Real Estate 101: Who does what?

Listen to anyone who’s ever searched for a home to buy or rent. Chances you’ll hear the terms “real estate agent,” “broker,” and “REALTOR®” used interchangeably to describe the professionals helping acquire or sell properties.

Everyday speech aside, those terms have distinct meanings, even though the people occupying the roles may provide the same or similar services. Let’s look at each:

What is a real estate agent?

Real estate agents are professionals licensed in one or more states to help clients buy, sell, rent or lease properties. These may be residential homes, commercial real estate, or both. A prospective agent must be sponsored for licensure by a real estate brokerage and work under the supervision of a managing broker.

How much do real estate agents make? It varies. Agents earn a commission or fee for helping bring together buyers and sellers. (Here, we’ll use the terms “buyer” to mean any type of customer and “seller” to mean any type of owner or landlord.)

For buyers, agents help find desirable and/or suitable properties and offer guidance. As trusted advisors, agents can help buyers understand the practicalities of their situation: what the buyers’ desire may not be the same as what best suits their budgets.

Agents also show the properties and help facilitate negotiations and paperwork. They may also recommend mortgage brokers and help with arranging the appraisal and inspection of the desired property.

An agent who lists a property for sale is known as its “listing agent,” helping set the price for the property based on its unique characteristics and an understanding of the current market. Listing agents market properties using digital and traditional media, as well as the on Multiple Listing Service (MLS), a resource that helps buyers’ agents find suitable properties offered by cooperative sellers’ agents.

Listing agents also provide guidance on staging and preparing properties for viewing, field various offers, and help with paperwork and closing.

What is the role of a real estate broker?

To become real estate brokers, real estate agents must have some years of experience (which varies by state) and pass a brokerage exam in the states where they wish to practice.

Agents often become brokers because they wish to operate independently or start their own brokerages with a staff of agents. Different types of brokers include:

• Managing brokers, who usually supervise a team or teams of agents and perform managerial functions for a real estate office or firm.
• Associate brokers, who have their own brokerage licenses, but choose to work under the authority of another broker. In larger brokerages, associate brokers may run their own teams, reporting up to the managing broker.
• Designated (or principal) brokers, who oversee agents on the team to ensure compliance with applicable real estate laws and regulations.

Brokers can work with buyers and sellers just as they did when they were agents.

What is a REALTOR®?

A REALTOR®, in the official sense of the word, is a real estate agent, broker, property manager, appraiser or other active industry professional who is a member of the National Association of REALTORS® (NAR). Founded in 1908, this organization provides advocacy, training and many other services for the real estate profession.

The principals (owners and/or managers) of a real estate firm must join a local REALTOR® association before their affiliated agents and brokers can. A firm’s eligible professionals can decline to join the association, but the firm will be charged an assessment for each eligible person who does not.

It’s important to remember that the NAR is a membership organization. A real estate agent or broker who is not a member can perform the same buying and selling activities as a REALTOR®.