How Are a Realtor and Real Estate Agent Different

By
Real Estate Agent with RE/MAX Executive Realty 91362

What's The Difference Between a Real Estate Agent and a Realtor®?

Many people will be surprised to learn that Realtors and real estate agents aren't the same thing. Not every real estate agent is a Realtor; it is a classification that is only legally allowed to be used by some.

If you are looking to move a house or even thinking of a career in this industry, we investigate how a Realtor differs from a real estate agent. Many consumers and even those in the real estate industry interchange the words "real estate agent" "Realtor" and "Broker." It should be abundantly clear that these three terms have very different meanings.

The resource at Maximum Real Estate Exposure does an excellent job explaining how a real estate agent is different from a Realtor and also how a real estate agent differs from a real estate broker.

If you are going to be buying or selling a home, it makes sense to understand these nuances. Choosing the right agent is one of the most critical considerations when buying or selling a property.

Who are Realtors®?

Realtors are real estate agents that have a membership with the National Association of Realtors. Also known as the NAR, this association owns the trademark and copyright on the word "Realtor®." They have over 1.3 million members around the world, with over 1,200 local associations in the US.

Membership to the association has many benefits for real estate agents. These include:

  • Conventions
  • Training opportunities
  • An industry magazine
  • Legal assistance

As well as this, the association operates a powerful Congressional lobby. This works on behalf of Realtors to improve legislation in real estate. The Realtors Political Action Committee is funded from voluntary contributions from Realtors and is used to elect candidates who support the real estate industry.

The Code of Ethics

In the early days, real estate wasn't looked on as a reputable trade. The NAR was formed to make the business more professional with a code of ethics to hold members to higher standards. In order to become a member of the NAR, agents have to commit to following these guidelines.

The code of ethics was created in 1913 and was one of the first written ethical set of rules for any industry. The code is kept current and adapted to meet new developments in the real estate business.

This code of ethics requires that Realtors treat everybody that they come into contact with through their business in an honest manner. They should protect their client's best interests and avoid making false statements about other Realtors. When dealing with the public, they need to be professionally competent and prevent discrimination.

There are 17 articles in the current code of ethics. Each section covers a different area of conduct and includes standards that Realtors are held to. Some critical sections of the document include:

  1. Require the Realtor not to misrepresent or hide information about the property.
  2. Keep customer funds separate from their own.
  3. No false advertising.
  4. Reveal any personal interest in a property.

The code also emphasizes the need to act morally in all business engagements, and these duties are backed up by a system of accountability. You can see a full description of all the articles in the code of ethics in the reference above.

Being Held Accountable

What sets Realtors apart is their accountability. Complaints can be filed with the local association of Realtors, by not only the general public but also other Realtors. If the Realtor has been acting out of line from the code of ethics, they could be fined or have their membership restricted.

Complaints are looked at by a committee from the local association. This Grievance Committee looks at whether there has been a violation of the code if everything stated in the complaint is valid. They don't look into whether there is any guilt by the Realtor at this stage, however. If their finding is that a violation could have occurred, a date is set for a more formal hearing.

At the hearing, the Realtor is allowed to bring a lawyer, and this is their opportunity to give their side of the story. The hearing committee is formed of 3 to 5 volunteers and is only able to judge on matters relating to the NAR and their code of ethics. They aren't able to place any sanctions against the Realtor to do with their real estate license. That is a matter for the state licensing board and is entirely separate from this hearing.

The verdict of the hearing is final, and the committee can place several sanctions on the Realtor. This could include the removal of access to member benefits on a permanent or temporary basis. This means that they will not be able to use the MLS or access educational material, for example.

Fines not exceeding $5,000 can also be given out, or the committee could require the Realtor to undergo more education so that they can better meet the standards expected of them. Any combination of these sanctions can be used dependent on the findings of the committee.

Commonly, hearings deal with complaints that come from disputes overpayments. For example, disputes over who is owed the commission between different Realtors. This system allows Realtors to avoid expensive legal action.

The Multiple Listing Service (MLS)

The Multiple Listing Service or MLS is an online database containing all the details of homes for sale. These private databases are affiliated with local or national Realtor associations and allow Realtors to have all the information about the current housing market.

The MLS allows Realtors to more easily find buyers for their customers' properties, and when acting as a buyer's agent, find houses that meet their clients' criteria. There are a few online sites like Zillow and Trulia which list properties, but they aren't as up to date as the MLS or provide the same level of data.

Realtors pay fees to the affiliated groups which operate the MLS locally and nationally to maintain access to the database. Consumers should understand that buyer's agents and seller's agents have different roles in a real estate transaction. What a seller's real estate agent does for their clients can differ from what a buyer's agent does.

Consumers should realize that there are different skillsets for whether an agent is representing a buyer or seller.

Continuing Education

The NAR requires Realtors to continue to improve the service they provide to clients through ongoing educational commitments. Members have to take the training courses approved by the state licensing board to keep their qualification current.

