Real estate broker vs. agent: What’s the difference?

Multiple types of real estate professionals assist buyers and sellers with real estate transactions. (Shutterstock)

Both real estate brokers and agents hold licenses to provide real estate services, and their duties often overlap, so many people use the terms interchangeably. But make no mistake, these two professions aren’t the same.

This guide will help you understand the difference between real estate brokers and agents to help you decide which one you should work with.

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What’s a real estate broker?
What’s a real estate agent?
What’s a Realtor®?
Should you use a real estate agent or broker?

What’s a real estate broker?

A real estate broker is a professional who has completed education beyond what their state law requires for agents and who has passed a broker’s license exam. A broker can perform any of the duties typically performed by a real estate agent. Additionally, a broker can build and manage their own business by either working independently or hiring agents to work for them.

Types of real estate brokers

Associate broker — These professionals have a broker’s license but elect to work under another broker. An associate broker isn’t normally responsible for supervising agents.
Managing broker — A managing broker is in charge of the office’s day-to-day operations. They hire and train new agents, handle licensing issues, and facilitate continuing education opportunities, among other duties.
Principal/designated broker — Due to legal implications, each brokerage has at least one designated broker whose primary function is to manage their agents and ensure they comply with real estate law.

How do real estate brokers get paid?

Real estate brokers are paid a share of the commissions from real estate agents who work under them. Additionally, they earn money from their own deals, but as the broker, they don’t have to split their commission with the brokerage.

How do real estate brokers get licensed?

Real estate brokers must first become real estate agents. After receiving a real estate license, they must work with a broker to be eligible for the broker’s exam and earn licensure. After gaining experience (the number of years varies by state), they must take a real estate broker course and pass a real estate broker exam. States issue broker’s licenses to agents after passing their licensing exams.

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What’s a real estate agent?

A real estate agent is a person who’s licensed to help people buy, sell, or rent property. Agents must work under a broker’s supervision, and they’re considered an agent of the broker — not an employee. Most often, agents are independent contractors.

Real estate agents also represent their clients in marketing their properties and negotiating the transactions. Agents must organize the transaction between buyers and sellers or between owners and renters. Once a sale offer is accepted, real estate agents guide their clients through the requirements to complete the sale, including submitting paperwork, getting home inspections, and going through the final closing settlement.

Types of real estate agents

Not all agents are the same. The different types of real estate agents include:

Seller’s agent — A seller’s agent, also known as a listing agent, is a professional who represents the seller in a real estate transaction. Among their many duties, they do research to determine a fair selling price, list and market the home, and prepare it for showing.
Buyer’s agent — As its name suggests, a buyer’s agent helps buyers find and purchase a home. They recommend available properties based on your needs. A good buyer’s agent routinely searches the property listings and keeps an eye out for new properties on the market. Buyer’s agents also make arrangements for you to view properties you’re interested in. During the process, a buyer’s agent can advise you of your financing options and help you understand the sale agreement, title documents, and other paperwork you must submit to complete the transaction.
Dual agent — A dual agent represents both the buyer and the seller in a transaction. This type of agent is required by law to disclose their role in the transaction. Otherwise, either party can back out of the agreement.

How do real estate agents get paid?

Real estate agents are paid a commission for their work. Since the commission is usually based on a percentage of the sale price, the seller pays for their agent and the buyer’s agent using proceeds from the sale. The sales commission is typically between 5% and 6%, or another negotiable amount.

Once the sale is complete and the money is funded, the title or escrow company handling the sale writes a check to the brokerage(s) representing the buyer’s agent and the seller’s agent. Each brokerage then takes their commission and issues a check to their agent.

For example, let’s say a home sells for $300,000, and the sales commission is 6% (or $18,000). If the seller’s agent and buyer’s agent agree to split the commission evenly, the brokerages they work for will receive commission checks of $9,000 each from the escrow or title company. The broker will then take their cut, say, 2.5% (or $225), leaving the agent with a final commission of $8,775 ($9,000 – $225 = $8,775).

How do real estate agents get licensed?

Real estate agents must complete a pre-licensing course from an accredited real estate licensing school before passing a licensing exam. Agents are required to apply for a real estate license with their state’s real estate regulatory organization upon passing the licensing exam. Once approved, agents will be searchable on the organization’s website, and they’ll receive their real estate license certificate from the state in the mail.

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What’s a Realtor®?

A Realtor® is a licensed real estate agent that’s a member of the National Association of REALTORS®. Only members of NAR — the largest real estate trade association in the U.S. — can use the title of "Realtor."

Realtors® and real estate agents perform the same duties, including helping their clients buy and sell real estate and negotiating on their behalf during the transaction process. The main difference between the two is that Realtors® must adhere to the NAR’s Code of Ethics. But Realtors® aren’t just agents. The designation can also be given to other real estate professionals, including brokers, property managers, and appraisers.

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Should you use a real estate agent or broker?

Many consumers place little, if any, importance on the decision to use a real estate agent versus a broker. But keep in mind that brokers may have access to more properties listed by professional organizations and other agencies. What’s more, a broker may be able to get you lower fees since they don’t have to share their commission with a brokerage.

Whether you’re looking for a real estate agent or broker, it’s a good idea to get referrals from friends or search for agents in your area. Aim to interview at least three professionals. Ask agents about their experience and other key questions to gauge if they’re a good fit for you.

Credible makes it easy to find a real estate agent who knows the market in the area where you want to buy.

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