Real Estate Broker Vs. Real Estate Agent
One of the most common questions people ask in the real estate segment is if there is a difference between a real estate agent and a broker. Getting a professional to help you buy or sell a house can be a bit tricky since there are different kinds of professionals offering the same service.
So, what does a real estate agent do? And what about realtors; and brokers? This article explains the differences between these terms to help you get a sense of what they do before you seek out their services.
Real Estate Brokerage Vs. Real Estate Agent: Overview
The type of people who work in real estate extends beyond the agents: in fact, you will find professionals such as inspectors, salespeople, and appraisers working alongside real estate agents. The challenge is that people can get confused about the roles some of these people play – because admittedly, the lines can get blurred.
- A real estate agent is licensed to facilitate the buying or selling of property, and they work on commission. In many cases, agents work for a brokerage, splitting the commission with their employer.
- Brokers are traditionally more experienced and may operate as independent real estate agents, or even hire other agents to work for them.
The role of a real estate agent is to serve as a crucial facilitator in a rather lengthy process of buying and selling property. They help to link a buyer with a seller and are instrumental in the subsequent talks and negotiations that lead to a deal being struck. Compensation comes through commission, at a standard rate of 6 percent. This commission is subtracted from the total cost of the property, and since the buyer and seller each have their own real estate agent working on the same transaction, this commission is split between the two agents.
Brokers, on the other hand, are individuals who pursued their education beyond the level of real estate agents and successfully sat for a state-level examination to acquire a broker’s license. Real estate brokers can work independently or even have other brokers (or real estate agents) working on their behalf. Real estate brokers who work under other brokers are referred to as Associate Brokers.
Types of Real Estate Agents
There are several types of real estate agents, each with their own responsibilities, and specializations. Here’s a list of five types of real estate agents.
1. Listing Agent
Listing agents represent a homeowner when selling a home. It is, therefore, their job to make sure the homeowner’s interests are represented, and that they get fair contract terms. In a situation where the buyer doesn’t have their own agent, a listing agent can work for both sides (dual agent); and in some states, they can become transactional agents as well.
2. Dual Agent
A dual agent is an individual who represents both a buyer and seller in a real estate transaction. This may happen when a buyer’s agent and the listing agent both work for the same real estate brokerage; because it is the brokerage that defines how the agent relates with their client. But while the dual agency is common in real estate, it is illegal in some states and may create conflicts of interest. For this reason, homeowners and buyers prefer to hire their own exclusive agent to guarantee impartiality on the part of the agents.
3. Buyer’s Agent
A buyer’s agent represents a home buyer in real estate transactions. It is their job to see that the home buyer’s needs are considered before a final deal is signed, and they do this by putting their client’s interests ahead of the seller’s. A buyer’s agent helps their client negotiate a fair price for the property, and they guide them through closing and due diligence.
4. Transaction Agent
If a homebuyer goes to market without the help of an agent, they may be assisted by the listing agent, who in this case will operate as a dual agent. However, in states where dual agents are illegal, the listing agent will instead act as a transaction agent, working for neither the buyer nor seller, but acting as an impartial facilitator for the duration of the transaction.
Both real estate agents and brokers can earn the title of Realtor by becoming a member of the National Association of Realtors (NAR). This typically involves agreeing to follow the code of ethics outlined in the NAR policies, and paying the required annual fees. The benefits of joining the NAR includes access to educational material, which is important for career advancement, and additional discounts are offered as well. It is important to note that NAR members don’t have rights or privileges beyond those of regular licensed real estate agents.
Responsibilities of Real Estate Agents
As previously mentioned, real estate agents have the sole job of representing their client’s interests. They help buyers find the type of property they are looking for, and they assist in negotiating the price down to a fair deal. Here is a list of more specific roles that real estate agents have:
- Setting the right price for a property, based on current market value.
- Marketing listed properties on behalf of the seller.
- Searching for offers, and negotiating offers from the buyer’s agent.
- Maintaining communication between the seller and potential buyers.
- Helping buyers find the property they’re looking for.
- Many more tasks to help with the successful purchase of a home.
Types of Real Estate Brokers
1. Designated Real Estate Broker
They are required by law, to oversee a real estate agency and are held liable for all real estate transactions signed by the agents and brokers working for that agency. The contribution of designated brokers to the day-to-day operations of the firms they run can vary. While some may take a hands-on approach where they oversee the operations and manage staff, others prefer to delegate roles and departments to other qualified personnel.
2. Managing Real Estate Broker
Managing brokers sometimes function as operations managers, which means they handle the day-to-day operations and are more hands-on with managing their staff. Managing real estate brokers are typically one step below the designated real estate broker, but they can also work as the managing broker at their agency.
3. Associate Real Estate Broker
Associate real estate brokers are individuals who have acquired a state-issued license to operate as real estate brokers; which allows them to start their own real estate agency. But many of them prefer to work for an existing firm. In practice, they have the same role as that of a real estate agent, but they are more qualified and have more experience from having gone through additional training before acquiring a license.
Responsibilities of Real Estate Brokers
Real estate brokers who work with homebuyers have the job of finding a property that matches the criteria set forth by their clients. They also prepare offers, sit for negotiations, and generally help the client with all relevant issues leading up to the closing date.
On the other hand, brokers who work with sellers must figure out the market value for the property being listed. In addition, the broker communicates with their client about offers, they oversee the showing of property to potential buyers and generally work as a link between the seller and the buyer.
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