Defining Real Estate Terms: REALTOR®, Brokers and Agents Oh My!

Ever feel like the real estate industry is speaking a different language? Even when it comes to the most basic of terms it can get confusing. Here is a cheat sheet to help you know what is being said, and who’s on your team and keep you sounding as smart as you already are.

REALTOR® vs. Real Estate Agent

When it comes to buying or selling property, you'll often encounter the terms "REALTOR®" and "real estate agent." While they're often used interchangeably, there's actually a big difference between the two.

A real estate agent is someone who has obtained a license to assist people in buying, selling, or renting properties. They have completed the required education and passed the exams to become licensed. They are obligated to comply with the Commonwealth of PA laws, and federal laws of course. The PA State Real Estate Commission refers to an individual who holds a real estate license as a “Licensed Real Estate Salesperson.”

On the other hand, a REALTOR® is a real estate agent who is also a member of the National Association of REALTOR®s (NAR). NAR is a professional organization for real estate agents that drafts, implements, and monitors strict rules and regulations that all agents must follow. A code of ethics and standards that focus on providing all homebuyers and sellers with equality “no matter race, ethnicity, gender, religion, age, sexual orientation, gender identity, disability, national origin, socioeconomic status, political affiliation or any other qualities by which we may define ourselves”. 

So, while all REALTOR®s are real estate agents, not all real estate agents are REALTOR®s. Philly Home Girls agents are all REALTOR®s. When choosing to work with a PHG REALTOR® we provide an added layer of assurance that you're working with someone who is committed to upholding the highest ethical standards in the industry. Here are a few sentences from the preamble for example:

“In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTOR®S® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others. The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.”

Broker vs. Agent/REALTOR®

Now, let's clarify the difference between a broker and an agent/REALTOR®.

To understand it helps to know how a real estate agent's license works in PA. As a real estate agent, you must “hang” your license at a brokerage. All Philly Home Girls agents, for example, hang their licenses at our brokerage Elfant Wissahickon REALTOR®s. 

A broker is a real estate professional who has taken additional education and licensing exams beyond those required to become a real estate agent. They have met the qualifications set by their state's real estate commission to own or manage their own real estate office or work independently. Brokers can work directly with clients and oversee transactions, and they may supervise other agents. Every licensed real estate salesperson is required to work under the supervision of a designated broker of record.

While a brokerage is a business and not a human, every real estate brokerage must contain one human designated to be the Broker of Record. This person establishes the company’s policies and procedures, so if the brokerage is a REALTOR® member, all of the agents licensed at that company are REALTOR®s.

Because the Broker of Record has so much impact on the Brokerage’s policies and procedures, their level of experience, values, and commitment to business ethics strongly influences the quality of business practiced by the agents they supervise.

Two PHG agents have broker’s licenses; team leader Jeanne Whipple and team member Carmine Simmons, who was a practicing broker of record in Jersey City for 15 years, yet neither is a designated broker of record. They are qualified and licensed to take that role on, but since they are not actively brokers of records, they are considered Associate Brokers and their license numbers begin with AB, whereas a salesperson’s license number starts with RS and the brokerage’s license number starts with RB. 

There’s no advantage to working with a Broker of Record over an Associate Broker or Real Estate Salesperson. In fact, a broker of record has a lot of work to do in the realm of oversight, policy enforcement, procedures like escrow management, license administration, professional insurance issues, legalities, and liabilities. Unless the brokerage is very small, a broker who has time to show houses and manage real estate transactions in a quality way would be quite the unicorn.

Buyer's Agent vs. Seller's Agent

A buyer's agent works exclusively on behalf of the buyer’s interest in a real estate transaction. They provide services specific to the activity of buying a home, such as searching for, finding, and showing suitable properties, negotiating terms and changes to them, and navigating the purchasing process and contracts that bind them. By educating their clients, Buyer's agents empower their clients to understand their options and make confident decisions. They set expectations, prepare their clients to move forward on a clear path, and provide guidance and support throughout the home-buying journey.

On the other hand, a seller's agent (also known as a listing agent) represents the seller’s interest exclusively in a real estate transaction. Their main duty is to advise the seller on how their property will perform in the current market at the price they choose. They, or their brokerage or team, then markets the seller's property to effectively attract potential buyers. They negotiate terms that are acceptable and typically beneficial to the seller, and guide them through the selling process and the changes that happen between signing a listing contract and closing (also known as settlement). 

Change is coming 

Prior to August 17th, 2024, the Seller’s agent can negotiate the buyer’s agent’s commission rate and advertise it to attract the buyer’s agent and incentivize them to guide the buyer they represent to closing. After August 17th, the buyer’s agent will be able to dictate what is now called the “rate of compensation”. It can still be wrapped up in the price like it is today, but buyers will also learn the advantages of paying it outside of the price. 

While buyer's agents and seller's agents have different roles, it's essential to note that in some cases, a real estate agent or REALTOR® may represent both the buyer and the seller in a transaction. This scenario leads us to the concept of dual agency.

Dual Agency vs Designated Agency

Dual agency occurs when a real estate agent or brokerage represents both buyer and seller in the same real estate transaction. For clarity, that’s one human and one brokerage representing the best interest of both parties in a transaction. It works really well when the transaction is a complete and total love fest from contract to close, for example, a family member or beloved neighbor. The dual agent “cannot take any action that may be adverse or detrimental to either party” to quote the consumer notice, which is a document authored by the Commonwealth of Pennsylvania.

Why is this so important? Public opinion seems to lean towards the principle that a buyer and a seller are two different things, a high price or a low price for example. So how can one person achieve that for both sides? The answer is, that they can’t, and the truth is, price isn’t all that happens in a real estate transaction. If the activities around the transaction stay above the line, meaning, focused on the fact that the seller wants to sell, and the buyer wants to buy, then both parties can achieve their goals fairly under dual agency.  

If you cannot sit with the idea of dual agency comfortably, Designated Agency is an option. 

Designated agency is when the buyer’s agent and the seller’s agent are both licensed at the same brokerage. PHG agents practice this type of agency regularly. Often buying clients come directly to us with interest in our listings, which in turn, are our Brokerage’s listings. 

Both clients have the benefit of having their own Designated Agent that will operate to the REALTOR standards and interests of that individual client. A bonus is that most Designated Agency transactions are the smoothest because both parties’ transactions are processed under one system. 

YOUR LOCAL TEAM

In our personal opinion, the best place to find a full-time, professional, ethical experienced real estate agent is at a small, local brokerage on the ground in the city where you want to buy or sell. At an independent local brokerage, the ratio of broker to licensee is typically drastically lower than a national chain. The individual attention and training the licensee receives from the leadership can lead to higher quality, more individualized service, special attention, focused expertise, and other traits you may appreciate in your real estate agent.

Did we just describe our brokerage, Elfant Wissahickon REALTORS ®? Yes, we did. Are we promoting our team of REALTORS®, Philly Home Girls, the #1 team in PA and Philadelphia when ranked by the number of clients represented? Yes, we are. We love doing what we can for our community of clients, and in turn, they love what we do for them. Join us.