What Are Realtors?
Did you know that a Realtor®, Real Estate agent, and Real Estate broker are three different things? It's true. Many people think these terms have the same meaning and they do not.
It is completely understandable that this happens because even those in the real estate industry use the words interchangeably.
Let's get one thing clear from the onset. A Realtor® is very different from a real estate agent. Many people ask what is a Realtor®. The definition of a Realtor® isn't that confusing at all.
A Realtor® is a licensed real estate agent who has become a member of the National Association of Realtors. The NAR is the largest trade group in the country and a very powerful organization.
There is a high percentage of real estate agents who are also Realtors. When you are buying or selling a home, you might want to find out if you're potential agent is also a Realtor®.
Why does it matter? Realtors are held to much higher ethical standards than real estate agents. In order to be a Realtor® you must agree to uphold a strict code of ethics while practicing your craft.
When consumers choose to work with a Realtor® they should expect to be working with someone who puts the client's best interests ahead of their own at all times.
The level of service should be a few steps above that of an agent who has not become a Realtor®.
Ethics and High Levels of Representation Are Hallmarks of a Realtor®
When buying and selling a home most consumers want to work with a professional who goes above and beyond for them in all aspects of the transaction.
With a Realtor®, consumers should expect to be getting someone with superior ethical standard and a high level of expertise. They usually have a wide network and get along great with fellow agents.
Realtors usually are not only part of a National network but a local one as well. For example, in Massachusetts there is the Massachusetts Association of Realtors.
A Realtors professional network includes other professionals in the field, as well as the national real estate association.
These networks provide Realtors with additional continuing education to help them hone their skills, tools for negotiating contracts and relationships with other members of the business, and deeper knowledge about what is happening in their local market.
The National Association of Realtors (NAR) offers its members access to a variety of benefits, including market data and transaction management services, which can make the buying and selling process easier.
Real estate law is complex and many rules must be followed in order to successfully purchase or sell a home. Working with a professional Realtor® can help minimize the risks associated with buying or selling a property.
How is a Real Estate Broker Different Than A Realtor?
A real estate broker is a real estate agent who typically takes on an ownership role or management of a real estate company. Agents will work under a real estate brokers license.
In order to become a real estate broker an agent must pass a broker's license exam. A real estate broker can be a Realtor® and often are members of NAR.
Some real estate brokers will own their own franchise such as RE/MAX, Century-21, or Caldwell Banker.
There are a number of different types of real estate professionals. Some Realtors have a broker license, but choose to work as salespeople. These real estate professionals are sometimes referred to as broker associates.
How Much Money Do Realtors Make in a Year?
What a Realtor® makes selling real estate varies from agent to agent. Realtors are compensated by commission and the sky is the limit. Typically, agents who have years of experience under their belt make more than newer agents entering the industry.
There are other factors that will influence the yearly earnings of a Realtor including the local market.
For example, if the average sale price of a home is $800,000, it stands to reason that agents working there have a much greater chance to have a higher income than an agent whose average sale price is $400,000.
You would only need to sell half as many homes to make the same income. Top producing Realtors usually put in long hours including nights and weekends.
The reality television shows where an agent shows three homes and makes a sale is nothing like the real world. The best Realtors put in countless hours to make their business function at the highest level.
Breaking into the industry is not easy. Anyone who thinks you get your license and become an instant success is kidding themselves.
Remember The Realtor Commission Pie is Split Multiple Ways
Keep in mind that when a Realtor® makes a sale they do not keep the whole commission check. A real estate commission goes to the listing real estate brokerage first.
The check is routinely split with another real estate company who has brought the buyer.
Then the listing agent gets their share which is some percentage based on an agreement with their broker. To think an individual Realtor® gets five or six percent of the home's sales price is silly. That scenario does not exist.
Realtors are also considered independent contractors and pay their own federal and state income taxes.
What an agent actually makes on a per sale basis is a lot less than you think.
Final Thoughts
If you are considering breaking into real estate, becoming a Realtor® is a good idea. You will be looked upon as someone who cares about doing the right thing.
Ethics are usually the hallmark of most Realtor's thinking. If you are a buyer or a seller, look with a local Realtor® with a solid reputation. A great Realtor® will do many things for you during a real estate transaction.
Getting references from a friend of relative is often a good starting point for finding someone you can trust.
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