Real Estate Agent vs. Broker: What’s the Difference?

By Realty Times Published Jan 22, 2024 04:28 pm

There are two terms that are often used interchangeably, which are real estate broker and real estate agent. There’s a third sometimes thrown in the mix as well, which is a Realtor. So what’s the difference between these terms?

There are overlaps between all three, but at the same time, distinctions.

What Is an Agent?

A real estate agent works in the industry and has passed their relevant coursework as well as the licensing exam in the state where they work.

An agent is someone who can represent a buyer or a seller in a transaction. Some real estate agents specialize in working with buyers, others with sellers. Some do both.

A real estate agent has a broad set of responsibilities including getting offers and counteroffers, managing negotiations, and helping their clients complete the necessary paperwork. Real estate agents can also help their clients tie up loose ends, such as getting any necessary home inspections.

A real estate agent is usually paid a commission, which means when a transaction closes, they receive a percentage of the sale price.

What’s a Broker?

A real estate broker is someone who has gone beyond the basic education required to become a real estate agent and has gotten their broker license. A real estate broker might take coursework covering topics like insurance, taxes, and ethics. The coursework is more in-depth than what was required to become an agent. Brokers also learn about things like property management and real estate investments.

There are three types of brokers.

A principal or designated broker is someone who works at every real estate office. This person oversees the office to ensure legal compliance, and they get a commission of the sales their agents make. Then, there’s a managing broker, who may be more hands-on with the agents that work for the office. An associate broker works under a managing broker and doesn’t usually supervise other agents.

A real estate broker can work on their own rather than working for someone else. They can also have agents who work under them.

You can still work under another broker even after you pass your broker exam, in which case you would be referred to as a real estate associate broker, as was touched on above.

Brokers have the same responsibilities as agents. The primary difference is that a broker may be able to earn more money than a real estate agent by having a team under them.

What is a Realtor?

Realtor is a third term that’s often used to refer to an agent or a broker. In reality, Realtors are members of the National Association of Realtors or NAR.

When you’re a NAR member, you agree to uphold the organization’s rigorous standards for ethics. Realtors can include other professionals who work in the real estate industry outside of agents. For example, you can be a property manager or appraiser and still be a Realtor because it’s a professional designation that stems from group membership.

When you become a Realtor, you can use the trademark as part of your title.

Overall, the biggest difference here is that a real estate agent has to work under a licensed broker. A broker can work on their own. Both agents and brokers are licensed by their state and not federally. Every state has its own set of laws and guidelines that dictate the role of real estate professionals, their duties to clients, and what their relationship must look like.