Real estate agent versus real estate broker

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Americans are snapping up homes. In May 2021, sales of existing homes in the U.S. rose 44.6% compared to May 2020 and average home prices rose 23.6% in the same time frame, according to the National Association of Realtors. This housing boom is driven by several factors: low interest rates, low supply, and high demand as lifestyle shifts drive many to change up their living situation. “We’re seeing people who are homeowners wanting to buy bigger homes, and a lot of first-time homebuyers,” says Jeff Belzer, a Realtor with Jeff Belzer & Associates at LIV Sotheby’s Realty in Ventura, California. The current low interest rates, Belzer adds, “are opening up new opportunities for people.”

If you are ready to consider buying a home, you’re probably heard that brokers and real estate agents may be involved in the process, among other figures such as lawyers and bankers. In this competitive market, having a real estate professional on your side can make the whole process easier and less stressful.

So who are real estate agents, real estate brokers, and Realtors? What do they do, and do you need them to buy (or sell) a property? 

This guide will help you distinguish between them and find the right real estate professional to work with. 

Real Estate Agent

A real estate agent also holds a state license, which requires fewer education hours and a less rigorous exam than a broker’s. They can represent buyers or sellers. 

Pro Tip

Real estate brokers have a higher level of professional licensure than agents, and both brokers and agents can technically be Realtors. Whichever real estate pro you choose, interview them to make sure they’ll represent you well.

While a real estate agent license enables people to be involved in buying or selling and take a commission from the transaction, agents need to work under a broker. 

Real estate agents are usually not paid directly. Each time they close a transaction, their commission goes to the real estate broker they work under. The broker keeps a part of that but gives the agent a cut, the exact value of which depends on the agreement between the agent and broker. 

There are two types of real estate agents: 

• Seller’s agents help people who want to sell their home. They advise on how to prepare the home for selling, which might include staging it. They promote the listing and work to bring interested buyers to the property. Then, should a buyer make an offer, they work with the buyer’s agent — possibly presenting counteroffers on the seller’s behalf — to reach an agreed-upon price. Once the seller accepts the offer, they continue working with the seller until the transaction closes. 
• Buyer’s agents help people when they’re house-hunting. A good buyer’s agent takes the time to understand the buyer’s specific needs, then lines up listings that meet those needs. If the buyer likes any of those homes, the buyer’s agent brings the seller’s agent the offer. If the offer is accepted, the buyer’s agent works with the seller’s agent to finalize the transaction so they can hand over the keys to their client. 

Whether you choose a broker or an agent, spend some time before you commit to working with any one person. “People should absolutely interview their real estate professional,” Belzer says. “Under no circumstances should that person just go with someone. The good real estate pros will want to give you the full presentation and make sure everyone’s on the same page. It’ll make the process go so much smoother.” 

How do real estate agents get paid

Real estate agents are paid on commission, which means that they only make money when a deal is closed. Real estate commissions are usually five to six percent of the sale price and are paid by the seller. The commission is paid directly to the brokers involved in the deal, and split between the seller’s broker and the buyer’s broker (if there is one). Each broker then pays their agent a cut of their own commission. 

Real Estate Broker

A real estate broker holds the highest level of real estate licensure. That means they’ve successfully taken all the real estate education specified by their state’s requirements, and passed that state’s real estate broker exam. With this license, they can work independently. (Real estate agents, on the other hand, have to work under a broker.)

“There are top agents who will never get their broker’s license,” Belzer says. “But by being able to take on the responsibility of a broker, you’re going to have more to offer.”  

There are three types of brokers:

• Independent brokers: These brokers can be in business independently. They can represent the buyer or seller, and operate directly with their client.
• Managing brokers: They work at a real estate agency or brokerage as supervisors, and have to meet certain additional criteria besides holding a broker’s license. Managing brokers might represent buyers or sellers while managing their brokerage — they might also be called the principal broker — or they may choose to focus on management, and let their agents work with clients on the agency’s or brokerage’s behalf. 
• Associate brokers: These real estate professionals have their broker’s licenses but choose to work under another broker. They might opt for this so that they have a back office to handle the administrative work or a pipeline to queue up leads for them. When they close a deal, the brokerage for which they work takes the full commission, then pays them their cut. In this role, there’s really not much difference between a real estate broker and an agent. Associate brokers have the same duties — and are paid in the same way — as real estate agents while maintaining a higher level of licensure. 

How do real estate brokers get paid

Like real estate agents, brokers are paid on commission when the house is sold, with the seller footing the bill. The commission is split between the buyer’s and seller’s broker. If a broker facilitated the deal themselves, they keep all of their share of their commission. Otherwise, they give a cut to the agent that worked on the deal.

Realtor

Real estate agents, associate brokers and brokers can also be Realtors, a qualification trademarked in 1949 by the National Association of Realtors, the largest real estate trade association in the U.S. 

In fact, most of them are.   

“There are approximately 2 million [real estate] licensees in the United States, and nearly 1.4 million of them are Realtors,” says Deborah Baisden, who’s one herself and works at Berkshire Hathaway HomeServices Towne Realty in Virginia Beach, Virginia, as well as serve as NAR vice president for her region. 

To become a Realtor, an agent or broker needs to be a dues-paying NAR member and commit to its Code of Ethics. The NAR says they are “held to a higher ethical standard than licensed agents.” 

“The Code of Ethics has been in place since the early 1900s and its primary purpose is to protect the consumer, making sure they’re getting a true picture of the property and their investment,” Baisden says. The code lays out an agent or broker’s fiduciary responsibility to their client, the proper handling of money in a real estate transaction, and the importance of accurately representing a property to potentially interested parties. 

How do Realtors get paid

A Realtor isn’t a role, rather a title to indicate that a real estate agent or broker has passed the stringent qualifications to become a member of the National Association of Realtors. Depending on if a Realtor is a real estate agent or broker, they are paid the same way as any other real estate agent or broker. 

How To Find the Right Professional For You 

Do you really need any of these figures — agent, broker or either one who’s also a Realtor — when buying or selling a house?

Most homes are sold with the assistance of agents or brokers, who only get paid if and when the transaction closes. The commission for the sale of the house is typically five or six percent of the sale price, paid by the seller, and is split evenly between the representatives of the buyer and seller.  

You are not mandated to hire any of them, but they certainly help you get the best experience and the best price — and avoid surprises. 

“When people go through ‘for sale by owner’ or another non-represented route, the experience is really rough,” Belzer says. “Maybe things aren’t fully disclosed or you don’t take concessions when you should have.”

And since real estate is often the biggest financial transaction most people undertake, it pays to have competent representation in your corner.

“A big part of what we do is advocacy,” Baisden says. 

The choice is yours. Either way, make sure you take the time to interview real estate professionals you’re thinking of hiring to find a person who understands your wants and needs, and will work hard to make sure they’re met.