If you want to buy or sell property, you will end up having to work with various different real estate professionals to get the job done. There are many different people in this industry who all have various different roles to play in the complex task of real estate transactions.
One common point of confusion for people is the distinction between a real estate broker and a real estate agent. These two terms are sometimes used interchangeably but they are, in fact, two different positions in real estate.
Though brokers and agents are in fact different jobs, they are closely related and often handle the same duties or work together on transactions. In addition, agents often go on to become brokers, adding somewhat to the confusion between the two.
While the difference won't necessarily make or break your real estate transaction, we still want to help you know the difference between these two similar roles. In addition, we will look at other related real estate titles such as realtors, lawyers, and mortgage brokers, to help you understand the difference.
Real Estate agents
A real estate agent is a real estate professional who specializes in sales. They are educated on real estate topics and receive certification through a designated regulatory body such as the Real Estate Council of Ontario or the BC Financial Services Authority.
An agent’s job duties vary a lot depending on which side of a transaction they are representing. When working as a listing agent, a real estate agent is working with a property owner to set home prices, list their property, market to buyers, help with staging, facilitate viewings and handle and present offers.
When working as a buyer's agent, they will represent buyers and help them find potential properties to buy, arrange showings, and help them put in their offers.
Real estate agents get paid a commission amount from each sale which is handled by their real estate brokerage who also takes a cut of their own. Real estate agents may not work independently and must work under a broker or real estate agency that finalizes all sales they make.
Real estate brokers
A real estate broker is a real estate agent who has taken additional education and certification in order to attain a broker's license. As a result, a broker is still able to do any of the duties that a regular real estate agent can do, and more. For a client, a broker can function exactly as a real estate agent would in the course of a transaction.
The difference is a broker can broker their own real estate transactions, meaning they can work both independently from larger brokerages, work as a designated broker in a real estate office, or operate their own firm as a managing broker. In this capacity, real estate brokers act as bosses above real estate agents to ensure that transactions are conducted in a proper and timely manner while complying with all relevant laws and regulations.
Real estate brokers who work in sales will make money like any other real estate agent, though if they work independently, they will be able to receive their full share of the commission. A licensed real estate broker who only manages agents and does not conduct sales themselves collects income through the portion of the commissions that they split with their agents.
For real estate agents, licensing requirements vary by province, however, most will require you to have a certain level of education and to pass a written exam. There are university and college courses offered in real estate that can serve as the foundation of a real estate agent's education and they then may be required to have additional job training.
A real estate agent will usually be required to work for two or three years before being eligible to receive their broker's license. They will also be required to complete additional educational programs before applying.
Once a real estate agent or broker is licensed, there may be some continued courses and education required depending on the region, such as regular examinations. They may also be required to pay regular licensing fees.
Why would an agent want to become a real estate broker?
Becoming a broker can be seen as a great next career step for licensed real estate agents. For one, it represents an expansion of their career options. An agent who becomes a broker may now work independently, start their own brokerage firm, and build their own team of agents under them. This provides huge opportunities in terms of expanding their business. After all, most of the world's largest real estate agencies were at one point started by a broker or two who dreamed of creating a company of their own.
Becoming a broker also provides a certain level of prestige. It signifies that someone is both successful and knowledgeable in their field which looks really good to clients and allows for potentially bigger deals.
And finally, since the role of a broker is a more elevated position, it naturally brings with it the potential for increased earnings above that of a regular real estate agent. However, this may also mean the role comes with even more responsibilities, but to many, it’s worth it.
Overall, there are numerous benefits to the agent who wishes to become a broker and it’s a very smart next step for career advancement.
What is a realtor?
Another term you may have heard used a lot is ‘realtor’. In many cases, this is used as a generic term with the same meaning as a real estate agent. However, there is, in fact, a difference in meaning. The National Association of Realtors (NAR) in the U.S. began the practice of referring to their members as realtors – a practice that has crossed over to the Canadian Real Estate Association (CREA).
In this context, the name actually represents a registered trademark of the organization, giving them exclusive commercial use of the term There have even been legal battles fought over improper use of the word by other parties as well as arguments against the terms trademarking as a genericized term. However, the trademark still remains to this day.
Joining CREA or the National Association of Realtors is voluntary for real estate agents, therefore, the title of realtor is useful in distinguishing the members of this group and the code of ethics and standards that they uphold which can be appealing to consumers. If you are working with a licensed real estate agent who calls themselves a realtor, you can be sure that they are a member of a reputable real estate organization.
When to work with a real estate broker or agent
When looking to buy or sell a property, you may work with either an agent or broker on the deal. For the client, it will not make very much difference for your transaction whether you work with a broker or agent as they will still be doing essentially the same duties.
One minor difference is that a broker may be more established and experienced in the industry, and an independent broker may be able to offer you rates or deals that other large real estate brokers will not. However, these independent brokers will also not have the reputation and systems in place of the larger brokerages.
That being said, there is really no need to go out of our way to work with a broker over an agent, and should instead hire real estate agents based on their work history and personal working style.
Other kinds of real estate professionals
Real estate lawyers
Real estate lawyers are another major player in the real estate industry that you will encounter when you are on the market. Unlike a real estate agent or real estate broker, a real estate lawyer has a very different job. Like their name would imply, these are certified lawyers who have chosen to specialize in real estate law.
Their duties are very different from real estate salespeople. Rather than dealing with setting sales up, real estate lawyers will instead handle the various legal concerns that are required to bring a real estate deal to completion.
Mortgage agent or mortgage broker
Again, though the name sounds similar to a real estate agent or real estate broker, mortgage agents handle a very different role in the real estate process.
Mortgage agents are real estate professionals certified to work specifically with mortgages. Mortgage brokers have a similar relationship to mortgage agents as real estate brokers do to salespeople. They are a step above mortgage agents and have additional training, but handle similar duties.
A buyer may choose to work with a mortgage agent or broker when they are looking at their options for financing their homes. They are able to provide their clients with informed mortgage advice and help them determine the best product for their circumstances. While they help on the financial side, they do not take part in the actual home search or selection process.