Whether you’re a buyer or a seller, a real estate agent is a valuable partner in your real estate journey. A good agent will help you get ready for the market, negotiate the best price, buck up your confidence when things get rough, and guide you through the labyrinthine closing process.
But what kind of agent do you need? There are many types of agents— and brokers. From dual agents to managing brokers, it can be tough to tell exactly who does what, and whether or not you need one to find your dream home.
Below, we’ll go over each type of agent and each type of broker, reviewing the licensing requirements for each one. We’ll also cover what each type of agent and broker can do for you, as well as questions like what, exactly, is a Realtor? Let’s start with the agents.
- What’s the Difference Between a Broker, Real Estate Agent, and a Realtor?
- The Different Types of Real Estate Agents
- The Three Types of Real Estate Brokers
- Important Agent Qualifications
- Important Broker Qualifications
- What Is a Realtor?
What’s the Difference Between a Broker, Real Estate Agent, and a Realtor?
Although this question might seem confusing, it’s actually quite simple.
A real estate agent helps a client buy or sell a home. They work for a real estate broker, and since they’re out there making sales, they generally have a very good, up-to-the-minute feel for the market.
A broker is essentially an advanced real estate agent who’s moved up to management. Brokers manage agents, monitor transactions to make sure they follow the law, and keep an eye on the big picture. They usually have much more experience in the industry than agents, but they don’t often work with clients.
Agents and brokers generally split the commission.
A Realtor is an agent or broker who’s also a member of the National Association of Realtors (NAR). While working with an agent or broker who’s a member of NAR doesn’t confer any direct benefits to clients, other than the ability to lodge a complaint with NAR if the transaction goes bad, NAR’s code of ethics is often considered an additional layer of vetting or protection.
Remember: Just because an agent or broker has all the certificates, qualifications, and memberships, doesn’t mean they’re necessarily qualified. Always look for reviews of any agent you’re considering, and don’t be shy about asking for references.
So what are the different types of real estate agents?
The Different Types of Real Estate Agents
A listing agent helps a seller prepare their home for the market, lists it on the market, negotiates the highest possible price for the home, and then gets the deal across the finish line.
That job description covers a lot of ground. Let’s look at some typical tasks that listing agents handle.
- Price Strategy: A good listing agent can help you settle on a list price that will attract multiple suitors and lead to a quick sale.
- Staging: One of the most important parts of the pre-sale process is staging your home to show it off to its greatest advantage. Your agent can also recommend a professional home staging company, if you decide to go that route.
- Home Improvement: Your listing agent can recommend improvements like a new door or a new coat of paint that can be amazingly effective ways to boost your home’s value.
- Timing: When you list your home is just as important as the list price. There are busy and slow seasons and even individual days of the week that are more effective to list on than others.
- Hosting Open Houses: A well-run showing is key to get buyers interested in your home.
- Getting the Word Out: A good listing agent knows exactly how to reach prospective buyers in your area, whether that’s an ad in the local paper, or social media.
- Adjusting the Price (If Necessary): If your home languishes on the market, your listing agent can advise you on exactly how much you should cut the price to attract buyers.
- Fielding Offers and Delivering Counteroffers: The first offer is just that— a starting point. Once your agent receives that offer, they can negotiate it upwards for you.
- Guiding Through Closing: The closing process is long, expensive, and confusing; having an experienced agent to advise you through this phase is hugely valuable.
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The buyer’s agent is the counterpart to the listing agent, and performs many tasks that complement the listing agent.
- Suggesting Homes: Once you have an idea of what kind of home you want, your buyer’s agent can match you with listings and even give you a heads up about properties that haven’t quite hit the market yet.
- Accompanying the Buyer on Walkthroughs: A good buyer’s agent can point out subtle or hidden flaws in a property, and translate them to actionable intel.
- Offer Strategy: A good buyer’s agent will read the market— and the seller— to help come up with a starting offer that’ll get their client to the final sale price they want.
- Counteroffers and Negotiation: The listing agent is a professional negotiator who’s likely been through dozens or hundreds of transactions, and will get you the best price possible.
- Guiding through Closing: The closing process can be intimidating, but a good buyer’s agent can help you along. Buyers who don’t work with a buyer’s agent may need a real estate attorney to complete closing.
A dual agent is an agent that represents both the seller and the buyer.
However, dual agents aren’t ideal, because they have conflicting interests between representing both the buyer and seller. It’s virtually impossible for a single agent to both get the highest offer for the seller and best deal for the buyer. In fact, in some states, dual agency is illegal. Even in states where it’s not prohibited by law, it should be avoided.
There’s another kind of dual agency, too— when the listing agent and the buyer’s agent both work for the same brokerage. While this conflict is arguably milder, it’s still cause for concern.
