You’ve probably heard these terms used interchangeably: Realtor and real estate agent. But they’re actually very different.
A realtor is a licensed professional who belongs to the National Association of Realtors (NAR). A real estate agent is a licensed professional who works in the real estate industry but is not a member of the NAR.
Both realtors and real estate agents help people buy, sell, and rent properties.
But understanding the differences between them is critical.
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What is a Realtor?
A Realtor is a real estate professional who is also a member of the National Association of Realtors (NAR). The NAR is a trade association that sets standards for its members and provides them with resources and support. A Realtor has all the training, licensing, and education of a real estate agent, but has taken an additional step to join NAR. As a consequence, the Realtor is also bound by the NAR code of ethics.
NAR was founded in 1908. It’s the largest professional trade association in the United States, with more than 1.5 million members. NAR’s membership consists of real estate brokers, agents, appraisers, and other industry professionals.
The organization lobbies on behalf of its members and the real estate industry at large on issues such as homeownership, business taxation, and professional regulation. It also provides its members with resources such as training courses, publications, and a national real estate listing database.
What is a real estate agent?
A real estate agent is a professional who helps people buy, sell, or lease property. Real estate agents typically work for a real estate broker or another real estate professional. A real estate agent can be a Realtor but being a real estate agent doesn’t necessarily imply that one is a realtor.
To become a real estate agent, you must first complete the necessary education and training. This typically includes completing a real estate pre-licensing course and passing a state-specific exam. Once you have your license, you can start working in the real estate industry.
You may choose to work as an independent agent or join a real estate brokerage firm. Some agents also decide to become certified real estate appraisers. But you do need to work under a brokerage for the purposes of establishing your license.
A real estate agent may work with residential real estate, commercial real estate, or any other type of real estate. They may eventually become an associate broker or an actual broker and can act as either listing agents or buyer’s agents. They still have a full real estate license and are still a licensed real estate agent, they just aren’t with the National Association.
What’s the difference between a Realtor and a real estate agent?
The main difference between a Realtor and a real estate agent is that a Realtor is a member of the NAR and must adhere to its strict code of ethics. There are other differences, of course, but from a client’s perception, this is probably the biggest one.
A secondary difference is that a NAR member can connect with the MLS directly, whereas someone who is just a licensed real estate agent may need to connect through their principal broker.
Working with a Realtor offers many benefits, including access to the Multiple Listing Service (MLS), which is a database of properties for sale that is only available to members of the NAR. Realtors also have access to other resources, such as legal and financial advice, that can be helpful when buying or selling property.
That doesn’t mean that the right real estate agent is always a Realtor. But being a Realtor makes it easier to get open houses, work with a licensed real estate broker, and pitch to potential buyers and sellers. A Realtor is more likely to be connected with other real estate sales agents and listing agents and is consequently more likely to complete a deal.
What are the disadvantages of working with a Realtor?
The main disadvantage of working with a Realtor is that they may charge higher commissions than a real estate agent. Otherwise, Realtors are generally believed to be more motivated and professional, as they have gone through additional steps to secure their credentials.
There’s also no requirement that a Realtor must charge a larger real estate commission. Prospective buyers or sellers can ask their listing agent or selling agent how their commissions compare. Everything is negotiable when it comes to home buying and selling.
Why Wouldn’t a Real Estate Agent be a Realtor?
There are a few reasons why someone might choose to be a real estate agent instead of a Realtor. One reason is that real estate agents are not bound by the same code of ethics as Realtors. Another is that a real estate agent may not want to pay the fee to become a Realtor, especially if they don’t need to.
What is the NAR Code of Ethics?
The National Association of Realtors’ code of ethics is a set of standards that all members must adhere to. The code includes standards for ethical conduct, professional responsibility, and honest dealing. Realtors who violate the code of ethics can be subject to disciplinary action, including expulsion from the NAR.
The NAR code of ethics includes:
- The obligation to put the interests of clients ahead of their own.
- The duty to uphold the highest standards of honesty, integrity, and fairness.
- The commitment to act in a manner that contributes to the preservation of the free competitive enterprise system.
- The pledge to avoid exaggeration, misrepresentation, or concealment of pertinent facts.
- The duty to treat all parties involved in a transaction honestly and fairly.
- The obligation to cooperate with other real estate professionals to help ensure that the real estate market functions efficiently and effectively.
