Real estate is stressful. Between setting up your home for showings, trying to figure out where you’re going to make compromises, and making a gigantic life change, you’re overwhelmed.
Whether you’re buying or selling your home, you want a real estate agent you trust. You want someone who understands the market and is experienced at negotiating. You want a partner who can reduce your stress.
There’s tons of conflicting information about the types of real estate agents out there. How do you pick a real estate agent? Should you go with a real estate broker, a Realtor®, or a real estate agent? What are a real estate agency’s responsibilities?
Your Cheat Sheet: What’s the Difference Between Real Estate Brokers, Real Estate Agents, and Realtors®?
- A real estate agent has a real estate license, has met all state requirements to be an agent, and works under a real estate broker.
- A real estate broker is the manager of a real estate firm.
- A Realtor® belongs to the National Association of Realtors (NAR), which requires agents to comply with a code of conduct.
The roles are much more nuanced than this, so read on below for a more detailed understanding of how agents, brokers, and Realtors® are different. We’ll also give you tips for how to choose the right type of real estate agent to help you buy or sell your home.
Real estate agent vs. real estate broker
Most states differentiate between two types of professionals– agent and broker. A real estate broker runs a real estate agency and must pass an exam and be licensed to be a broker, while a real estate agent must pass an exam and be licensed to sell property.
The real estate broker is the leading person in a real estate firm. They man the whole operation. They’ve taken coursework to ensure they can manage a real estate firm. This person takes responsibility for all of the real estate agents she employs. Brokers must have a particular license, and some licensed brokers choose to work in someone else’s firm. In this case, they’re usually called an associate broker.
The real estate agent has met their state’s requirements for getting a license to sell property. An agent usually works under a broker, and are sometimes called subagents, real estate salespeople, or sales agents. According to the Bureau of Labor Statistics, there were 151,700 employed real estate sales agents in the United States in 2015.
When it comes to buying or selling a home, you’ll probably work with a real estate agent who works for a real estate agency led by a broker. The real estate agent is the person you’ll work with most directly. They’ll be on call to help you through any questions.
But what’s a Realtor®, and do I need one?
A Realtor® is a real estate agent who is part of the National Association of Realtors®, which has a certain standard of ethics and moral codes to follow. These rules have a reputation for being strict. Many real estate agents and brokers are Realtors®, and they’ll proudly display this information on their business cards. They’re the real estate “in crowd.”
Realtors® have access to inventory that real estate agents don’t, particularly through the Multiple Listing Service (MLS), which gives them greater access to homes on the market. If you work with a Realtor®, you’ll have access to more homes.
Other types of real estate agents and terms to know
Seller’s agent or Listing agent
When you sell your home, you’ll need to find a seller’s agent.
The seller’s agent is the real estate professional who represents the person selling the property. This person will act as the manager of your house sale. Think of them like the project manager. They talk fast, act fast, and get stuff done.
The seller’s agent will work with the buyer’s agent to come to a final price for the property. Get the property sold and you enter into a brokerage agreement with your agent and their firm. This agreement ensures they will represent your interests as a seller.
When you’re buying a home, you want a buyer’s agent to swoop in and help out.
Consider the buyer’s agent your first mate, willing to do the heavy lifting, negotiate on your behalf, and rally the crew to find the perfect house.
Real estate agents are often both buyer’s and seller’s agents. The only real difference between the two is that buyer’s agents work for the house hunter. They’ll typically take you around town, show off houses they think you’ll like, and manage the process from negotiating the offer to closing the deal.
A designated agency began because of conflicts of interest with dual agencies. A designated agency is when a real estate firm has a designated individual agent to represent only the interests of the seller, and another designated agent to represent the interests of the buyer. This gives both the buyer and the seller more personalized representation.
A dual agency is when a buyer is represented by the same firm that has the listing. It’s also called a dual agency when the same real estate agent represents both the buyer and the seller.
Imagine playing a game of blackjack as both the dealer and a player. There are a handful of potential benefits of using a dual agent as a seller but its not a recommended best practice.
Potential Benefits of Using a Dual Agent:
- Streamline the transaction. After all, negotiating with yourself is so much easier.
- The agent might have more information about the property than an agent working strictly from the buyer’s side.
- Dual agents will occasionally take a reduced commission since they’re working both sides.
- Buyer’s tend to have more purchasing power because the agent knows everything about the seller.
- Communication between buyer and seller gets a little easier since there’s only one primary point of contact.
Minor benefits aside, some states have tried to outlaw the practice by citing a conflict of interest. Unfortunately, every state in the US leaves some sort of opening for real estate agents to “double dip.” The good news is that where the practice is legal, most states require the real estate agent to disclose the conflict of interest.
Here’s where the issue gets a little murky.
Eight states ban the practice outright but even among those states there are exceptions. We’ve put together a little table to help:
|Bans Dual Agency||Allow Transaction Brokerage||Allow Designated Agency|
How to Work with Any Type of Real Estate Agent
The right real estate agent can get you in or out of a home smoothly. A bad one can bring on substantial headaches that cost you time and money.
Here’s how to ensure you get the best results, regardless of the type of real estate agent you’re working with:
Be clear about what you want
Even the best real estate agents depend on their clients to be honest and upfront about their needs. If you disagree with a real estate agent’s opinion, it’s important that you voice your position. Explaining your stance is essential– whether you’re buying or selling.
Check their historical sales performance
When you’re choosing a real estate agent, you want to ensure they have a history of selling homes. If they have extensive sales history, that means they’re doing something right.
Take Laura Kaufman, she’s one of the top seller’s agents in San Francisco. In 2015, she ranked in the top 1% of the 4,267 agents for homes sold in the city. She’s got a proven track record for getting properties sold in that specific area so you know she’s got the chops to handle the market.
Consider client reviews but don’t rely on them
While sales data is arguably the most objective way to compare real estate agents, its not necessarily the end all be all. Ask each agent for a few references from a few of their previous contacts, read up on a decent sample set of online reviews posted on their various agent profiles, and do everything you can to make sure their a good personality fit.
You want to work with a real estate agent who has significant experience in your neighborhood. If you’re selling, your agent will have up to date data on how hot the market is. If you’re buying, your agent will help you make decent offers. No matter what, choose a real estate agent with experience where you are.
Regardless of the type of agent you need, make sure they’re a good listener
Laura Kaufman believes that understanding a client’s needs is essential to getting them into their dream home. “My clients choose me as their Realtor® for my straightforward, enthusiastic and patient approach,” she said. “I love helping real estate buyers figure out what qualities are most important to them in a home and guiding them through their options.” In order to do this, Kaufman has to listen carefully to her client’s needs.
Choose the right type of real estate agent
Some real estate agents may claim that they specialize in both buying and selling. But the best really stick to one lane or the other. For example, Michelle Gonzalez, a top real estate agent in Miami, has 20 years of experience as a seller’s agent. Not only that, Gonzalez specializes in a specific type of properties as well. She’s ranked #1 in Miami for townhome sales, and #25 for condos.
The bottom line is that you can’t just pick any old Seller’s or Buyer’s agent out of the phone book. There are tangible differences between one type of real estate agent and another. Don’t leave one of the biggest financial decisions of your life to the first agent that comes along, or else you could end up having to fire them and start over with a new agent (and no one wants that!).
Carefully consider the pros and cons of using an agent who specializes in sales, purchases, or both, weigh they’ve done historically in your area, how they’ve worked with other clients in the past, and their network of support. Then, after all of that research, go with someone you’re comfortable working with for at least a month.