What Is an Agent?

Getting started in real estate can be complicated. For example, after you pass your real estate exam, are you going to be...

A real estate Agent? A Broker? A Realtor®? A Salesperson? All of these things? Or just some of them?

Now, if you don’t know how to refer to yourself as a real estate licensee, you can see how the general public might get confused as well. For example, when you say "real estate agent", in most states you are actually talking about a licensed real estate salesperson that works under a licensed real estate broker.

But when was the last time you heard somebody say “wow, what a great real estate salesperson”? Or how about “My real estate licensee really knows her stuff!” No, you’re much more likely to hear “My real estate agent rocks!” or “I’ll ask my Realtor®, she knows everything”. Today we’re going to talk about the differences between real estate salespersons, brokers and Realtors®.

The public likes to use the word “Realtor®” as a generic term for any real estate agent, much like the term “Kleenex®” is now a generic term for any tissue. Technically, however, that’s not correct. Passing your real estate exam and getting your license makes it legal for you to help someone find a buyer for a property, but it doesn’t mean you’re a Realtor®.

A Realtor® is a real estate professional who is also a member of the National Association of Realtors® (NAR). To become a member, real estate professionals may pay membership dues and agree to abide by the association's ethics and standards.

If somebody is not a member of the National Association of Realtors®, they cannot claim that title even if they passed all of their state’s requirements with flying colors. You have to be a member of the NAR to call yourself a Realtor®. And anyone who is a member of the NAR is licensed to use the Realtor® trademark as part of their business name.

Bound by a code of ethics, Realtors® promise to operate with transparency, honesty, and integrity. They are expected to conduct their business with the best interests of their clients in mind, without exaggeration or misrepresentation of any kind. Regardless of their role, Realtors® should be experts in their field. This gives the public a level of confidence, which can make a Realtor® more appealing to work with.

Realtors® can be agents or brokers. The terms “real estate agent” and “real estate broker” are easily confused and often used interchangeably. And while there may be some overlap in what they do, there are also some important differences- especially when it comes to their qualifications and where they sit on the professional ladder.

A real estate agent is an industry professional who has taken and passed, all required real estate classes as well as the licensing exam in the state where they intend to work. For most people, this is the starting point for getting into the real estate field.

Depending on the state where the agent is licensed, they might hold a salesperson’s license, a sales associate license or a broker’s license. Regardless of what the license is called, it allows the agent to represent either a buyer or seller in a real estate transaction. In exchange, the agent receives compensation.

Agents must work under a licensed broker who is legally accountable. When an agent gets a listing, the listing agreement is actually between the seller and the brokerage’s principal, or “employing”, broker. 

When a real estate deal closes, the seller pays the agreed-upon commission to the brokerage, and the employing broker pays out the commission to the agent. It is illegal for an agent to get paid for a real estate transaction from any source other than their employing broker, so if an unscrupulous seller tries to pay you under the table… don’t do it! It’s not only illegal, but it’s also bad business practice.

Real estate brokers can also work under an employing broker, the same as a real estate agent. Depending on their state, real estate brokers can work independently or have other agents work under them. Anytime a broker has agents working under them, they are legally responsible for the agents’ actions.

In summary, real estate agents are licensed to facilitate real estate transactions. They work under a licensed broker who is legally responsible. Brokers have more stringent licensing requirements and as a result, have the option to work alone or have other agents work under them. And Realtors® are licensees that are part of the National Association of Realtors, a trade organization.