What’s the Difference Between a Realtor and a Real Estate Agent?
Every day, tons of people are entering the world of real estate as investors to build up passive income or make a dynamic, rewarding career change. Beginners are quickly confronted with the fact that there is a lot of new terminology to learn. From all the acronyms like FHA and HOA to the real estate specific phrases like “on contingency” or turnkey, you might get overwhelmed. So let’s start with the basics by looking at one of the most common questions: what is the difference between a realtor and a real estate agent?
What is a Real Estate Agent?
Simply put, a real estate agent is someone who facilitates real estate transactions and has earned a state real estate license. Real estate agents typically only earn commission on the deals they are involved in, and they must work for a brokerage.
Agents represent either the buyer or the seller in a real estate sale, or they are involved with a real estate brokerage firm and maybe assisting other agents on a deal. Real estate agents can also lease properties for a landlord or assist renters with finding the best space for their business or next apartment.
Becoming a real estate agent is the most common entry into the realm of real estate jobs. Even though 2021 has been a wild year for real estate, many people are choosing to dive in and try to make some serious money as real estate agents.
How To Become a Real Estate Agent
The key to becoming a real estate agent is getting your real estate license. This license will allow you to be a part of deals and earn your first commission. With your license in hand, you will need to find a brokerage to either hire you or sponsor your license. It is best to start that networking as early as possible, while you work your way through the whole process.
Some of the qualifications for becoming a real estate agent include:
- Be over the age of 18
- Have U.S. citizenship or a legal residence status
- Live in the state where you will apply for a license
- Take a state-specific, pre-approved real estate education course
- Pass a background check
- Complete the license application process
- Pass the state and national real estate exam
- Find a real estate broker to sponsor you or employ you.
Now, this sounds like a lot, but many of the steps connect with the others smoothly. For example, if you choose the right education program, you should be more than prepared to pass the exam and jump right into your first real estate agent position. If you are not a fan of taking tests, take a look at how hard it is to pass the real estate exam.
Be sure to check your state laws and find out the specific process. You will need a real estate license in each state you wish to conduct business in, but thankfully we have made guides for many states already. Take a look at [our state licensing guides.]
Titles in Real Estate: “Broker” vs. “Agent”
Once you have dipped your toe into the real estate world, you will meet people with a variety of titles, who all seem to do vaguely the same thing. Real estate agents, realtors, brokers, etc… just make sure to be polite to any Mortgage Loan Originators! There are some critical differences between the titles for people who organize real estate sales and leasing agreements.
A broker is a real estate professional that went through extra educational requirements and passed a higher level exam than an agent. The special broker’s licensing exam looks at advanced topics like legal issues in real estate transactions, operating your own brokerage firm, and many other niche real estate topics. If you have an interest in property management, investing, or the construction of residential and commercial properties, a broker license will give you a wide foundation to draw from.
To own and manage a brokerage, you would need to become a licensed broker. If you are an aspiring real estate agent, you will meet plenty of brokers as you try to find the best place to hang your license. There are a few important distinctions between the functions of a real estate broker.
A real estate agent that earns their broker license but still works under another broker is called an associate broker. They, like any broker, have the ability to work independently and hire real estate agents, but associate brokers typically do not supervise any agents.
Acting as an office manager for a brokerage, a managing broker handles the hiring, firing, and training of real estate agents. They also oversee the day-to-day operations of the brokerage and handle the administrative staff.
A designated broker is the main principal at a brokerage, taking on the responsibility for ensuring that all the associated agents are following the law. In the case of a brokerage with Realtors, the designated broker will need to make sure the Code of Ethics is being followed. This brings us to our next question…
What is a Realtor?
A Realtor is essentially a real estate agent, with some additional acclaim over a vanilla agent. They have elevated themselves through additional certification and by joining the trade association NAR. There are similarly large, ubiquitous organizations for many other fields, like the PMI for project managers or SAG-AFTRA for actors. Becoming a Realtor is simply a way to upgrade your career once you are a real estate agent.
With a Capital “R”
“Realtor” is always capitalized, as it is a proper noun, trademarked by the National Association of Realtors. They have a 113-year history and are now the most extensive professional trade association in the United States. The NAR also functions as a self-regulatory organization for real estate professionals, providing guidance and best practices for all involved.
How To Become a Realtor
If you have your real estate license, you are well on your way to being able to call yourself a Realtor. There actually is not a separate license through the NAR; you just need to maintain an active membership in addition to having an active state real estate license.
The main step you will need to take is agreeing to the NAR Code of Ethics. You agree to these by joining a local branch of the National Association of Realtors and taking an exam on the Code of Ethics. You will also need to pass another background check into your professional history and maintain a clean record as long as you are a Realtor.
Joining the NAR and becoming a Realtor is a relatively simple process. The yearly dues are only $150 for 2022, and membership should have an excellent ROI for any hard-working Realtor. A number of benefits are available through NAR for Realtors, to say nothing of the fantastic networking opportunities. Networking as a real estate agent is a major hurdle for many new agents, so why not take advantage of a massive association.
Which to Choose: Realtor vs. Real Estate Agent
Just starting out in real estate, and want to be a part of deals? Then you can start the process to become a real estate agent today. Getting your real estate license is the first step to becoming a Realtor, broker, or just hanging your license somewhere and starting to earn a commission.
If you want to be involved in real estate as an investor, flipper, or developer, the answer is not as simple. You may want to get your real estate license at some point, but depending on your goals, it may be better to defer that decision. The ethical implications of being a real estate agent occasionally conflict with your interest in earning money.
If you are looking for a serious career in real estate, the additional prestige and connections of joining a Realtor association can open a lot of doors. Since the principals of a real estate brokerage must all be members of a Realtor association before a non-principal can join. That means if you are just starting out, you should apply for a position or sponsorship from a Realtor, not just any brokerage.
How to Get Started in Real Estate
Get started today by signing up for state-approved real estate classes and preparing for your licensing exam. You should also begin to look for brokerages in your area that would be a good fit for you. Be sure that they will offer you additional training and support, if you want to build a career in real estate.
Without mentoring or the experience of other agents helping you grow and learn, it will be more difficult than it needs to be. That’s why Empire of Real Estate is working to bring you more guides like this one. We are here to tell you the hard truths about the real estate industry and provide insider information.