Differences Between a Real Estate Agent, REALTOR® and Broker

Buying or selling a home can be a stressful experience for people. It can sometimes be overwhelming. There are so many decisions to be made, so many conditions to be met and so many issues that can arise during the home listing or buying process, the negotiation stage and the details to be sorted out in closing.

Most people buy or sell a home only a few times in their lives. It may be a starter home where financing is stretched to the maximum, a move-up home as the family grows or a downscaling event where the nest is now empty and less room is needed. Whatever the situation, the home selling and buying process can be challenging, and most people rely on help from a professional real estate salesperson.

Finding the right salesperson can be just as overwhelming as the process, and the right real estate agent can make the experience of buying and selling a home far less stressful. Each state has different licensing regulations for different types of real estate salespersons, and finding the right real estate agent in PA starts with understanding the difference between the terms broker, real estate agent and REALTOR®.

It’s fair to say that most homebuyers and sellers are aware of these terms, but when asked “What’s the difference between a real estate agent and a REALTOR® “What’s the difference between a real estate broker and a real estate agent?” they’d be hard pressed to answer accurately. On a local scale where the customer is personally affected, asking “What’s the difference between a real estate agent vs. a REALTOR® in PA?” could be very confusing.

These might all sound like a play on words, but there actually is a big difference in the definitions and the roles of a broker, an agent and a REALTOR®. Understanding who each real estate professional is and what they do will set you at ease when choosing the best professional to represent your homebuying or homeselling needs. Let’s look further into the question.

 

What’s the Difference Between a Broker, a REALTOR® and a Real Estate Sales Agent?

The proper answer can actually confuse some real estate salespeople. It’s correct to say that “every real estate broker is a real estate agent, but not every agent is a broker” and “every REALTOR® is a real estate agent, but not every real estate agent is a REALTOR®”. It’s also correct to say “most brokers are a REALTOR® but not every REALTOR® is a broker.” This needs to be clearly explained.

 

Real Estate Agent

What is a real estate agent? An agent is the entry level to the real estate sales business. A real estate agent in PA is officially known as a salesperson and is licensed by the state to perform all the legal functions of a real estate professional in representing a buyer or seller of residential or commercial property.

In order to obtain a salesperson license, the holder must meet and pass the minimum qualifications set out by the state so they are properly equipped to serve their client’s best interests. The standards include:

• A minimum of 18 years of age
• Undergo a specified number of hours in an approved course
• Successfully pass a state examination on real estate laws and transactions

 

All real estate agents or salespersons must work under the supervision of a licensed real estate broker who is higher qualified and more experienced in real estate law, finances and management of real estate transactions and salespersons.

Real estate salesperson licenses must be renewed frequently, and the license holder must take ongoing education to ensure they are current with evolving real estate law and market conditions.

 

Real Estate Broker

A real estate broker is essentially a real estate salesperson or agent who has more experience than a basic agent and has qualified higher in real estate education and coursework. Brokers are licensed to run their own real estate agency and to employ salespersons to list, sell and assist buyers in real estate transactions.

Generally, real estate brokers in Pennsylvania act as managers (broker of record) and/or owners (broker-owner) of real estate agencies, rather than simply filling the role of a real estate salesperson. Their higher responsibilities include:

• A minimum of three years continual, full-time experience as a salesperson
• Hold a valid real estate salesperson license
• Complete 240 hours of coursework at a state-approved college or university
• Successfully pass the state real estate broker examination

 

The state-approved real estate broker education program includes courses on:

• Real estate finance
• Real estate investment
• Real estate construction
• Real estate sales
• Residential property assessment
• Commercial property assessment
• Valuation of income-producing property
• Residential and nonresidential property management
• Salesperson supervision and management
• Real estate agency management

 

While most real estate brokers manage or own a real estate agency, they sometimes act as lone brokers who serve a niche, specialized market such as commercial or luxury property to demanding or sophisticated buyers. With a real estate broker license comes the expectation by both the customer and the regulatory body that brokers are more knowledgeable and experienced in their profession than agents.