The Three Types of Brokers
While agents are independent contractors, they do answer to someone; usually this person is a real estate broker. Real estate brokers are essentially advanced real estate agents; you could also think of them as management, while agents are the workers. Brokers supervise individual agents, monitor transactions to make sure they’re being done in accordance with the law, and generally look after the big picture. So what are the main types of brokers?
The Designated Broker
Also called the principal broker, the designated broker is the person who holds the brokerage’s license; states require each brokerage to have a designated broker for each state they operate in.
As the holder of the brokerage’s license, the buck stops with the designated broker. They monitor all the brokerage’s deals, and make sure they’re in compliance with the law. Designated brokers usually have a lot of experience in the real estate industry, and are intimately familiar with local rules and regulations.
The Managing Broker
The managing broker runs the day-to-day operations of the brokerage. That can include everything from mentoring and hiring real estate agents, to getting involved in the nuts-and-bolts of individual transactions, to working with clients.
The managing broker works directly under the designated broker, and reports to them.
The Associate Broker
An associate broker is very close to a real estate agent; they handle transactions, and can represent buyers and sellers. The main difference between an associate broker and an agent? An agent splits their commission with the broker they work for; an associate broker doesn’t.
Important Agent Qualifications
Just as with a doctor or lawyer, a real estate agent— or a real estate broker— has to be officially licensed and qualified before they can practice. Let’s look at some of the requirements to become an agent or broker.
These are usually general requirements, like being at least 18, and graduating high school.
Pre-Licensing Real Estate Courses
These are entry-level seminars that cover state and federal real estate law. These can be in-person courses or, as is more likely in 2020, done online. These courses can take anywhere from 40 to 160 hours, depending on the state.
State’s Real Estate License Exam
This is a one-day standardized exam, much like the SAT or GRE; the average duration is a little over three hours. If you don’t pass the first time, most states allow you to take it up to three times in one calendar year. There’s a section on state laws and regulations, and national ones, and you must score at least 70% on each section to pass.
Pass a Background Check
Some states, like Colorado, require you to pass a background check. Other states have more ambiguous requirements; California, for example, requires “proof of honesty,” while Arizona requires you to “be of high moral character.” In many states, a felony conviction can disqualify you from getting a real estate license.
Apprentice Under a Licensed Broker
In many states, a newly licensed real estate agent must work under a broker for a certain period of time. Even in states where this isn’t a requirement, it’s a good idea for a novice agent to learn the ropes under an experienced broker’s tutelage.
Acquire a Real Estate License
Once all the state’s requirements are met, the agent has to actually apply for, and receive, the license.
Important Broker Qualifications
As we mentioned above, a broker is essentially a more advanced real estate agent. Brokers have an additional layer of qualifications above and beyond those of an agent.
Broker Licensing Courses
Brokers have to complete educational courses, just as real estate agents do; typically, these courses run from 75 to 150 hours.
Unlike a real estate agent, many states require brokers to have a certain amount of full-time, licensed sales experience. For example, California requires two years of sales experience in the last five years to become a licensed broker. Other states require a certain number of years as a real estate agent before qualifying to become a licensed broker.
Pass the State Broker’s Exam
This exam is similar to the agent exam; there’s a minimum score for passing, and prospective brokers can take it multiple times until they achieve a passing score.
What Is a Realtor?
A Realtor is simply a real estate agent or broker who’s a member of the National Association of Realtors (NAR). This is a trade group that holds members to a code of ethics, collects dues, and reviews complaints against individual Realtors.
All Realtors are real estate agents or brokers, but not all real estate agents or brokers are Realtors.
NAR has certain requirements that applicants have to meet before they can become a Realtor:
- The applicant has to hold a real estate license, and work for a real estate firm
- The applicant must be employed by or affiliated with a Realtor
- The applicant can’t have any civil judgments or criminal convictions involving real estate law or civil rights law within the previous seven years, though applicants will have the chance to explain/defend their record and present “mitigating circumstances.”
- The applicant has to make a written application for Realtor membership, and provide information about any ethics complaints, arbitration or disciplinary hearings
- The applicant has to agree to follow NAR’s code of ethics, as well as any local laws and regulations
- The applicant has to complete NAR’s orientation course, and have their application accepted.
As you can see from the above list, NAR membership screens out applicants who’ve been convicted of real estate-related crimes, and imposes a code of ethics on members, so it does have some value as a vetting mechanism.
When you’re looking for a real estate agent, the right qualifications are of paramount importance. But it can be difficult to tell if an agent is as good as they seem to be on paper. A lot of the time, it comes down to a leap of faith. But what if there was a better way?
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