What is the difference between an agent and broker?
Are you new to the world of real estate? Are you looking to buy, sell, or rent property? Knowing that you want to find the best REALTOR to assist you, there are a couple things you will want to understand first. You might have noticed that the various titles for real estate professionals can be quite confusing.
What doesn’t help is that sometimes people uses these titles interchangeably, but it’s important to note the differences between these people. It’s also important that you understand that there are different requirements to use these titles.
Real Estate Agent vs. Real Estate Broker
A real estate agent can refer to any person who has earned a real estate license. There are several different areas these people can work in, including sales professionals, associate broker, or brokers. There are many different requirements that vary by state (and country) for becoming a licensed real estate agent.
Now, you may have also heard the term REALTOR®. This is a real estate agent who is a member of the National Association of REALTORS®. These professionals are bound to uphold all standards and the code of ethics brought forth by the association.
So a REALTOR® is always a type of real estate agent, but not all real estate agents can be called REALTORS®. (Though many people have come to use this term incorrectly—think when people call a garbage receptacle a Dumpster. Technically Dumpster is a brand and only refers to the garbage receptacles made by that brand).
So what is a real estate broker? A broker is a real estate agent who is further studied and educated than the basic agent level. These people have taken an additional exam and met even more state requirements to become a licensed broker. Brokers can work on their own (without a firm) and can hire their own agents.
Some people break this down further into what is call a real estate associate broker, which is someone who is licensed as a broker, but chooses to work under the management of a broker.
Sometimes the interchangeability of these titles, and the common misunderstanding of the differences between the jobs can make buying, selling, or renting a more confusing process. Hopefully, now that you know these subtle differences, you can more easily navigate the world of real estate.
What are Franchises in Real Estate?
Most of what people think of when they think of a real estate broker is a franchise. Some popular names that are real estate franchises are:
- Coldwell Banker
- Keller Williams
- Century 21
- Better Homes & Gardens
- Berkshire Hathaway
and of course there are many more. When you see these names, these are usually relatively small, local real estate brokers that have purchased a franchise. Buying a real estate franchise gives you the right to the branding, tools and services of a national brand. You may have seen the little disclaimer saying “each office is independently owned and operated”.
Although the vast majority of real estate franchises are relatively small (under 50 agents) there are some extremely large real estate franchises that have hundreds, even thousands of agents.
What is important to remember is that just because you see a big name like Keller Williams, doesn’t mean you are dealing with a large, established company. You are most likely dealing with a small broker, with the owner sitting in the back room and 2 or 3 employees and a handful of agents that work as independent contractors.
If you would like to hear this over excited guy explain the difference between real estate agents and brokers — check it out below