Brokers in agencies are the managers who a salesperson or a REALTOR® report to and bear the responsibility for their actions. A real estate broker also handles the earnest money deposit and establishes the escrow account. Clearly, a broker assumes a greater responsibility than a salesperson or REALTOR® and as part of supervision duties, a broker will step in to handle and problems with a home purchase or sale.

 

REALTOR®

REALTOR® is a registered trademark. It’s a professional designation awarded to licensed real estate salespersons who apply for membership in the industry self-regulated organization known as the National Association of Realtors® (NAR).

A real estate salesperson who is allowed to use the title REALTOR® has been screened by NAR for their experience, education and professionalism in the real estate business. The qualifications include:

 

• Hold a valid real estate salesperson or broker license
• Be actively engaged in full-time, professional real estate sales
• Have no criminal record
• Have no current, recent or pending bankruptcy proceedings
• Have no record of unprofessional conduct or sanctions
• Pledge and adhere to the NAR Code of Ethics

 

The National Association of Realtors® states that their Code of Ethics is what separates a professional REALTOR® from nonmember real estate agents or salespersons. The Code of Ethics includes these 17 promises that REALTORS® must fulfill:

1. Pledge to put the interests of buyers and sellers ahead of their own and to treat all parties honestly.
2. Shall refrain from exaggerating, misrepresenting or concealing material facts, and is obligated to investigate and disclose when situations reasonably warrant.
3. Shall cooperate with other brokers/agents when it is in the client’s best interest to do so.
4. Have a duty to disclose if they represent family members who own or are about to buy real estate, or if they themselves are a principal in a real estate transaction, that they are licensed to sell real estate.
5. Shall not provide professional services in a transaction where the agent has a present or contemplated interest without disclosing that interest.
6. Shall not collect any commissions without the seller’s knowledge nor accept fees from a third party without the seller’s express consent.
7. Shall refuse fees from more than one party without all parties’ informed consent.
8. Shall not comingle client funds with their own.
9. Shall attempt to ensure that all written documents are easy to understand and will give everybody a copy of what they sign.
10. Shall not discriminate in any way for any reason on the basis of race, color, religion, sex, handicap, familial status or national origin.
11. Expects agents to be competent, to conform to standards of practice and to refuse to provide services for which they are unqualified.
12. Must engage in truthful advertising practices.
13. Shall not practice law unless they are a lawyer.
14. Shall cooperate if charges are brought against them and present all evidence requested.
15. Agree not to badmouth competition and agree not to file unfounded ethics complaints.
16. Shall not solicit another REALTOR’s® client nor interfere in a contractual relationship.
17. Shall submit to arbitration to settle matters and not seek legal remedies in the judicial system.

 

The NAR Code of Ethics is strictly enforced by local real estate boards and certified salespersons who hold a REALTOR® membership and take their responsibilities very seriously. The standards are much more rigorous, restrictive and confining than those who hold the basic state salesperson or real estate agent license.

As of August 2016, there were 1,223,423 members of NAR who hold a REALTOR® designation. This is out of approximately 2.5 million licensed real estate sales agents across America, or making up nearly half of the professional salespersons and brokers/holders of a voluntary and improved professional standard.

In addition to screening and certifying licensed real estate agents and brokers, NAR provides a facility for professional development, research and exchange of information across its membership as well as to the public and all levels of government ­— federal, state and local. At its core, NAR acts “for the purpose of preserving the free enterprise system and the right to own real property.”

 

Advantages and Disadvantages of Using a Broker, Agent or REALTOR®

Beyond a doubt, the biggest advantage any buyer or seller of real estate can have is peace of mind. Peace of mind that the transaction is being handled by someone with experience. Someone who helps with pruchases of sales every month. Experience matters. After all, a home is usually the biggest investment for the average American, and having someone who will help you make a solid investment when purchasing, or having someone who will help you get the most dollars out of the sale of your home … is key.

