Real Estate Agent vs Broker vs Realtor: What’s the Difference?
This article is part of a larger series on How to Become a Real Estate Agent.
The terms real estate agent, broker, and Realtor are often used synonymously by clients and real estate professionals. While all three professionals can help people buy, sell, or rent properties, they differ in responsibilities, salaries, and governing agencies. In this article, we explore the differences between a real estate agent vs broker vs Realtor, the pros and cons, and the qualifications of each role.
Basic Differences Between a Real Estate Agent vs Broker vs Realtor
The reason that individuals interchange the terms real estate agent, broker, and Realtor is that a lot of their job responsibilities overlap. The most significant difference between these roles is that Realtors are members of the National Association of Realtors (NAR).
NAR members can use the trademarked Realtor designation, are bound to the NAR’s Code of Ethics, and can be agents and brokers. Licensed real estate agents and brokers interested in becoming Realtors by joining the NAR must be active professionals, have no recent or pending bankruptcies, and have no record of unprofessional conduct.
However, there is a distinct difference between a real estate broker vs agent. Only brokers can work independently, own real estate firms, and manage agents, and agents must work under a sponsoring broker, which prohibits them from working independently.
Here is a further breakdown of the definition of each role and the differences between them:
Real Estate Agent
A licensed real estate professional who works for a sponsoring broker to help individuals buy, sell, and rent properties.
Real Estate Broker
A licensed real estate professional with additional real estate training. They can work independently or run a brokerage to help individuals buy, sell, and rent properties.
A licensed real estate agent or broker who helps individuals buy, sell, and rent properties, but has a designation from the National Association of Realtors.
Differences in Duties & Responsibilities
All agents, brokers, and Realtors must represent their buyer, seller, and renter clients to the best of their abilities within a transaction. Therefore, many duties and responsibilities are the same for agents, brokers, and realtors. These include:
- Abide by Fair Housing Laws
- Complete continuing education
- Find and evaluate properties
- Write contracts
- Provide market data
- Market their brand
- Generate leads
- Close sales
- Deliver necessary documents to all parties of a transaction
- Coordinate appraisals and home inspections
- Negotiate on behalf of clients
- Market their listings
Although many duties overlap by all three professionals, there are differences mainly between agents and brokers, regardless of whether they are Realtors or not. Here are some notable differences between the duties of agents versus brokers
Real Estate Agents & Realtor Agents
Brokers & Realtor Brokers
Differences in Salary & Expenses
The difference between a real estate broker vs agent salary is brokers typically earn a higher income than agents, mainly because brokers receive a percentage of all of their agent’s sales commissions. If brokers list and sell property, there’s no commission split because they are the owner of the brokerage, so 100% of funds go toward the brokerage. However, brokers also carry higher expenses.
Median Annual Salary (National)
Differences in Expenses
Real Estate Agents
Same as agents, plus:
Same expenses as agents or brokers plus:
*Not all brokers cover these expenses
How much a real estate agent vs Realtor salary differs depends on the home prices in their region, the commission rates they charge, their sales volume, and the commission split with their brokers. Real estate agents earn slightly less than Realtors. While we couldn’t find any information that explains why, it’s likely due to having more exposure carrying the NAR Realtor brand.
Pros & Cons of Real Estate Agents vs Brokers vs Realtors
Each role of a real estate agent vs broker vs Realtor has advantages and disadvantages. Before joining the NAR to become a Realtor or upgrading your license from a real estate agent to a broker, take a look through the pros and cons of each real estate role:
An agent is the most common among real estate professionals because it is the easiest licensure to get and the role allows for autonomy. In addition, agents don’t have as many expenses like membership dues to NAR or brokerage expenses acquired by owning your own broker.
