How is a Real Estate Agent Different From a REALTOR®??
It is easy to assume that real estate agents and REALTORS®? are the same things. If you were of this opinion, you're not alone. A significant percentage of people, even within the industry, interchange the terms Realtor, real estate agent, and a broker. Unfortunately, these three words are often used incorrectly because they don't have the same meaning.
Let us assure you that there are many significant differences that set apart a REALTOR? from a real estate agent. Let's investigate how these real estate terms differ.
What Does it Take to be a Realtor®??
Firstly, the term REALTOR®? is a trademark of the National Association of Realtors, also known as the NAR. This means that the designation "REALTOR®?" can only be used by members of the NAR. They currently have in the region of 1.4 million members, with associations all over the world.
The benefits of becoming a REALTOR®? include:
- Legal support
- Training materials
- Representation in Congress
- Discounts on products and services
- Industry magazine
- Access to conventions
The Realtor® Code of Ethics
In the early days of real estate transactions, the agents were considered little better than street sellers. With a lack of trust from the public, there was a need to improve the industry. In the early years of the 20th century, the NAR was created to address this situation. They formed a code of ethics to force an improvement in the reputation of real estate agents.
The code of ethics has evolved over the years and deal with how the agent behaves towards both clients and other agents. When an agent becomes a REALTOR®?, they are obliged to stick to this code of ethics, with consequences if they don't.
If you are buying or selling a home, you can take comfort in the fact that if you are working with a REALTOR?, they are going to have the highest ethics and principles. The best REALTORS®? take their role seriously as being a fiduciary for their clients. In a nutshell, they should always be working towards putting their client's best interests ahead of their own.
If a REALTOR®? fails in their duty to stick to the code of ethics, they can be reported to their local association. It doesn't matter if they are informed by a member of the public or a fellow REALTOR®?; the Grievance Committee will investigate the case.
While the committee, which has been formed of volunteers, cannot take away the real estate license to operate of the accused, there are other sanctions that they do have at their disposal. Initially, the committee doesn't try to judge whether the complaint is true or not, instead, they focus on whether there is a breach in the code if the allegation is true.
If they do find a breach in the code is possible, things move on to the next stage. The next step will be a hearing, where the REALTOR®? is allowed to have a lawyer present, to help in their defense and explanation of their side of the story.
There isn't any recourse to appeal should the committee find that there is a breach of the rules. The committee can then decide on the punishment, which should be handed to the REALTOR®?. This could include; a monetary fine, more education, or stopping them from having access to the MLS. A combination of punishments could be given to the REALTOR®?, depending on the finding of the committee.
Local NAR associations, as well as the national association, have multiple listing services. These MLS databases provide REALTORS®? with access to a vast amount of real estate information. Allowing them to see homes on the market in their local area and beyond. There are membership fees that need to be paid to continue to stay a member of the local association and keep access to the MLS.
There is a requirement for a real estate agent, which wants to be a REALTOR®?, to undertake more continuing education to make sure they provide a better service to their clients. This is above and beyond what they are required to do for a state license and can focus more on ethical practice within real estate transactions and relationships.
Once an agent has joined the ranks of being a REALTOR®?, they need to maintain this standard by passing the code of ethics examination every four years. This is additional to any state-mandated examinations which they need to stay current on.
What About The Differences With Being a Broker?
As previously mentioned, there is also a disconnect with what the word "broker" truly means. It is not just another name for an agent like so many people use the term. A real estate broker is a professional that has continued their education beyond that of a real estate agent. Further, they have studied and successfully passed an exam, allowing them to obtain a real estate broker's license.
A real estate broker can work as an independent agent or start a brokerage and hire other real estate agents or REALTORS? to work for them. The role of most real estate brokers is to oversee the daily operation of running a real estate practice. Like any other business, they are in charge of supervising the people they employ. They are typically the glue of the organization.
In addition to running the business and managing other agents, one of the significant functions of a real estate broker is to hold a buyer's house deposit in an escrow account that is duly accounted up until the time of the closing. The buyer's deposit is most often referred to as earnest money.
Without an earnest money deposit, there would be nothing holding a buyer's feet to the fire, so to speak in purchasing a home. When a buyer does not perform according to the contract, a seller would be able to keep the earnest money deposit. Therefore, holding this money is a significant responsibility for a broker. More often than not brokers are caught in the middle when there is a deposit dispute between a buyer and seller.
Buyers and sellers should also note that a down payment and earnest money differ from one another.
One other common difference between a broker and a real estate agent is it usually includes an active ownership role.
Conclusion on The Types of Agents
As we have hopefully shown, there is more to REALTORS®? than just another way of referring to a real estate agent or broker. They have a stringent code of ethics that need to be upheld, with higher moral standards than a typical agent will likely be following. For a home buyer or seller, this should represent them getting a more professional service from REALTOR? than another real estate agent.
Agents who a REALTORS®? should explain this fact to those they are interviewing with for their services. By not educating the public on the difference between an agent and a REALTOR®?, you are downplaying the tremendous responsibility of being a true pinnacle within the industry.
A similar analogy that would be an ASHI home inspector not letting their clients and real estate agents know they have become certified to this higher level of standard. Both of these would be considered a missed opportunity to share a higher level of expertise with the public.
Buyers and sellers should always conduct a thorough interview whenever working with a real estate agent. Buying or selling a home is a big deal that involves a lot of money. It makes sense to put in the time and effort for finding the very best agent to work with.