Courses improve skills in ethical work methods as well as staying up to date on consumer protection rules. These rules and requirements for continued education vary significantly across different states.

Real Estate Agents Also Are Different From Real Estate Brokers

As mentioned above, a real estate broker is different from a real estate agent. To become a real estate broker, you must have served as a real estate agent for a couple of years. After this time, you would then need to get a real estate brokerage license. In order to get a real estate broker's license, you need to pass a state-required test.

Generally speaking, most real estate brokers own their own company and employ real estate agents who work under their license. A real estate broker may or may not be a Realtor. One of the many essential roles a broker plays in a real estate transaction is holding the buyer's earnest money deposit in their escrow account. These funds are duly accounted for at the time of a closing. Keeping large sums of money in escrow is a typical but critical function in nearly all real estate sales.

Conclusion on How Real Estate Agents Differ From Realtors®

Realtors make up 1.3 million of the 2 million real estate license holders, and there are some clear benefits to using a Realtor over a standard agent or broker. Their code of ethics means that you should have a better experience as a client. If the worst were to happen and things go wrong, you know you have extra protection to file a complaint with the NAR. Above all, they should provide a more professional service that has your best interests protected.

While in theory, you should have a better experience with a Realtor, don't take it with a grain of salt. When buying or selling, do a careful interview of multiple agents; only then will you increase your odds of having a successful, stress-free transaction.

Other Valuable Active Rain Real Estate Resources

  • Frequently asked homebuyer questions - learn the items along with the answers that many buyers ask their real estate agent. When buying your first home, it makes sense to educate yourself as much as possible.
  • Avoid these mistakes when selling in a divorce - are you going to be selling your home while going through a divorce? If so, make sure you understand some of the most common mistakes and try to avoid them. Selling a home and divorce are two of life's most stressful events. Combining them together makes it that much more difficult.

Use these resources to make the right decisions when buying or selling your next house.

 

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

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Show All Comments
Rainmaker
5,186,299
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Bill Gassett it's surprising how many are NOT Realtors..... many are on "a wing and a prayer" and march to their own drummer.... kind of a zig zag pattern...not often the straight and narrow!! 

good topic....

Dec 12, 2019 06:15 AM #1
Rainer
147,044
Adam Feinberg
ANCHOR ASSOCIATES - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

All real estate is local- and your article highlights how different markets have different norms. In Manhattan- there is no MLS, and hardly any Realtors.  Our market operates very differently than everywhere else in the nation (including the nearby suburbs and even different than other boroughs- i.e. The Bronx). That said, while we don't have many members of the NAR, we do have our own trade organization- REBNY, that does many of the same functions as the NAR- but is specific to our market.

Dec 12, 2019 07:09 AM #2
Rainmaker
2,844,316
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Bill Gassett The NAR needs to hire YOU to promote what a Realtor is and the value we bring to clients.  The NAR silly-arse commercials certainly do not do that. 

Dec 12, 2019 07:39 AM #3
Rainer
147,044
Adam Feinberg
ANCHOR ASSOCIATES - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

Hi Bill,

I didn't see an option to respond to you in the same thread- so I am responding seperately. NAR membership plus REBNY membership doesn't really make sense in our market because our market is so dramatically different. Renting in Manhattan nearly requires the level of adminstration as buying anywhere else in the country. Buying here- an entirely different experience than buying anywhere else. Most buildings are not going to be financed via Fannie/Freddie- but rather via portfolio lending. Puchasing a co-op here requires board approval- and the board can reject a buyer for any reason. Knowing how to navigate here is an entirely different skill set than anywhere else. I would say agents with finance, accounting or legal backgrounds have a huge edge and credibility over someone with membership in any particular organization (i.e. NAR). The reason being that agents need to understand the composition of a buyers net worth, their Debt to Income, Post Closing Liquidity, etc.

 

As to the framework- REBNY has the rule making authority with regard to professional, legal and ethical standards, co-broking, etc - so in that respect REBNY is our equivalent to the NAR. 

Dec 12, 2019 09:30 AM #4
Rainmaker
1,102,036
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

In Illinois we all used to be real estate agents (whether Realtors or not) and now we are all called real estate brokers. No extra training was necessary - just a quick fix to make some money for the state. 

Dec 12, 2019 09:57 AM #5
Rainer
547,345
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Absolutely great information!!!

The code of ethics requires that Realtors treat everybody that they come into contact with through their business in an honest manner. They should protect their client's best interests and avoid making false statements about other Realtors. When dealing with the public, they need to be professionally competent and prevent discrimination.

Dec 13, 2019 04:06 AM #7
Rainmaker
2,506,433
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The license remains the neutral ground....

Dec 13, 2019 06:35 AM #8
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Bill Gassett

Metrowest Massachusetts Real Estate
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