Real Estate Agent vs. Realtor vs. Broker - What's the Difference??

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What is a Real Estate Agents: What is a Real Estate Broker: What is a Realtor: What is a Real Estate Agent? A real estate agent (also known as a real estate salesperson in some states) is a professionally licensed individual who represents a buyer and/or seller in a real estate transaction. Real estate agents are compensated with a commission for their services, which is a negotiated percentage of the property's sale price (normally 6% paid by the seller). What is a Real Estate Broker? A real estate broker is a real estate professional who has acquired a broker license. In most states, one must hold an active real estate license for two years and attain further education in order to acquire their broker's license. What is a Realtor? A REALTOR® is a real estate professional who is an active member of the National Association of REALTORS® (NAR), a national organization that fosters and promotes best practices in the real estate industry. The Relationship Between Real Estate Agents and Brokers In many states, the real estate industry generally organizes the tiers of real estate licensees into two groups: Real estate agents are typically known as the lower-credentialed group. Real estate brokers are typically known as the more-credentialed group. In these states, a real estate agent is required to hold their license and operate underneath a real estate broker or brokerage and then pay a portion of their commissions to that broker in exchange for operating under their license. The broker will also commonly provide supplemental training, support, and resources for the agent. This two-tier system is set up so that the higher-credentialed real estate broker can oversee the actions of a less-experienced agent. Commission splits between agents and brokers are typically between 80/20 to 50/50 depending on how much value the broker brings to the relationship. Some real estate agents who qualify for the broker’s exam may choose to remain as an agent to avoid the additional responsibilities associated with having a broker’s license. A real estate broker can conduct all the same activities as a real estate agent but they aren’t required to operate under anyone else in order to conduct business. Furthermore, if a broker makes a commission for servicing a sales transaction, they can keep the entire commission. Many real estate agents ultimately choose to obtain their real estate broker status simply to avoid commission splits. In other states, all real estate professionals who are licensed to sell real estate are technically labeled real estate brokers but the higher-credentialed brokers are designated as a managing broker and are required to have at least two years of active experience and additional education. In these states, it’s common for the layperson to refer to non-managing brokers as “real estate agents”. A managing broker manages a non-managing real estate broker in the same way that a real estate broker manages a real estate agent in a two-tiered state. In commercial real estate, whether a person is licensed as a real estate agent or as a broker, it’s customary to refer to all licensed professionals as real estate brokers and refer to the more-credentialed tier as managing brokers.

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