The NAR code of ethics is designed to protect the interests of both buyers and sellers in the real estate market. It ensures that Realtors uphold the highest of standards while representing their clients. If a Realtor does not obey the NAR code of ethics, they can be expelled from the association.
That’s not to say that real estate professionals don’t have to act with decorum. A real estate professional can also have their license taken away if they engage in unscrupulous activities, such as price-fixing. The difference is simply that Realtors have an additional barrier of both protection and scrutiny.
The MLS is a database of properties for sale that is only available to members of the NAR. However, some real estate brokers make their own MLS databases available to non-members. There are also sites that now scrape the MLS for information, so there is a lot of information out there. However, the MLS is updated much faster and more reliably than these other sites.
Requirements for Joining NAR
In order to join the NAR, a real estate professional must have a valid real estate license and must agree to abide by the NAR code of ethics. There is also an application fee.
The application process for joining the NAR can take a few weeks. Once an application is received, it will be reviewed by the NAR membership committee. If the applicant meets all the requirements, they will be approved for membership. But you don’t need an extensive history to join NAR.
What are the Consequences of Violating the NAR Code of Ethics?
Violating the NAR code of ethics can result in disciplinary action, including expulsion from the NAR. This is serious and could indicate that a real estate professional was using less than scrupulous methods when buying or selling real estate. An example could be trying to manipulate the price of a listing for friends or family.
Can Someone Who Isn’t a Realtor Become a Broker?
Yes, but they will need to meet the requirements for licensure in their state, which may include taking additional courses or passing an exam. Realtors who are already licensed brokers can continue working as Realtors, but they may not be able to use the term “Realtor” in their business name.
How Can You Identify a Realtor?
The easiest way to identify a Realtor is to look for the “R” logo, which stands for Realtor. You can also find out if someone is a Realtor by asking them or checking their website. Realtors are required to display the logo on their business cards, letterhead, and other marketing materials. Real estate professionals cannot call themselves Realtors or use the term Realtor within their marketing.
Will a Brokerage Require You to be a Realtor?
No, but many brokerages prefer to work with Realtors. This is because Realtors have taken an extra step to ensure that they uphold the highest ethical standards in the industry.
Why Do Realtors Get a Higher Commission?
Realtors get a higher commission because they have taken the extra step to become members of the NAR. In other words, it’s mostly market pressures; someone who is a real estate agent can still ask or negotiate for a higher commission, but a Realtor is more likely to get the higher commission.
The main difference between a Realtor and a real estate agent is that a Realtor is a member of the National Association of Realtors and must adhere to its code of ethics. Realtors have access to resources, such as the MLS, that can be helpful when buying or selling property. However, they may charge higher commissions than a real estate agent.
If you’re a real estate agent, you should become a member of NAR. It’s worth it for the additional credentials and direct access to the MLS. However, if you’re looking for an agent, you shouldn’t dismiss one simply because they aren’t a Realtor. Being a Realtor does convey a lot of advantages, but not being one isn’t necessarily a red flag.
Is every real estate agent a Realtor?
No. A real estate agent is a professional who helps people buy, sell, or lease property. A Realtor is a real estate professional who is a member of the National Association of Realtors (NAR). So, while every Realtor is a real estate agent, not every real estate agent is a Realtor.
Is it expensive to become a Realtor?
The cost of becoming a Realtor varies depending on the state in which you are licensed. Typically, there is a fee to join the National Association of Realtors (NAR), as well as annual dues. In some states, there may also be a fee to use the term “Realtor.” But it’s never very expensive and it conveys additional weight and trustworthiness when dealing with clients.
Is a Realtor better than a real estate agent?
There is no definitive answer to this question. Working with a Realtor offers many benefits, such as access to the Multiple Listing Service (MLS) and resources like legal and financial advice. Ultimately, though, it’s up to the client. Most Realtors have very similar backgrounds, they simply have taken the additional step to join the Realtors’ association.
Do I need a Realtor to buy or sell properties?
No, you don’t need a Realtor to buy or sell properties. You can work with a real estate agent who is not a Realtor, or you can even buy or sell property on your own. However, working with a Realtor may offer some benefits, such as access to the MLS and other resources.
Do Realtors need to renew their membership?
Yes, Realtors must renew their membership every year. So, there are always real estate professionals who may not have renewed their membership even if they were once Realtors.
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