It’s time to buy, sell or rent your home but who should you call? If you call a real estate agent is it the same as calling a broker or a Realtor? Don’t all these terms really describe the same profession? Actually, no. Understanding the difference between Realtors, agents and brokers can help you real estate transaction process.
Each of these three titles pertains to a type of professional that works in the real estate industry but there are subtle differences between each. To help, we’ve outlined the main difference between Realtors, agents and brokers, so that you can make a more informed decision when choosing to work with your next real estate representative.
What is a real estate agent?
A real estate agent is anyone with a real estate license. Requirements to become licensed differ from country to country and province to province. For instance, in British Columbia agents must complete two courses which take, on average, between 60 to 72 hours to complete (in total, and not including exams). In contrast, agents in Saskatchewan must complete educational curriculum through Association of Saskatchewan Realtors (ASR) within one year.
Due to regulations, a real estate agent must work for a real estate broker (or brokerage). That means you hire a real estate agent, you are technically also hiring his or her broker.
Agents charge a commission based on a percentage of the sale price of the property. While Canada’s Competition Act promotes free and open competition, most agents will charge a commission rate that is within a range that is typical for their province or city. While the average commission rate isn’t officially collected and readily available, it is easy to find out just by asking a few agents what commission they charge. For instance, a Vancouver-based agent will probably charge 7% on the first $100,000 and 2.5% on the remaining balance of the sale price. In Toronto, however, the total commission rate will be 5% on the full sale price, with 2.5% going to the buy-side agent and the other 2.5% going to the sell-side agent. No matter where the agent is located, a percentage of their commission is then paid to their brokerage (unless they pay a flat-fee upfront to keep 100% of their commissions on an annual basis).
What is a real estate broker?
A real estate broker is an agent who pursues a higher level of education and licensing (often after working in the industry for a while). That means to become a real estate broker, you must first be a real estate agent. The courses required to become a broker are typically geared towards qualifying the real estate professional to run and manage their own brokerage firm — a legal entity that is able to hire and lead a team of real estate agents but must also comply with real estate regulations, Competition Act requirements as well as a raft of other legal regulations (such as anti-money laundering requirements). This also means this real estate professional now has extensive knowledge of real estate laws and regulations as well as more power and responsibilities than professionals who remain real estate agents.
What is a Realtor?
Realtor is a trademarked term for an agent who belongs to a recognized real estate board. For instance, an agent who pays their fees and belongs to the Real Estate Board of Greater Vancouver (REBGV) can call themselves a Realtor. As a Realtor, these agents must adhere to the board’s Code of Ethics and standards of professionalism. In addition, each agent that belongs to either their provincial board or the Canadian Real Estate Association (CREA) must complete ethics training on an ongoing, regular basis.
Listing agent and buyer’s agent
A broker, Realtor or an agent can act as either a listing agent or a buyer’s representative. Listing agents represent the seller, and are also referred to as “seller’s agents.” Buyer’s agents, on the other hand, represent the buyers, and are often known as “buyer’s representatives” and, on occassion as “selling agents” (which is not the same as a “seller’s agent”).
Regardless of who you choose to work with, these real estate professionals all have something in common: They owe their client’s a fiduciary responsibility to protect their best interests in a real estate transaction. That means each real estate professional must put the needs and financial well-being of their client ahead of all other factors. It also means that any agent who ends up representing both the buyer and seller in the same transaction (known as “dual agency”), must be upfront about this potential conflict of interest and must get the agreement of both the buyer and the seller, in writing.
The bottom line
While there is a fundamental difference between Realtors, agents and brokers, all of these professionals are licensed to represent you when buying or selling real estate, regardless of what side of the deal you happen to be on. The most important aspect, for you, to be concerned with is that the professional you choose to work with is not only properly educated and licensed, but acts in good faith to protect your best interests in a real estate transaction.
When choosing the right professional, keep in mind, that every Realtor has different capabilities and focuses when it comes to the real estate industry. To ensure you’re working with the right person, remember to interview a few Realtors and focus on their knowledge, experience and whether or not they can and will work with your needs and requirements.