However, there is not much room for advancement if you wish to manage other agents or be in complete control of your business, separate from your sponsoring brokerage.
|Less financial liability than a broker||Must operate under a broker’s license|
|Fewer educational requirements||Must join a local board to access MLS|
|Less costly licensing||Typically earns less income than a Realtor or broker|
|Lower management responsibilities||Must work as an agent for a period before obtaining a broker’s license|
|No annual NAR membership dues for non-members||Commission is split with the brokerage|
|Lower operating expenses than a broker||May have to pay desk fees to the brokerage|
Brokers have more freedom but carry more liabilities than real estate agents. This is because they own and operate the entire brokerage, including all its employees. They can make overarching decisions on how they would like their business and agents to run, but that comes with more financial obligations.
|Can work independently of another broker||Must pay for and carry a surety bond|
|Can keep 100% of the sales commission unless they work under a managing broker||Can be liable for agent’s actions|
|Can own and operate a property management company||Requires additional education, exams, licensing applications, and associated costs|
|Can earn higher income from commission splits with agents||Must satisfy a specific number of hours in the field as an active real estate agent before licensure|
|Can leverage the years of marketing experience||Must know how to manage a business|
|Can work independently from home, saving the overhead rental costs||Working as both a selling and managing broker requires a lot more hours, and competes with agents in the office|
Realtors may be perceived as more trustworthy because they adhere to higher ethical standards under the NAR Realtor brand. Still, they pay annual dues to maintain that membership. Also, depending on where they live, real estate agents may be required to join the NAR if they want to work for a broker who is a member.
This might pose a challenge for some agents since the NAR uses Realtor dues toward political causes they believe in; therefore, if an agent doesn’t support those causes and must join the NAR, they’re essentially funding something they don’t believe in.
Similar advantages as an agent or broker, but also includes:
Similar disadvantages as an agent or broker, but also includes:
|Access to NAR benefits, discounts, and events||Costly annual dues|
|The Realtor designation is widely recognized||Managing broker must be a Realtor member if agents want the designation|
|May enhance marketing when used in campaigns||Must be an active agent or broker for membership|
|Access to cutting-edge real estate research and timely news||May not be able to join if you or your broker have a bankruptcy within three years of application, or you may be required to pay cash upfront for membership and MLS|
What additional benefits does the NAR give to its members?
As the largest trade association in the U.S., the NAR offers its members resources, support, and benefits, including professional development courses, local discounts, and charity and volunteer events. Some additional benefits of being a Realtor include:
- Public advertising and campaigns supporting Realtors
- Support for federal, state, and local policy initiatives
- Resources like Realtor Magazine, designations, and certifications
- International network
- Discounts for equipment, insurance, services, and tools
- Further educational and networking opportunities at the state and national conventions
- Opportunities to contribute to local and national charities
There are many differences and similarities between a real estate agent vs broker vs Realtor. All of these roles require professionals to represent clients when buying, selling, and renting homes. However, Realtors are NAR members, and brokers have additional responsibility than agents. No matter which real estate profession you choose, all are lucrative careers that allow you to work with clients, have flexibility, and have unlimited earning potential in your career.
Frequently Asked Questions (FAQs)
Brokers have more experience and education than agents, but it’s not necessarily the better choice. Upgrading to a broker’s license carries heavier responsibilities if the broker manages other agents and their brokerage. If they work alone, they still have the responsibility of obtaining a surety bond, treating all parties equitably, and maintaining their business. However, becoming a broker has advantages like receiving passive income from commission splits with agents, not having to work under a principal broker, and keeping 100% of the commission from sales.
Realtors are brokers and agents who are National Association of Realtors (NAR) members and pay NAR fees. Not all real estate agents are Realtors, so you can only use the term Realtor if you are a NAR member. You want to be transparent with clients, so if you’re not a NAR member, and they refer to you as a Realtor, let them know the difference.
Real estate brokerages are businesses that are engaged in real estate practices. They are managed by real estate brokers and provide a place for licensed real estate agents to work. Some real estate brokers list and sell properties or manage real estate agents and handle the administrative responsibilities of a brokerage business.