What’s the difference between a real estate agent and a broker?
A real estate agent, broker, or Realtor™ all have one goal, to bring buyer and seller together to close a real estate transaction.
All three have the same fiduciary responsibilities to their client, which is the party they are representing.
The six duties are:
- Accounting: No comingling of funds and must account for all monies
- Care: Execute their responsibilities to the best of their abilities
- Confidentiality – Guard any confidential information, especially if it is damaging to the client’s negotiating position
- Disclosure- Inform the client of any information that is beneficial to the client
- Loyalty: Puts the client’s interests above their self-interest.
- Obedience- Obey any lawful orders that the client wants to be executed.
Real Estate Agent Definition
A state assigns the title of real estate agent or real estate salesperson. Real estate agents are required to meet all state standards and pass state exams to be fully licensed.
Real estate agents are required to hang their license with a real estate broker and is prohibited from owning or operating their own real estate office. They are hired to provide services related to any real estate transaction, but under the supervision of a broker.
Real Estate Broker Definition
A real estate broker is a real estate agent who successfully completes additional education and receives a broker’s license. In contrast to real estate agents, brokers can operate independently, start their own business, and employ real estate agents.
They have undergone real estate broker exams and have amassed a certain number of points with the department of State to qualify for this designation. It requires more in-depth coursework and experience than the pre-licensing exam, giving you a real estate salesperson or agent designation.
These are state designations provided by the Department of State.
- The principal or Designated Broker: Has agents to manage and supervise under them and has executive decision-making powers. They oversee licensee compliance to the State and national real estate laws.
- Associate Broker: Does not manage any licensees under them and has no decision-making powers. But has the same level of expertise and experience as the principal or designated broker, but chooses a non-managerial role.
This is the largest trade member association in the U.S. It is a trademarked term for a real estate licensee who is an active paying member.
A Realtor can be a real estate principal or designated broker, an associate broker, or a real estate salesperson. You cannot be a Realtor if your Department of State does not license you.
For example, in Las Vegas, you cannot join the multiple listing service (MLS) without joining the National Association of Realtors (NAR). The MLS is the largest database where buyers and sellers come together and transact cooperation for compensation between real estate brokers.
In the borough of Manhattan, New York, for instance, there is no Realtor designation because there is no multiple listing service operated by the National Association of Realtors. There is an MLS system but not monopolized by the National Association of Realtors.