People use the terms REALTOR® and real estate agent interchangeably, but that is incorrect. There are differences between REALTORS® and real estate agents. While every REALTOR® is an agent, not every agent is a REALTOR®. Although both are licensed to sell real estate, the basic difference between a real estate agent and a REALTOR® is a REALTOR® is a member of at least the National Association of REALTORS®. As such, the main difference that you hear a lot about -- but are likely confused about -- is that a REALTOR® is held to a higher standard and must adhere to the REALTOR® Code of Ethics but what does this mean to a consumer? The Code of Ethics is strictly enforced by local real estate boards. The Code contains 17 Articles and various underlying Standards of Practice. It's not just a bunch of rules that agents swear to uphold and adhere to. The Standards are much more restrictive and confining as to conduct than those state guidelines governing agents who simply hold a real estate license. Some REALTORS® are brokers, while some are agents. Unfortunately, people use the terms interchangeably: there are some differences. Brokers are usually managers. They run an agency and have agents working under them as salespeople. They might own a real estate brokerage or manage a franchise operation, though they may also work under another broker as a Broker-Associate. They must take additional courses and pay additional fees to maintain their state-issued Broker License. An agent, on the other hand, is a salesperson selling on behalf of the Broker. Agents are also state licensed and must pass a written test before legally acting as a real estate agent. Each state has its own licensing laws and standards.
WHY USE A REALTOR®
For most people, buying a home is the largest financial investment they will ever make. It is the one time you can say you went shopping and spent a quarter of a million dollars (or more). So shouldn’t you work with a REALTOR® to get the best advice possible for that investment?
REALTORS® Facilitate the Process
A REALTOR® is a client advocate, the market expert and the negotiating tiger all wrapped up into one independent contractor. Because REALTORS® are usually solo practitioners, they wear many hats. They are sales people, but they are also marketing directors, social media managers and data analysts all in one. A rising number of home buyers are using REALTORS®. About 88% of home buyers purchase their home through a real estate agent or broker—a share that has steadily increased from 69% in 2001, according to the National Association of REALTOR®’s 2013 Profile of Home Buyers and Sellers. Homeowners rely on REALTORS® to help them find the most qualified buyer and to navigate the home selling processes. Rules regarding home sales are always changing, and it is the REALTOR®’s job to stay on top of those market dynamics and pass along their expertise to their clients. REALTORS® direct their home-buying clients to the best financing options for their situation, and they steer all their clients to make better decisions in preparation for the home buying or selling process. For instance, a homeowner who wants to list their home might be advised to take a home equity line of credit (HELOC) before listing to make necessary repairs—because once the property is listed, a bank will not lend on that property. A buyer might be advised not to buy a car before starting or closing on a home purchase, because such a big ticket purchase would change their debt-to-income ratios and might disqualify them for a home loan.
REALTORS® Offer Great Resources
REALTORS® know the best contractors and can refer them easily to new homeowners and potential sellers. They are the link between all things real estate and the novice. One of the REALTOR®’s most important roles is as the unbiased voice of reason. The REALTOR® is the objective set of eyes in the transaction. They help sellers see outside their personal connection to a property, and they help buyers stay level when faced with a multiple-bid situation. A REALTOR® can help a buyer save money and help a seller to make the most money. Because they go through the home buying and selling process daily, they can warn clients of potential dangers and looming changes. For instance, when Congress threatens to eliminate the mortgage-interest deduction, REALTORS® are at the forefront of the fight rallying to voice their support and save the measure. They are the link between housing policy and the consumer. A REALTOR® maintains a customer-focused approach. Showing properties and writing offers is just a percentage of what happens in the course of the typical REALTOR®’s day: no two days are alike, and no two transactions are alike. The REALTOR® is the only constant in the real estate transaction. Can you afford not to have that experience on your side?
The Typical REALTOR®
There is a stereotype of the typical REALTOR® that must be dispelled: the stereotypical agent works a few hours a day and makes millions of dollars a year. Reality TV shows perpetuate this myth. On television, buyers find the perfect house after visiting just three homes—and write an offer that is accepted immediately. The next thing you know, they’re moving in! Nothing could be further from the truth. The typical buyer searches with a REALTOR® for about 6 weeks and looks at nearly a dozen properties before selecting a home, according to the National Association of REALTORS®. They then wait about 30 days—on average—for the loan to fund and deal to close. The agent is only paid once the deal closes. If the buyer decides to sign another lease—or not to buy—that agent is not compensated. The same is true of listings. If the listing does not sell, the agent is not paid. Selling real estate is a commission-only business. That means an agent can work with a buyer or seller for months without ever making a commission—because deals fall though and not every listing sells. It’s a business run on trust and faith. Also, many people see the commission check at the closing table and have no idea how that money is split. They think their agent walks away with all of it—that’s just not true. Remember, agents work for brokers. The commission check is made payable to the brokerage which then cuts a check to the listing agent and the selling agent. Both agents also must pay a percentage of their earnings to their broker. Generally, agents also are responsible for paying their own federal and state income taxes, social security tax, and health insurance.
Note: At Florida Regional Realty all agents and brokers are full-time REALTORS® and members of the National Association of REALTORS®, the Florida Association of REALTORS® and the Northeast Florida Association of REALTORS®.