When you buy or sell a house in the U.S., most people work with a real estate agent, real estate broker or REALTOR®. Are you confused by so many different words to describe the person you expect to help you buy a house, or sell your home? Or which one you should work with?
When the National Association of Realtors® contacted me to explain I could not use the domain I'd just bought, SavvyRealtorResources.com, I decided it was time to research the topic. And why not share the information I discovered with you. While it's easier to buy a different domain, it all seems rather foolish as REALTOR® while trademarked, has entered the public domain just like Kleenex, Crockpot, Band-Aids (great list of 41 Brand Names People Use as Generic Terms).
When Do You Hire a Real Estate Agent?
Real estate agents and brokers are licensed by one of more states where they practice real estate. For example, where I live in southern NH, bordering Maine to the north and Massachusetts to the south, it's common for real estate professionals to be licensed in 2 or 3 states. So let's look at what titles mean:
- Real estate agent – has taken the minimum number of hours of education and passed a test to become licensed in one state. They usually have to take the test for each state where they want to be licensed, and may have different course requirements too. Real estate agents must work under a licensed real estate broker.
- Real estate broker – takes more classes than a real estate agent and has to pass a broker's license exam for each state. Real estate brokers can work alone or they can hire agents to work for them.
What's interesting is the relationship between real estate agents and brokers.
- Real estate agents are independent contractors, not employees of the broker or real estate agency they're affiliated with.
- Most real estate agencies are independently owned franchises of national brands like Keller Williams, ReMax or Coldwell Banker. There are also local (single location) real estate broker agencies and regional real estate agencies like William Raveis, based in Connecticut and spreading out into New England.
- Exclusive buyer agents – represent only buyers and never sellers, e.g. they don't take listings. This helps eliminate the conflict of interest, known as “dual, limited or designated agency”, where one agency (or one real estate agent) represents both the seller and the buyer. Buyer agents represent less than 1/2 of 1% of all real estate agencies in the U.S.
- Real estate agents have to pick the right broker/agency to work with and it's not easy, which is why you'll see them switch offices. Some real estate agencies are well run and agents maintain their ties for many years. Other offices, regardless of the brand, provide little support to their agents and don't hold them to the ethical standards you expect.
When picking the right real estate agent for your transaction, you are picking a person … not a brand! Just like finding a plumber, electrician or handyman, you've got to interview and find someone who listens (key) to what you need, and demonstrates the skills and commitment to work with you.
So Who is A REALTOR®?
Any licensed real estate agent or real estate broker is eligible to join the National Association of Realtors®. When I asked them why they join, the answer came down to one thing – it's a requirement to be able to list homes for sale on the MLS (Multiple Listing Service) for their area.
This access comes at a sizeable cost though. There are yearly dues for membership in the local association and the National Association of Realtors®, and these add up when a Realtor® joins these groups in multiple states. Then there are quarterly due to be able to upload listings to the MLS, and monthly fees to make sure that an agent's contact information is included with their listings on Realtor.com … or some other real estate agent can appear next to your listings.
Note: The NAR website states there are over 900,000 Realtors® in 2014. Other statistics indicate there are 2.5 million real estate agents, indicating that half of them are members of the National Association of Realtors®.
Can a Homeowner List Their House on the MLS?
Homeowners can list their house for sale on the MLS by working with an MLS Entry Only broker, who typically charges a flat fee for this service. You'll still have to offer a commission to the buyer's real estate agent.
Buying a house or selling your home is fairly challenging so learn who you want on your real estate team, as you'll need your real estate agent plus other home professionals.
This is some really good information about real estate agents. I liked what you explained that normally real estate agents are contractor employees. So, it is normal for them to work for a bunch of different companies. That is good for me to know that because I am looking to buy my first home.