Key Takeaways
- When buying or renting out a home, it’s inevitable that you’ll need to work with some real estate professionals along the way.
- Knowing the difference between realtors, agents, and brokers can make the process much smoother.
- Maximizing success as a rental owner is easiest with a property management team.
“They managed all my DFW homes for many years and also helped me with the sale of some of them. Great company, easy to work with. Would recommend McCaw to any investor that wants to work with a great reliable property management company.”
Boris L., DFW Metroplex Rental Property Owner
Whether it’s your first time buying a home or you are an experienced buyer, one thing you can’t avoid when purchasing property is dealing with real estate professionals. These professionals can be appraisers, home inspectors, brokers, property lawyers, etc.
Generally, with every real estate professional you encounter, it is easy to understand their role in the transaction, with one exception. Most property investors and homeowners can’t tell the difference between a real estate agent, a real estate broker, and a realtor.
Most people just think that these titles are different names for the same thing. But that is incorrect. Although real estate agents, real estate brokers, and realtors do more or less the same things, there are important differences in their roles.
Estate agents and brokers operate on different rungs of the professional ladder, but realtors are in a different class. In this article, we break down the subtle but vital details every real estate investor or homeowner must know about these professionals. Continue reading this guide by McCaw Property Management to learn more.
Real Estate Agents
These are licensed professionals who are trained to help people buy, sell, or rent all kinds of property. To become licensed, states require interested individuals to have prelicensing training, with a mandatory number of training hours, which varies by state. In Virginia, trainees must take 60 hours of training, but in California, the requirement is 135 hours.
After training, aspiring agents must sit for a written licensing exam, which is usually divided into two sections. One section covers federal real estate laws & general real estate principles, while the second focuses on state-specific laws. If they pass the exams, they are awarded a license and allowed to use the title of a ‘real estate agent.’
Eligibility requirements for becoming a real estate agent are as follows. They must:
- Be 18 years or older
- Be a legal resident of the US
- Complete a background check
- Complete their state’s required pre-licensing class
- Sit for and pass the licensing exam
- Maintain their license by completing the required continuing education classes
Even after being licensed, real estate agents are not allowed to operate independently. They must work under the supervision of a licensed broker. A real estate agent can work with either buyers or sellers of properties. An agent who represents a seller is called a listing agent, and if they represent a buyer, they are called a buyer’s agent.
Learn More About Our Services!
Real estate agents organize transactions between buyers and sellers or between owners and renters by doing the following:
- Help sellers set the listing price
- Sometimes suggest updates to improve the value of a property
- Assist sellers with staging their home
- Market the property on the MLS and other platforms
- Negotiate sales prices, closing costs, and fees on behalf of their client
- Carry offers, counteroffers, and queries between the parties
- Walk clients through the process of filing paperwork after offers are accepted
- Help clients prepare, submit, and file documents
- Ensure their clients understand every step needed to complete the transaction
A real estate agent is the person most buyers and sellers will work with. They have the expertise to handle most real estate transactions.
Real Estate Brokers
Real estate brokers get the same training as real estate agents, but they don’t stop there. They continue their training to receive a real estate broker license. Just like at the agent level, broker education, exam, and licensing are organized by states. The coursework for real estate brokers is more in-depth than the training for real estate agents.
This training covers things like ethics, taxes, and insurance in more detail. Aspiring brokers must understand federal and state laws as they apply to real estate investments, construction, property management, and operating a brokerage. As a result, brokers have a deeper understanding of the real estate business than real estate agents.
There are three types of real estate brokers:
- Principal or designated broker: This person oversees all the real estate agents at the firm. They ensure that agents comply with the established regulations. Principal brokers are paid a commission from the commissions earned by the agents they supervise. Every real estate office must have a principal or designated broker.
- Managing broker: Managing brokers hire/train new agents and oversee the daily operations of the office. They manage the office’s administrative staff and have oversight of every transaction of the office. They can also be a principal or designated broker.
- Associate broker: Sometimes known as a broker associate, broker-salesperson, or affiliate broker, this person has a broker license but elects to work under a managing broker. They typically do not supervise real estate agents.
To be eligible to sit for the broker’s exam, real estate agents must have at least three years of experience as a licensed real estate agent.
Realtors
A realtor is a real estate professional who is a member of the National Association of Realtors® (NAR). The NAR subscribes to the highest standards of professionalism and transparency in real estate transactions. They place demands on their members that real estate agents and real estate brokers are not subjected to.
To become a member of the NAR:
- The individual must hold an active real estate agent’s license
- Be associated with a designated REALTOR® or join the local association of REALTOR®
- They must complete a background check (have no recent record of civil judgments or felony convictions within the last 7 years)
- Complete the NAR’s code of ethics orientation course
- Pay the annual dues plus a consumer ad campaign assessment fee
Individuals who are accepted acquire the right to use the trademarked REALTOR® title after their name. Being a member of the NAR gives real estate professionals access to real estate market data not available to others. They also gain access to a suite of transaction management services.
Conclusion
Should you hire a real estate agent, real estate broker, or realtor when buying or selling a property? It depends on the size and complexity of the transaction. For most people, the expertise of a real estate agent is more than enough to cover their needs.
However, since brokers are subject to stiffer liabilities when faced with a lawsuit and they are often required to subscribe to E&O insurance, they are better suited to handle large transactions with a high level of risk and complexity.
Realtors, because of their training, have even higher standards. But the consequence of working with either a broker or a realtor is that their professional fees are also higher. So, ultimately, the right choice depends on the specific situation.
Want to learn more? Reach out to McCaw Property Management today.
Chart Of The Day - 1 Feb 2022
