Differences between a Real Estate Agent, Broker, Realtor
A quick discussion to familiarize yourself with industry terms.
If you're interested in purchasing a home, you'll want some help. So where do you go? So who should you hire? Real estate professionals go by various names, including real estate agents and real estate brokers. So what's the difference between the two? Sometimes these titles are used interchangeably, but there are some important differences between the two.
Here's a rundown of the real estate professional titles you’ll come across, and what they mean.
Real estate agent
A real estate agent is someone who has a professional license to help people buy, sell, or rent all sorts of housing and real estate properties. To get a real estate agent license, states require individuals to have training. The educational requires and time-frame of the training vary significantly by jurisdiction. In Virginia, for example, a new real estate agent must have taken 60 hours of pre-licensing training, while in California they 135 hours of course work is required to optain a license in that state.
Once that training is completed, aspiring agents will need to take a written licensing exam. This exam is typically divided into two sections: one on federal real estate laws and general real estate knowledge, the second on state-specific laws. Once they pass their exam, they’ve earned a license, the title of a “real estate agent,” and they might join a brokerage firm where they can begin working with home buyers, sellers, and renters.
Real estate brokers
A real estate broker is someone who has advanced real estate training. One who has taken education beyond the agent level as required by state laws and was able to successfully pass a broker’s license exam.
Similar to real estate agent exams, each state sets its own broker education and exam requirements. The extra academic materials cover topics such as ethics, contracts, taxes, and insurance. All at a more more in-depth level that taught in a real estate agent pre-licensing course.
Brokers are also taught about about real estate legal issues and how laws apply to operating a brokerage, real estate investments, construction, and property management.
As a result, “brokers have a more in-depth knowledge of the real estate business. To qualify for a broker exam and to obtain a broker licsense, real estate agents must already have a certain level of experience in the industry. Qualifications are typically, three years as a licensed real estate agent. There are three types of real estate brokers, each with subtle differences in the role they perform:
- Principal/designated broker: Each real estate office has a principal/designated broker. This is a person who oversees all licensed real estate agents at the firm and ensures that it's agents are operating in compliance with state and national real estate law. Like real estate agents, principal brokers get paid on commission. Taking a percetage of the commissions earned by the sales agents which they supervise. May principal brokers also receive an annual base salary.
- Managing broker: An individual with this title oversees the day-to-day operation and transactions of the office and typically takes a hands on approach to hiring agents, training new agents, and managing administrative staff. (Some principal/designated brokers also serve as managing brokers.)
- Associate broker: This real estate professionl, sometimes called a broker associate, broker-salesperson, or affiliate broker has a broker's license, but is working under a managing broker. This person is typically not responsible for supervising other agents.