Realtor®, real estate agent, real estate broker broker—it’s hard to keep up with all the lingo involved in a real estate transaction. A good place to start is by learning what a Realtor really means.
What is a Realtor?
Realtors are licensed real estate agents who are members of the National Association of Realtors®, the largest trade group in the country. Every real estate agent is not a Realtor, but most are. If you’re unsure, you can ask your agent if he or she is a licensed Realtor.
In this sense, when homebuyers hire a licensed real estate professional who is also a Realtor, they have added assurance that they will receive fair and exceptional service from beginning to end.
What to expect from your Realtor: Expertise and ethics
There are several reasons why homeowners should buy or sell with a Realtor, including the professional’s high ethical standards, wide network, and searching and negotiating expertise. Because Realtors are part of their local professional network as well as the national network, they are provided with additional continuing education to fine-tune their skills, tools to negotiate and develop contracts, and deeper connections to other members in the real estate business.
Membership as a Realtor in the NAR also comes with access to market data and transaction management services, as well as other benefits, which can simplify the buying and selling process.
Plus, buying or selling a home requires adherence to various real estate laws as well as dozens of forms, reports, and disclosures—delays or costly mistakes can ruin a deal and cost serious money. Working with a trained Realtor mitigates many of those risks.
“We consistently leverage the tools provided by being a Realtor to perform a market analysis for our clients. We want to ensure they are selling or buying properties for the fairest and best price,” says Michael Sadov, a Realtor and broker with the Real Estate Club in Miami.
“We also take advantage of the webinars, meetings, and networking events for Realtors, so we can stay up to date with training and the market to give our clients the best experience possible,” adds Jesse Zilberman, a Realtor of the same firm.
Realtor vs. broker: What’s the difference?
Some Realtors are brokers, while others are real estate agents. (You may also see titles like sales associate, associate broker, or Realtor associate instead of real estate agent.) Unfortunately, people use the term interchangeably, but there are some differences between real estate agents and real estate brokers.
Brokers are usually managers. They run an agency and have agents working under them as salespeople. They might own a real estate brokerage or manage a franchise operation. They must take additional courses and pay additional fees to maintain their state-issued broker license.
An agent, on the other hand, is a salesperson selling on behalf of the broker. It is also worth mentioning that some Realtors have a broker license, but choose to work as a salesperson. These real estate professionals are sometimes referred to as broker associates.
Real estate agent qualifications
Real estate agents are also state-licensed and must take a course and pass a written license exam before legally acting as a real estate agent. Each state has its own licensing laws and standards of practice.
Some states—like Illinois—have eliminated the real estate license and mandate all agents take additional coursework and pass another test to become brokers. They are broker associates still selling under a managing broker. This would also be applicable to broker associates still selling under a managing broker.
How much money do Realtors make?
There is a stereotype of the typical Realtor that must be dispelled: A real estate salesperson who works a few hours a day in their fancy real estate office and makes millions of dollars a year. Reality TV shows perpetuate this myth, too.
On TV, buyers find the perfect house after visiting just three open houses—and write an offer that is accepted immediately. The next thing you know, they’re moving in!
Nothing could be further from the truth in the real estate industry.
The typical buyer searches with a Realtor for about 12 weeks and looks at about 10 properties before selecting a home. Agents then wait about 30 days—on average—for the deal to close and receive their commission.
If an agent is representing a buyer, and the buyer decides to sign another lease—or not to buy—that agent is not compensated. The same is true for a seller’s agent representing a seller. If the listing does not sell, the agent is not paid.
Selling real estate is a commission-only business. That means an agent can work with a buyer or seller for months without ever making a commission—because deals fall through and not every listing sells. It’s a business run on trust and faith.
Also, many people see the commission check at the closing table and have no idea how that money is split. They think their agent walks away with all of it—that’s just not true.
Remember, agents work for brokers. The commission check is made payable to the brokerage, which then cuts a check to the listing agent and the buyer’s agent. Both agents also must pay a percentage of their earnings to their broker.
Generally, agents also are responsible for paying their own federal and state income taxes, Social Security tax, and health insurance.
How to find the right Realtor for you
Whether you find your Realtor online through realtor.com or through word of mouth, choosing the right representative is one of the most important decisions you’ll make during the homebuying or selling process.
Don’t be afraid to ask the tough questions—and don’t worry about upsetting your prospective agent either. Remember: It’s a smart move to talk to at least three people, and ask the Realtors some key questions to find out if they’re a good fit for you and the transaction you’re looking for.
Consider asking the following questions:
- How long have you been in business?
- How many houses did you sell last year?
- What percentage of your listings do you sell?
- What is the average list price to actual sales price ratio for your listings?
- What neighborhoods do you specialize in?
- What’s your schedule and availability?
Here’s more on how to find a Realtor near you, including details such as the professional’s sales performance, specialties, certifications, trade associations, and client reviews.
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