealings in the real estate industry.
Key Principles of the Real Estate Agent and Realtor’s Code of Ethics:
- Honesty and Truthfulness: Realtors must be truthful in their communications and dealings with clients, customers, and other professionals. They must not make false or misleading statements or engage in deceptive practices.
- Fairness and Integrity: Realtors must treat all parties involved in a real estate transaction fairly and honestly. They must avoid conflicts of interest and not exploit their clients or customers.
- Client Confidentiality: Realtors must maintain the confidentiality of their clients’ personal and financial information. They must not disclose confidential information without the client’s consent.
- Professional Competence: Realtors must maintain professional competence by completing continuing education courses and staying up-to-date on real estate laws and regulations.
- Personal Responsibility: Realtors are personally responsible for their actions and must not blame others for their mistakes or misconduct.
Specific Obligations of Realtors:
- Disclosure of Material Facts: Realtors must disclose all material facts about a property to their clients, including any known defects or potential problems.
- Dual Agency: Realtors must disclose to all parties involved in a transaction if they act as a dual agent, representing both the buyer and the seller.
- Prohibition of False Advertising: Realtors must not engage in false or misleading advertising. Their marketing materials must be truthful and accurate.
- Prohibition of Bribery: Realtors must not offer or accept bribes or other forms of unethical compensation.
- Avoidance of Conflicts of Interest: Realtors must avoid conflicts of interest that could compromise their ability to represent their clients’ best interests.
Enforcement of the Code of Ethics:
The NAR has a system to investigate and enforce the Code of Ethics. If a Realtor is found to have violated the Code of Ethics, they may face disciplinary action, including fines, suspension, or revocation of their license.
The Realtor’s Code of Ethics protects consumers and promotes professionalism in the real estate industry.
By adhering to the Code of Ethics, Realtors can help to ensure that their client’s interests are protected and that real estate transactions are conducted fairly and ethically.
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Realtors vs. Real Estate Agents FAQs
A Realtor is a licensed real estate professional member of the National Association of Realtors, while a real estate agent is licensed to help people buy and sell properties.
Realtors and real estate agents must be licensed, but Realtors must also adhere to a strict code of ethics set by the National Association of Realtors.
While both can provide excellent service, working with a Realtor may offer additional ethical considerations due to their membership in the NAR.
Conclusion
While there are distinct differences between realtors and real estate agents, both play an integral role in buying and selling properties. Realtors have a higher level of licensing and are held to a stricter code of ethics, while real estate agents may have more flexibility in their practice.
However, both professionals are dedicated to helping clients navigate the complex world of real estate transactions and finding the best deals for their clients. Whether you choose to work with a realtor or a real estate agent, it’s essential to carefully consider their qualifications and experience to ensure a smooth and successful transaction.
References
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