4 Ways Realtors Differ From Real Estate Agents

Realtors. Real estate agents. Real estate brokers. Residential specialists. Buyer representatives. Buyer’s agents. Aren’t these all essentially interchangeable terms?

Not exactly. It’s common for both homeowners and agents to use the terms “realtor”, “real estate agent” and “broker” haphazardly, assuming they all refer to the same entity, but they don’t. Not only are these titles not interchangeable, each one has its own qualifications, its own duties and more importantly — common traits. Failing to distinguish among them can make a pretty dramatic difference for people who are  purchasing a home.

Real estate can be confusing enough. Don’t allow yourself to add to the confusion.

Why Is There A Difference In Terms?

In a nutshell, the difference between realtors, real estate agents and brokers has to do as much with professional designations as it does with their unique functions.

  • A Real Estate Agent is only licensed to facilitate a real estate transaction. More often than not, real estate agents work for brokerages. More frequently, they work for large brokerage firms with a national presence and marketing. An agent makes their primary income from commissions.
  • A Real Estate Broker tends to be more of a general catch-all term. Real estate brokers are typically much more experienced and versed in the nuances of real estate than agents. Brokers can work either independently or under the umbrella of a brokerage house, and may choose to sell themselves or oversee a team of agents working underneath them.
  • A Realtor is actually someone who requires a professional certification from the National Association of Realtors, allowing the holder to function in almost any capacity in the real estate industry.

Training And Education

There’s a popular misconception that real estate professionals merely have to pass a standardized test. But there’s a lot more to becoming both a real estate agent and a realtor than answering a series of rote questions and answers.

Real estate agents need to show not only both generalized and specialized knowledge of the industry, depending on their certification, but they must also demonstrate an understanding of local regulations, statutes and laws. These will differ significantly from state to state, with many states requiring on-going mandatory certification for agents in order to remain current. Colorado is an example of one of these states.

A realtor must maintain all of the above requirements, but also complete training on NAR’s Code of Ethics at least once every four years.

Why A Code of Ethics?

NAR’s Code of Ethics was formally adopted in 1913 and is considered an industry standard  that real estate professionals are sworn to uphold. Similar to the Hippocratic Oath taken by physicians, NAR’s Code of Ethics preserves the integrity of the real estate industry and ensures that all professionals operating under this oath will act in the best interests of a customer. But why even bother to establish one in the first place?

The areas of both commercial and residential real estate are full of grey areas, many of which can be used by unscrupulous agents to their advantage. Not only is competition perpetually fierce, but slander, manipulation and greed can unfortunately run rampant for a small but vocal minority within the industry. NAR’s Code of Ethics helps to ensure a fair and even playing field for agents as well as homebuyers, establishing a standard of obligations even higher than state law and enables both transparency and responsibility for professionally designated realtors. You can download NAR’s revised Code of Ethics for the year 2020 here.

Which Is Better For Me — A Real Estate Agent or a Realtor?

While NAR’s Code of Ethics may ensure the integrity of a professionally licensed realtor, you’ll often find that any professional working in the real estate industry is motivated by your best interests and not their bottom line. But let’s see how that motivation plays out.

An agent can represent both buyers and sellers. For the former, agents are actively seeking to purchase a property which is best suited for a buyer. In the case of the latter, agents are actively trying to market a property to the advantage of a homeowner. In both instances, the primary advantage will be financial.

The higher the sale, the higher the commission will be. That’s no great secret. That’s the fundamental truth of any contingency based transaction. But remember that whether they’re working for an independent agency or a national brokerage, agents are paid based on commission. That means that their primary goal is to facilitate a sale.

A licensed realtor, on the other hand, generally has a much more extensive history in real estate. They can be brokers, agency owners, independent agents, or they can even be highly specialized residential experts in areas you would have never imagined. They’ve had success as much as they’ve had failures. They know both the ins and outs of the market, and can guide you through some of the pitfalls of real estate. Whether you’re buying or selling, their bottom line is your bottom line

Want to know more about real estate from the perspective of insiders with over thirty years of experience? Visit us today at Colorado REIA.


Brandon Boyd