Apr 18, 2019
Difference Between Broker and Realtor
A Realtor is always a broker1 or agent because being licensed is a requirement for being a Realtor, but a broker may not always be a Realtor. That’s because Realtor is a trademarked, made up title used by real estate brokers who are members of the National Association of Realtors (NAR), the primary trade association for real estate brokers in the United States. Essentially, being a Realtor means the real estate agent went one step further after getting licensed (which is done through state governments) and joined the National Association of Realtors which is a private trade organization for real estate agents.
Realtor vs Real Estate Agent
A real estate agent can be a Realtor if he or she is a member of the National Association of Realtors (NAR), America’s largest trade group for real estate agents. However, a real estate agent who is not a NAR member cannot call themselves a Realtor.
A Realtor on the other hand, is always a real estate agent. That’s because being licensed is a prerequisite for membership in the NAR.
Pro Tip: Often times, the terms Realtor vs real estate agent are used interchangeably, and many consumers don’t understand the difference. Now you know that a Realtor is basically just a real estate agent that is a NAR member!
Are All Real Estate Agents Realtors?
No. Even though the National Association of Realtors boasts over 2 million members across the United States, not all real estate agents choose to join and become Realtors. There are many real estate brokers who choose to operate independently of the NAR.
With that said, most real estate agents are Realtors because most MLS systems across the country are operated by local Realtor associations, meaning that you have to be a NAR member in order to participate. Since the MLS is critical for a real estate agent to be able to do business, most agents do in fact join the NAR and become Realtors.
Pro Tip: The dominant real estate association in NYC, The Real Estate Board of New York (REBNY), is not a part of the NAR. In fact, REBNY broke away from the NAR in the 1990’s because they felt that there was no benefit in paying dues. As a result, REBNY members in NYC are not called Realtors, unless they also happen to be a member of a Realtor association by choice.
What Is a Real Estate Agent?
A real estate agent is someone who is licensed to practice real estate in a particular state. The term real estate agent is rather generic, and does not provide specifics on what type of license the person has. For example, a licensed real estate salesperson, a licensed associate real estate broker and a licensed real estate broker are all real estate agents.
A real estate agent is called such because he or she acts as an agent on behalf of the principal (i.e. the customer) to buy, sell or rent real estate. As a result, a real estate agent has an agency relationship and serves the interests of the principal.
Difference Between Real Estate Agent and Real Estate Broker
A real estate agent is a general term for someone who acts on behalf of and in the best interests of a principal, otherwise known as a customer. The term real estate agent does not reveal any specifics on the type of licensure that the agent has.
In contrast, a real estate broker generally refers to someone who is a licensed real estate broker, which is the highest form of licensure. A licensed real estate broker can work individually as a sole proprietor, or start a real estate brokerage company.
A licensed real estate broker is able to bring on licensed real estate salespersons and licensed associate real estate brokers to work for him or her, generally as independent contractors. In essence, anyone who is not a licensed real estate broker must associate their license with a licensed real estate broker in order to use their license.
Difference Between Real Estate Salesperson and Broker
A real estate salesperson is the easiest type of real estate license to get, and does not require any prior experience. In New York, a real estate salesperson must simply complete a 75 hour pre-licensing course, pass a real estate school exam, and then pass the state exam, all of which are relatively easy.
In contrast, a real estate broker’s license is much harder to get. You typically need to work as a licensed real estate salesperson for at least 2 years and have completed a minimum number of deals to even qualify. Furthermore, you’ll need to take an additional 45 hour course and take an additional exam for real estate brokers.
As you can imagine, it’s much more difficult to become a licensed real estate broker vs just a licensed real estate salesperson. This is why the vast majority of real estate licensees that you’ll meet will be licensed real estate salespersons vs brokers.
Principal Broker vs Broker
A principal broker is a title typically used by a licensed real estate broker who is both the broker of record for the company as well as the head of the company. Keep in mind that this is a made up, custom title just like Managing Director or Vice President.
The distinction in real estate is that only owners or officers of a company or corporation can adopt custom titles. Licensed real estate salespersons and licensed associate real estate brokers cannot adopt custom titles because they are independent contractors of the company.
In contrast, the term broker is much more vague, and is often used by licensed associate real estate brokers and branch managers who are the supervising broker of record for a particular office.
What is a Broker of Record?
The Broker of Record refers to the licensed real estate broker of a brokerage under whom all other agents are associated.
The Broker of Record does not necessarily need to be the CEO or head of the brokerage, but the Broker of Record does need to be an individual who is qualified to be or already is a licensed real estate broker.
For example, if you’re an agent and someone asks you who is the Broker of Record of your brokerage, you should Google “public license search NY” and use the eAccessNY website to search for your brokerage. Use “search by name,” then “search by organization” to search for your brokerage.
If the company is small or mid-sized, then usually it will be structured as a LLC. In that case, you’ll see one specific individual with a license type called “Limited Liability Company Broker” listed. This is the Broker of Record for the brokerage.
If a company is larger, it might be organized as a corporation. Do the same process, and you’ll see one or more individuals with a license type called “Corporate Broker.” If there is only one Corporate Broker listed, then he or she is the Broker of Record for the company.
If there is more than one individual listed as the Corporate Broker, then you’ll have to do some additional research. You should email your office manager if you are unsure about who is the Broker of Record of the company. Alternatively, you can ask the Realtor or local real estate association that they are a part of for their Broker of Record’s contact information.
Pro Tip: Disagreements between real estate agents are typically settled between the office managers or brokers or record before things get out of hand. For example, in NYC it’s very rare for agents from different firms to go through REBNY arbitration. Things are usually settled by the “grown-ups” at the respective brokerages.
Realtor vs Broker vs Agent — Which is Better?
Remember that a Realtor is simply a custom title used by members of the National Association of Realtors. Other than membership, there is no real difference between a Realtor and a broker or agent who is not a Realtor.
Sure, Realtors technically have to abide by a code of conduct and ethics guidelines provided by NAR. However, just having these additional guidelines and rules does not mean they get enforced on a regular basis.
The main difference will be weather the local broker database in your area is governed by a Realtor operated MLS system or not. Assuming the local Realtor association runs the MLS in your area, then it does in fact make a difference whether your agent is a Realtor or not.
Only a Realtor will be able to take advantage of the MLS, a non-Realtor will generally not be able to. This is a huge disadvantage to not being a Realtor as you won’t be able to effectively cooperate with other agents.
This distinction of course goes away if the local broker database has nothing to do with NAR, such as the REBNY RLS in NYC.
Read the Full Article: https://www.hauseit.com/broker-vs-realtor/
Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).
