When you want to go into the real estate industry, you have a few options. You can become an agent, a Realtor, or a real estate broker. Realtors and real estate brokers have some things in common, but they are also very different.
If you’re planning to go down this path, you should know what a Realtor is and what a real estate broker is, exactly. It’s also important to know what type of job duties both have and the differences. Let’s take a closer look at the topic of Realtor vs. real estate broker.
What is a Realtor?
A Realtor is a real estate agent that has joined the National Association of Realtors. You will have to join the local NAR chapter, take an online course and pass an exam on the Code of Ethics. This is what sets a Realtor apart from a real estate agent. You can be an agent without joining the NAR.
When you decide to join the NAR, you will need to adhere to a Code of Ethics. This type of real estate professional is promising to hold themselves to a higher standard, which includes:
- Never mislead a buyer, seller, or tenant about the value of a property or the benefits of the property.
- Never submit an offer or a counteroffer without objectivity and representing the client in the best way possible
- Cannot be involved in dual representation without both the buyer and the seller knowing about it
- Must maintain strict client privacy and exercise due diligence when managing a property for the owner
The Code of Ethics for a Realtor is rather strict, but it provides many benefits, too. You will be able to market yourself as a Realtor and you will gain a network within the NAR, agents don’t have access to.
Realtor Job Duties
According to Indeed.com, a high-quality REaltor will need to deal with the clients they represent fairly. They will have many different job duties including negotiating the terms of the sale and the price for the client. Some of the common job duties of a Realtor include:
- Come up with a marketing plan for any property they list
- Gather client information to help them choose the right home to buy
- Finding the right properties to list on the Multiple Listing Service
- Pre-screening buyers to ensure they are qualified financially
- Presenting all offers to sellers they represent
- Helping with the negotiations and advising clients throughout the entire process
There are many things a Realtor will do. They will represent buyers, sellers, tenants, and landlords.
What is a Real Estate Broker?
A real estate broker became a real estate agent or Realtor first. Then, after meeting the experience requirement in their state, along with the other requirements, they received a broker’s license. A broker has to complete another set of pre-licensing courses, along with other requirements based on their state.
It will take two to four years of experience as an agent to become a broker, in most states. As a broker, you will be able to manage agents and market yourself as a broker. This type of career in real estate offers many benefits.
Real Estate Broker Job Duties
According to TheBalanceSMB.com, a real estate broker “works to negotiate and arrange real estate transactions.” This might seem like it’s similar to a Realtor, but a broker’s job duties go further. As a broker, you will likely manage a team of agents or Realtors under you. This means helping these agents with their transactions and supporting them throughout each transaction.
While brokers will take on most, if not all of the duties of a Realtor, they will also be able to oversee other agents. This includes instructing them and training them to become successful in real estate. Brokers will also make sure agents comply with local, state, and federal laws. They often provide service and marketing resources for agents, as well.
Types of Brokers
There are commonly three levels of brokers and each is a bit different. The broker types include:
- Associate Broker – This type of real estate broker is a newly licensed broker that will work much like an agent, but will also have some management responsibilities within the brokerage.
- Designated Broker – This person will likely own the brokerage and act as the lead administrator. They may also be called a principal broker or broker in charge.
- Managing Broker – This type of broker helps to run the day-to-day operations of the brokers and they may work with other managing brokers.
Usually, you will start as an associate broker and later become a managing broker. Not all brokers will ever become a designated broker, however.
Realtor vs. Real Estate Broker: The Differences
One of the main differences between a Realtor and a real estate broker is the licensing level. As a Realtor, you will earn a license as an agent or salesperson. Then, you will join the NAR and become a Realtor.
Brokers go further and get a broker’s license. This requires experience, additional education, and meeting other state requirements. In some states, it can mean getting a four-year degree or completing hundreds of hours of education.
Another big difference is the role each plays in the real estate industry. While a broker can play the same role as a Realtor, a Realtor cannot play the same role as a broker. A broker often oversees and sponsors agents and Realtors that work on their team.
As a Realtor, you will have pretty simple responsibilities. You will represent the buyer, seller, tenant, or landlord in a real estate transaction. Brokers can also do this, but they can also hire agents, train agents, and oversee a brokerage at a senior-level position.
Realtor Salary vs. Real Estate Broker Salary
The way a Realtor is paid is not the same as the way a real estate broker is paid. They both earn commissions for the transactions from the clients they represent. However, a Realtor won’t have other income sources, while a broker does.
A Realtor will earn a commission on their transactions when they represent buyers or sellers. They will earn a 3% commission based on the sales price of the property. It’s a full 6% commission per transaction, but it’s split between the buyer’s agent and the seller’s agent.
Realtors usually split their commission with their sponsoring broker. This split is often negotiated ahead of time and might be a 70/30 split. It may also be capped at a certain amount per year.
There could also be a desk fee of $50 to $100 per month that Realtors pay to their broker. This fee helps to cover technology and other expenses brokers must pay for their agents.
As a real estate broker, you can earn the full 3% commission on your transactions. You will also earn a portion of the commission from each agent you represent. Of course, brokers can also collect a desk fee from their agents every month.
Along with these forms of income, brokers may have an ownership stake in a complimentary business. This may include a title company or a mortgage company, which can help a broker make a higher income.
Brokers can easily make twice as much as a Realtor. It’s possible for top Realtors to make over $100k per year, but most will make an average closer to $60K or $70K per year, Brokers can make well over $100K per year, and if they are very good at what they do, it can be even higher. Of course, they can make even more with a larger team of good agents, too.
Realtor Expenses vs. Broker Expenses
Yes, of course, both Realtors and brokers have expenses. Realtors won’t have nearly as many expenses to pay as a broker will each month.
As a Realtor, you will likely need to pay a desk fee to your broker. Of course, you will also need to pay your NAR dues. Realtors also have expenses for lead generation, operating expenses, and a few other expenses.
Brokers have to pay rent for their offices, along with utilities. They will also need E&O insurance and they will pay for marketing, technology, recruitment, and training. Brokers may also have a support staff they pay every month.
Overall, brokers have higher expenses than Realtors. They also earn more money and have more experience in the industry than an agent will have. Brokers take on more responsibilities, so it makes sense that they both earn more and have more expenses.
Whether you’re new to real estate or you’ve been an agent for a while, you might be considering becoming a Realtor or a real estate broker. Both of these are an upgrade from just being a real estate agent. As a Realtor, you will gain a network of other Realtors, along with the many benefits of joining the NAR and adhering to the strict Code of Ethics.
If you want to build your career to the highest level in real estate, you will need to become a broker. Then, you can work your way up to the peak of the industry within your brokerage.
