Realtor® vs Real Estate Agent: What’s the Difference?
There are a lot of real estate terms that can be confusing to the average consumer, whether or not they have been involved in a real estate transaction in the past. We’re here to clear up the confusion on one of the readily used… or shall we say misused terms in the real estate industry.
Are you guilty of confusing a Realtor® with a Real Estate Agent, or using the titles interchangeably?
Well, the mix-up is pretty common, despite the fact that the two titles are not one in the same. Let’s see what defines a Realtor®, and what differentiates a Realtor® from a real estate agent.
The Realtor® Trademark
For starters, you may have noticed that we use the registered trademark symbol (®) every time we use the term Realtor®. That’s because “Realtor” is actually a term trademarked by the National Association of Realtors®.
That’s right. The National Association of Realtors® (or NAR for short) owns the term Realtor®. This means you can’t just go around using the term, even if you are a licensed real estate professional.
So What Exactly is a REALTOR®?
We’ve already established that “Realtor” is a term owned by the National Association of Realtors®, which just happens to be the largest trade organization in the country. As of October 2023, NAR had over 1.5 million members, all licensed in their respective state(s).
Realtors® are dues-paying members of the National Association of Realtors. When licensed real estate professionals join their local Realtor association - which is required to gain access to the oh-so-coveted MLS (Multiple Listing Service) - they are also required to join NAR.
You see, each MLS is a privately-owned entity with certain requirements for membership. Primarily, you must be associated with a partnered local association. Again, this requires becoming a dues-paying Realtor®.
Are All Real Estate Agents Realtors?
The natural assumption would be that all licensed real estate agents are Realtors®. Because who wouldn’t want to have access to the MLS? Isn’t that what all agents want?
Actually, no. Not all real estate agents are Realtors®, and not all agents want or need access to the MLS.
Only 13% of Realtors® make it to the 5-year mark.
In fact, more and more Realtors® are choosing to forgo NAR and local association membership for two main reasons:
Leaving the profession. Did you know that most Realtors® actually leave the real estate industry pretty soon after becoming licensed?
It’s estimated that about 87% of agents leave before hitting the 5-year mark.
Unfortunately, most newly licensed agents have unrealistic expectations when it comes to navigating the sales aspect of the industry. When those expectations are not met, new agents are more likely to look elsewhere for stable, reliable income.
Costs. Becoming a Realtor®, and maintaining membership does not come cheap. Realtors® pay annual dues to their local Realtor Association, the NAR, and their MLS. These dues can add up to thousands of dollars each year.
And this is on top of the sizable costs associated with being in business. Agents pay fees to their brokerage (ranging from technology and desk fees to franchise and transaction fees).
They also pay the cost of marketing and showing listings. Think hiring photographers, feeding guests at open houses, and driving around town to show (usually multiple) properties to clients.
Yes, Realtors® are compensated for their services through commissions, but that only happens if - and when- a transaction closes.
This pretty much explains why some real estate agents choose not to become Realtors®. But if they are not helping customers buy and sell properties using the MLS, what are they doing?
Non-Realtor® Real Estate Agents
We’ve already established that not all real estate agents are Realtors®. So what is it that these other agents do?
Well, quite a bit actually.
With a few exceptions, you must be licensed if you engage in any real estate activities for compensation. This includes helping others buy and sell real estate, writing and negotiating contracts, providing referral services, property management, and so much more.
Non-Realtors® often engage in one of the following activities for compensation:
FSBOs (For Sale By Owner). Individuals wanting to save on commissions and sell their homes without the help of a Realtor® may hire a real estate agent for assistance.
The agent usually charges a small flat fee for their services, acting in an advisory or consultant capacity. They may help the customer decide on a listing price, assist them in reviewing offers, and recommending service providers such as title companies, appraisers, and inspectors.
A La Carte Services. Agents who provide a la carte services usually assist buyers and sellers in one of the following ways:
Conducting a CMA (comparative market analysis)
Educating buyers on the buying process
Creating a BPO (Broker Price Option)
Helping a buyer or seller negotiate a sales price
Because they are not associated with an MLS, and are not compensated through commissions, these real estate agents charge customers a flat or bundled fee for services provided.
Property Management. Yes, property managers are actually licensed real estate agents! In most states, non-owners who list properties for rent, collect fees and rent, and provide property management services must be licensed.
Referral Services. There are some brokerages (like Mint Refer) that operate solely as referral brokerages, and employ referral agents.
These agents are licensed real estate agents who help pair buyers and seller with top-rated Realtors® in their area.
Why Would Someone Need a Referral Agent?
Though there are over 1 million Realtors®, they are not all created equal.
Unfortunately, many consumers are left with a bad taste in their mouths after working with a Realtor® for the first time. Why? Because unless they receive a positive word-of-mouth referral from a trusted family member or friend, they really don’t know where to look for the best Realtor®.
And there’s only so much you can learn by looking at someone’s profile on Zillow or Realtor.com.
Realtors® range in level of experience, service areas, and the amount of customer engagement provided.
Not to mention, not all Realtors® have people skills. That’s not something they teach in real estate school!
That’s Where a Referral Agent Comes In
Referral brokerages maintain detailed networks of Realtors® across the country. They know which Realtors® produce, and who the local experts are in any given area.
This is important because it helps buyers save time, energy, and money that might otherwise be wasted when working with the wrong Realtor®. And as we all know, when it comes to real estate, time is of the essence!
For instance, Mint Refer operates as a referral brokerage. While we don’t represent home buyers and sellers, we help connect them to the best in the business regardless of location.
When contacted by a customer, we conduct a detailed intake with the customer to determine their needs and wants. We then conduct a detailed analysis, and hand-pick Realtors® who not only meet a customer’s requirements, but will lead to overall customer success.
We do not charge customers a fee, but are compensated by the referred agent’s brokerage.
If you are looking to buy or sell a property, and are in need of a Realtor® referral, contact Mint Refer by sending us a message, or emailing us as info@mintbrokerage.co.
If you would like to join Mint Refer as a Referral Agent, please visit mintrefer.com/join or email us at join@mintbrokerage.co.