Real Estate Brokers and Agents: What’s the Difference?


Buying or selling a home is a process that almost always goes through real estate professionals. Though some people decide to handle things on their own, most work with either a seller or buyer agent to facilitate the transaction. This leads to an important question: what is the difference between real estate agents and brokers?

The answer may not be important to you as a buyer or seller. It is important to those who work in the industry. It is also important to local and state governments, taxing authorities, and real estate attorneys.

Note that what you read in this post constitutes general guidelines. The various states all have their own regulations controlling how real estate agents and brokers operate. If you are thinking of getting into the industry yourself, be sure to check with your state and any appropriate local authorities.

The Real Estate Agent

A real estate agent is an individual who has undergone training and licensing in order to facilitate real estate sales. In most states, agents cannot work independently. They have to sign on with a licensed agency so that their work is subject to oversight. Having said that, most agents work as independent contractors.

An independent contractor is not a direct employee. He or she is a self-employed business owner providing services on a contract basis. The agent is paid via commission, whether acting as a buyer or seller agent. The agent is also responsible for paying all appropriate taxes.

The Real Estate Broker

Real estate brokers are individuals who have undergone additional training, above and beyond that of an agent, in order to be licensed to operate a brokerage. For example, City Home Collective is a real estate brokerage in Salt Lake City, Utah. Its owner is a licensed broker.

It is interesting to note that licensed brokers can work independently. They do not have to hire agents to work under them as independent contractors. Most do for the simple reason that agents increase a broker’s revenues. It just makes more sense to bring on agents if you want your brokerage to expand beyond your own ability to represent clients.

Buyer and Seller Agents

Real estate brokerages often divide their agents into two categories: buyer and seller agents. A buyer agent is focused mainly on representing buyers. A seller agent is more focused on sellers. Agents do not have to exclusively represent just buyers or sellers. They can represent both, though usually not for a single transaction.

The reason for designating between buyer and seller agents is related to an agent’s fiduciary responsibility. Under the law, it is the agent’s responsibility to work on behalf of the client’s best interests. Since buyers and sellers have different interests, they each have their own agents.

Also note that some states do allow dual agency. A dual agency scenario is one in which either a single agent represents both parties or two agents from the same brokerage work opposite ends of the deal.

A Word About Realtors

The terms ‘real estate agent’ and ‘realtor’ are often used interchangeably. Technically, they are not the same thing. The term ‘REALTOR’ is a trademarked term owned by the National Association of Retailers (NAR). An agent wishing to describe himself as a realtor must be an NAR member in good standing. NAR members are held to a higher standard and an established code of ethics.

Working with a real estate agent or brokerage is generally the best way to go when buying or selling real estate. Agents and brokerages have the expertise and tools to ensure clients have the best possible experience.

Comments are closed.