There are other advantages like access to the Multiple Listing System, or MLS. But the truth is there are many services out there that will give a consumer the ability to place their home for sale in the MLS, without providing you the most valuable acpect of all: true guidance, from a professional who does this day in & day out… who knows what to expect… and can walk you through the entire process, explaining every step, giving you insight into the various situations that may arise, so you can make educated decisions that will help make this a smooth successful transaction.

Let’s look at the many components that a REALTOR® brings to the able, advanges and disadvantages.

 

THE MLS

The MLS is an interagency arrangement that gives approved members the right to advertise listings cooperatively and to represent buyers and sellers of real estate properties on the integrated, computerized listing system. The MLS accounts for the vast majority of real estate listings across the nation, and most MLS boards are very restrictive as to who is allowed to advertise on and access the MLS system.

Just because a salesperson holds a valid real estate sales license, regardless of their jurisdiction, does not mean they automatically have the right to list on or sell from the MLS. Most MLS boards require an agency to have a broker with a REALTOR® designation, and many will not allow an agent to participate on the MLS as well if they are not designated REALTORs®. Therefore, it’s vital that if you intend on selling or buying a home or other property through the MLS, you should ensure your licensed representative is able to obtain access to the Multiple Listing System.

There are other advantages and disadvantages of using a broker, a sales agent or a REALTOR®. Let’s look at them closer.

 

Real Estate Agent

Although an agent or real estate salesperson may not have the experience of a broker or the additional training or certification of a designated REALTOR®, you may find that an agent may have more time to devote to your listing or buying needs. Many agents are new to the business or may not devote full time to the industry, but that doesn’t mean they don’t have a tremendous amount of local knowledge such as areas, zoning conditions or even the history of a particular piece of property.

Real estate agents do not carry the responsibility that a broker does. However, they have the backing of their broker when it comes to dealing with contract specifics. All licensed real estate salespersons in Pennsylvania must be employed by a licensed broker who is also mandated to supervise each and every transaction that comes through their agency.

And while a person with a basic real estate license may not have sufficient knowledge of contract law, how to properly price a property or how to successfully negotiate a fair price and terms of a real estate deal, as well as properly wording subject clauses or structuring closing dates, they will have access to a Broker at all times to get answers to any issues that may arise that they may nt have encountered themselves yet.

 

Real Estate Broker

Clearly, the vast majority of real estate brokers have much more experience in the business than most agents or designated REALTORs® do. They have more invested in their careers and have a much higher standard of care required in their professional performance.

Most Brokers are managers, yet some are in sales. The brokers who manage as usually called “Broker of Record” or “Managing Broker” or alike.. while a broker who is still in sales in usually called an “associate broker”. Associate Brokers are Brokers who met all the requirements from the State to become brokers, but wish to remain in sales, and have their lincense under another Broker (a managing broker).

Having a broker represent your purchase or sale may be advantageous when dealing with a complicated property or a complex transaction. It would be wise to discuss the project with a broker if you suspect there may be difficulties that a REALTOR® or agent may not be able to handle.

Broker/Appraiser used to be one license. Now they are two licenses. Brokers may not appraise. They can give their “opinion” of price, same as any agent, but it holds no legal value.

Additionally, most real estate brokers will have a full schedule managing their agency and supervising their staff and may not be able to give you the time necessary to market or purchase your home. Brokers typically assign buyers or sellers to one of their licensed agents or REALTORs®… and step in to give their agents and clients advice when a sticky situation arises.

 

REALTOR®

A REALTOR® designation is not to be taken lightly. These folks have proven their ability to serve their customers professionally, whether it be listing their home or selling it.

REALTORs® are committed to the real estate industry and are held to a higher standard of accountability than their nondesignated counterparts. The designation is insurance that the salesperson has knowledge of real estate contract law and their finger on the pulse of local market conditions.

Be assured that a professional REALTOR® will act to the highest standards when representing you while buying or selling a home. They have earned the designation, maintain it with pride and adhere to the Code of Ethics.

CENTURY 21 Core Partners is a full-service real estate provider and employs professional brokers, agents and REALTORs®. Contact CENTURY 21 Core Partners in Pennsylvania and discuss which representative option is best for listing or purchasing your home.