When you’re looking to sell or buy a house, you’ll see a range of titles attached to the professionals who can help you navigate the process: agent, associate, broker, Realtor. While all of these individuals should be able to offer guidance, it’s important to understand what it means when you see “Realtor” next to someone’s name.
What is a Realtor? A definition
A Realtor with a capital R — also often written with all capital letters as REALTOR — is a licensed real estate professional who is also a member of the National Association of Realtors (NAR). The word is trademarked, hence the capital; you’ll also often see a registered trademark symbol next to it. It is certainly possible to be a fully licensed agent or broker who is not a member, but they are not called Realtors.
How many Realtors are there?
As of April 2022, NAR membership numbers more than 1.54 million, according to data from the organization. So there are more than 1.5 million Realtors in the U.S.
How do Realtors make money?
Realtors facilitate real estate transactions for clients who are buying and selling homes. They work on a commission model, meaning that they earn a percentage of what a property sells for. Historically, those commissions have typically added up to about 6 percent, with 3 percent going to the buyer’s agent and 3 percent to the seller’s agent, and they were covered by the seller. However, commissions are often negotiable, and they have decreased in the pandemic-fueled housing market.
Realtors may also pay a portion of their earnings to their brokerage, along with a range of other expenses. These can include marketing, membership dues for various organizations, access to the local MLS and other business costs.
What’s the difference between a Realtor and a real estate agent?
A Realtor is a real estate agent, but the titles are not identical. All real estate agents are licensed to help buy and sell properties via educational courses and passing a state exam. A Realtor has done all that and is, in addition, a member of the National Association of Realtors. Joining the organization indicates that they have passed the association’s course and have agreed to follow its bylaws and code of ethics, among other factors.
What is the Realtor code of ethics?
While Realtors’ job responsibilities may differ, they all agree to the same code of ethics. It’s a lengthy document that holds anyone with the Realtor designation to a high standard of professionalism and integrity. It also aims to protect consumers. Tenets of the code include:
- Never mislead an owner about the market value of a property
- Never lie about potential savings and benefits of working with them
- Submit offers and counter-offers as quickly as possible
- Fully disclose compensation amounts
- Offer equal professional services to customers regardless of race, color, religion, sex, handicap, familial status, national origin, sexual orientation or gender identity
- Use honest and truthful advertising
- Never make false or misleading statements about other real estate professionals, their businesses or their business practices
Do you need a Realtor?
Buyers and sellers are not required to work with a Realtor, or with any agent at all. Here are some common alternatives.
Sell it yourself
Some homeowners take the FSBO — For Sale By Owner — route. According to the most recent data from NAR, 7 percent of homes are sold by their owner. While doing it yourself does eliminate commissions, it also tends to eliminate some of the profit potential: FSBO homes tend to sell for less than traditionally listed ones. In 2020, the typical FSBO home sold for about $260,000, while those sold with an agent pulled in $318,000, the association says.
Use an iBuyer
Instead of dealing with open houses and traditional showings, some homeowners sell directly to iBuyers such as Opendoor and Redfin Now, which use algorithms to give you an instant offer. It’s convenient, but it also comes at a cost. Since iBuyers typically aim to turn around and flip your house for another sale, they will likely offer you a lower price so they can increase their profits.
Shop around on your own
You can also buy a house without a Realtor. But if you’re thinking about this option, be prepared for a lot of work. You’ll need to do all the negotiating yourself, plus there is a mountain of paperwork — including complex disclosures and legal contracts. It’s a bit overwhelming, and it’s nice to have an agent who understands it all working on your behalf.
Help finding a Realtor
Finding a Realtor isn’t hard. After all, you probably see billboards and for-sale signs with names and contact information all the time. However, you shouldn’t hire just anyone to help with one of the biggest financial decisions of your life. You’ll want to find the best Realtor for your individual needs.
It’s wise to start by asking friends, family and colleagues for recommendations. Don’t just take their word for it, though. Make sure you interview a few different candidates, and ask these essential Realtor questions to get a sense of how they will approach your house hunting or selling needs. The better you click with your Realtor, the better an experience your transaction will be.