I have been asked that question many times before so I decided to write an article to break down the differences. Many people use agents, brokers, and Realtors® interchangeably, but they aren’t the same!
A real estate agent is a real estate professional who is licensed to be a real state sales person. Getting such a license requires taking some classes, passing a test and paying some fees. Real estate agents must work under a licensed broker. A person can not get a real estate license and go out on their own and sell real estate. The license is actually held under a broker. The agents license can be transferred from broker to broker, but can’t be with more than one at a time.
Technically it is the broker who owns all of the agent’s listings and are acting on the broker’s behalf. Most real estate agents are independent contractors who work on a 100% commission basis. Depending on the brokerage, the agent gets a percentage of each commission the agent earns on a closed sale. Thus a real estate agent can only be paid directly by their broker.
A REALTOR® is a real estate agent who is a member of the National Association of Realtors. They actually trademarked the word. Generally all a person has to do to become a member is pay the dues. Members of the national association are also members of the state and local associations. For example I belong to the National Association of Realtors (NAR), the California Association of Realtors (CAR), the San Diego Association of Realtors (SDAR). In addition to paying dues, Realtors® agree to adhere to a code of ethics.
A real estate broker has continued his or her education past the real estate agent level and passed the real estate broker license exam. Real estate brokers can work as independent real estate agents or have other agents working for them. Some brokers get their license so they can work on their own independently, and not pay part of the commission to another broker. On the flip side, some brokers see the value in working for an established real estate brokerage, and work under them as an associate broker. So to clarify, a broker can work on his or her own, while an agent or associate has to work under a licensed broker.
Even though brokers are supposed to provide oversight, there are several large companies where one broker is responsible for literally hundreds of agents. They will normally hire additional licensed agents or brokers to manage many of the daily operations.
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