Say you’re about to buy your first home and you want to work with a licensed professional to guide you along the way. You’ve basically got two options: a Realtor or a real estate agent (sometimes called a real estate broker). The one title is well-known and carries the aura of prestige and expertise in the field; after all, it starts with a capital letter. On the other hand, there’s the relatively generic title that connotates a basic understanding of the industry. Based on these generic assessments, you – like me, like most laypeople out there – probably assume that the Realtor is the better of your two options.
Well, you know what they say about people who assume… (You don’t? I’ll fill you in: ass = u + me)
Although the National Association of Realtors reported a membership of just over one million in 2011, the Bureau of Labor Statistics says there are only half a million active real estate agents currently working in the U.S.; in many cases, NAR members keep their real estate license current, but are not actively working in the industry.
Interestingly, the federal government doesn’t differentiate between the two titles, lumping all of these professionals under the more generic title for statistical purposes.
It’s got to make you wonder, if the government doesn’t put real estate agents and Realtors in separate categories, why should you?
So what is the difference? Largely, it’s one of semantics… and also one of access.
In order to be called a real estate agent or broker, you must first obtain your real estate license. Requirements for this license vary from state to state, although some states have reciprocal programs, similar to those state-to-state transference agreements you might find when it comes to teaching licenses or passing the bar exam. All 50 states and our nation’s capital require real estate professionals to have a license prior to working in the industry.
After having received your license, you can then choose to become a Realtor. To do so, you simply have to become a member of the National Association of Realtors, the largest professional organization of real estate professionals in the world.
Think of real estate agents as rectangles, and Realtors as boxes. In pure geometry terms, all boxes are rectangles, but not all rectangles – or in this case, real estate agents – are boxes.
I said that the difference between a real estate agent and a Realtor is one of access – and somethingthat just happened in my own house just proved that.
As I sat here typing this post – with the television playing in the background – a commercial from the National Association of Realtors came on the screen, touting the benefits of home ownership to millions of Americans. That’s the point I’m making about access. If you’re a Realtor, you get to take advantage of this type of nationwide promotion. You’re also eligible to join brokerages that only hire Realtors; these, again, are usually the large, nationwide brokerages that have the access (re: finances) to purchase large swaths of advertising on TV and print. As a Realtor, your annual membership fee (oh yeah, the NAR doesn’t do all this for free), helps pay for this access, increasing your visibility in the community.
All that access is exactly what makes it confusing for those of us who aren’t knee-deep in the real estate industry. Being bombarded by ads makes it easy for us to think that being a Realtor is better than simply being a real estate agent. The process of becoming a Realtor doesn’t require any additional classes, training, or professional experience. In fact, a real estate agent could become a Realtor hours after receiving her license. Likewise, you may find incredibly experienced, well-reputed agents working for independent brokerages that don’t require its employees to be Realtors.
What does all this mean for you? It boils down to one of the basic tenets of personal finance: you have to do your research. Throw out the fancy titles – just about anyone can pay for it – and examine the facts:
- What kind of sales record does the agent have in your area?
- How well does the agent know your area?
- Ask for – and call – references; what do they have to say about the agent?
- Do you feel like the agent understands your situation, concerns, and goals?
Asking a real estate agent these questions – not “Are you a Realtor?” – will give you far more insight into how the individual works, and the likelihood that he’ll be able to find you the ideal home for you (or, sell your existing home).
Readers, have you used a Realtor or real estate agent in the past? Have you noticed any differences between the two?