Realtor License vs. Real Estate Agent License: Which do I need? (2022 UPDATED)

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If you think real estate is a good career move for you and decide to become an agent, you’ll want to consider getting a real estate license.

Agents make good money on commissions, enjoy a flexible schedule and benefit from the satisfaction of knowing they found their clients a great home.

Most people think real estate agents and realtors are one in the same. There are a lot of similarities, but actually quite a few differences in real estate agents vs. realtors.  In short – to become a real estate agent, you need to earn a real estate license in your state. To become a realtor, you must have already received your real estate license – AND you need to join the National Association of Realtors.

Confused yet? Here is some information that may help you out.

Realtors vs. Real Estate Agents: What’s the Difference?

sold signThese terms often get thrown around interchangeably, but they actually have pretty distinct differences between each other.

The biggest difference between the two comes down to the certifications for each. Simply put, while they have similar job descriptions, they are held to different standards as established by the National Association of Realtors. To better understand “Realtor vs. agent,” let’s take a closer look at the role of a real estate agent, followed by the role of a Realtor and the qualifications necessary for each.

Real Estate Agents: Real estate agents help people buy and sell properties, and has earned a license in order to do so. Agents can pick between several specialties including residential or commercial properties.

How to Become a Real Estate Agent: 

  • Meet Pre-Licensing Requirements: Pre-licensing requirements change from state to state. Generally, you will need to be at least 18 or 19 years old and a U.S. citizen.
  • Take a Pre-Licensing Course: A pre-licensing course will educate you on the real estate industry, so you are prepared to help people in the buying and selling process. It will also help you fulfil the course hours required for you to take your test.
  • Pass the Real Estate Exam: Next you will need to apply for and take your real estate exam. The exam will test you on various aspects of the real estate industry. You will be required to pay a fee to take the test. The test is multiple choice, and you will have a time limit (it varies from state to state). The exam has two different sections, the state portion and the national portion. Although licensing requirements vary by state, the average real estate agent will have completed 30 to 90 hours of coursework and must become knowledgeable about local, state, and national real estate laws and practices.
  • Find a Broker: Most states do not allow real estate agents to work on their own. They must work under a brokerage or sponsoring broker. There are many options, including remote, cloud-based brokerages to traditional brick and mortar brokerages. It’s important to find the right fit for you.
  • Continuing Education: Depending on the state, agents are often required to continue their education and renew their licenses every one to two years.

man with for sale signRealtors: Realtors are basically real estate agents that are also active members of the National Association of Realtors (NAR). The word Realtor is a actually a trademark referring to that active membership. Home appraisers, property managers, real estate counselors, and real estate brokers also can be members of the NAR, earning them the title of realtors. The association has a great reputation so agents that join will have a leg up on their non-member competitors. It’s important to note that technically, there is no such thing as a “realtor license”. More or less, NAR is an organization that fosters and promotes best practices within the real estate industry. You do not have to become a realtor in order to hold a real estate license, but you do have to hold a real estate license in order to become a realtor.

shaking handsHere are some benefits of becoming a NAR member.

Networking: When you join NAR, you join a network of over a million members. You can use your connections to build relationships with other members who may be able to provide you with inside information on listings.

Reputation: Agents that join NAR are held to a Code of Ethics that guarantees they are reputable. Buyers and sellers that realize this will be more likely to hire a realtor as opposed to a non-member agent.

Support: NAR works to protect the rights of their members. If you have a tax issue, or any other type of legal issue, you can contact their board of legal experts who are ready to help you in any way they can.

Other Perks: As an NAR member, you will be eligible for discounts on property and insurance. If you reach out to their credit board, they may help you get a loan for your business. You may even be able to get a special realtor credit card.

joining NARHow Do I Join NAR?

In order to join NAR, you must meet the following requirements:

  • You must be a practicing real estate agent
  • You cannot have any pending or recent bankruptcies on your credit record
  • You must not have a record of unprofessional conduct
  • If you work for an agency, the principle of your agency must be a member of the NAR.

New NAR members must take an online course on the ethics code and pass an exam. Current members are required to take an online ethics refresher course every four years. Membership in a local real estate board or association requires an annual $120 fee that covers membership dues for the NAR and any state-level real estate associations.

Which License Do I Need to Work in Real Estate?

When it comes down to it, all you really need to buy and sell homes is a basic real estate license. However, if you want to expand your business and enjoy the perks that come with being an NAR member, you will want to “get a realtor license” by joining NAR as well. So tell us, will you be adding a realtor license to your real estate resume?

Real Estate Agents vs. Real Estate Brokers: Key Differences

signing contractCertain states run their real estate licensing on a two tier credential system where on the lower tier, you have something called the salesperson who people commonly refer to as a real estate agent. And on the higher tier, you have something called the real estate broker. In this two tier system, each title requires an entirely different set of tests in licensing, but the broker designation also requires two years of experience as an agent.

You must get your real estate license, and hold that actively for at least two years before you can start the process to obtain your broker’s license. If you want, in order for the salesperson to conduct business legally in real estate, they have to hang their license under a real estate broker and pay them a portion of their commission.

The reason behind this is that it’s assumed that a broker is more experienced than the salesperson, and they will oversee their activities and ensure that they’re not causing problems. Typically the broker will provide ongoing resources like guidance, education, and business advice to the agent and their compensation for that is a portion of the salesperson’s commission.pexels-pixabay-280221

So to recap, in states with this two tier system, a real estate professional that holds their salesperson’s license is commonly referred to as a real estate agent. Whereas someone who holds a real estate brokers license is simply a real estate broker. Now in other states, this two-tier system is still somewhat in effect, but there’s only one standardized license in all of real estate.

It’s mainly the real estate brokers license in these states. No one holds a salesperson’s license at all, they only hold a broker’s license. For those looking to make more money, they must keep their license active for at least two years, and then take a class that certifies them as a managing broker.

In these states you have brokers and managing brokers, and here’s where things might get a little confusing. Most people in those states refer to non managing brokers as real estate agents, and then refer to managing brokers as “brokers”. Regardless of what state you’re in, probably the easiest way to remember the difference between an agent and a broker is to think of a real estate agent as a professional who primarily does business just for themselves. Whereas a broker normally runs a real estate brokerage firm.

 

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*This article was updated on 9/21/2021

This information was reviewed and approved by Chris Heller. Chris serves on the AgentAdvice Editorial Board and is the Chief Real Estate Officer at OJO Labs. Chris brings deep expertise having held influential industry positions including CEO of mellohome and former CEO of Keller Williams Realty International.

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