Considering a career in real estate? You might have heard the terms realtor and real estate agent bandied about as though they were interchangeable. But not all realtors are real estate agents and not all real estate agents are realtors. So how exactly do the two designations compare?
Continue reading to learn the similarities and differences between a realtor vs. real estate agent.
Roles of a realtor and real estate agent
Both realtors and real estate agents are licensed to help their clients buy or sell residential or commercial real estate. But both of these professionals may perform various functions in addition to or in lieu of real estate sales.
Realtors can serve as a real estate agent or choose to be a home appraiser, a property manager or an associate, managing or principal real estate broker if he or she earns additional broker educational credentials. Likewise, a real estate agent can choose to work as a sales agent, an associate broker or a broker.
Now that we’ve established that realtors and real estate agents can both sell real estate, you might be asking, what’s the difference between a realtor vs. real estate agent? The distinction comes down to trade association membership.
Realtors are real estate professionals with an active membership in the National Association of Realtors (NAR). The NAR is a North American trade association for real estate professionals. Naturally, having the backing of a large trade association lends a certain to clout to the transactions you facilitate as a realtor.
On the flip side, the term real estate agent itself does not imply any particular trade association affiliation. Only real estate agents who are NAR members can refer to themselves as realtors.
What is more, the NAR has trademarked the term realtor. Realtors must refer to themselves with the designation REALTOR®. Meanwhile, the term real estate agent is generic.
As mentioned earlier, both realtors and real estate agents require a real estate license. State licensing requirements vary. Usually, you must complete between 30 to 90 hours of classroom instruction at an accredited educational institution.
You then have to pass an exam to demonstrate your knowledge of real estate law. Whether you’re a realtor or real estate agent, you’ll need to pay a licensing fee and an ongoing fee to renew it at the interval your state requires.
But as NAR members, realtors have additional expenses that non-member real estate agents are not on the hook for. You will pay both an application fee when you apply for NAR membership and ongoing membership dues. To be eligible for NAR membership, you must have a valid real estate license and be able to prove that you are a practicing real estate professional without a history of professional misconduct or insolvency.
As a realtor, you must strictly adhere to an established code of ethics and standards of practice that real estate agents are not formally held to.
Numbering seventeen statutes in total, the NAR Code of Ethics, in a nutshell, promotes honesty, integrity, and transparency in business standards. A few key statutes that realtors must promise to uphold include protecting and promoting their clients’ interests above their own, making full disclosure when handling transactions involving a property they have an ownership interest in and never knowingly misrepresenting or hiding facts about a property.
Violating these statues as a realtor could hurt your professional reputation and/or result in ethics complaints, sanctions or legal ramifications. That said, as a matter of course, you should maintain a high ethical standard in business whether you’re a realtor versus a real estate agent.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.