Ask Andrew – Realtor vs Broker

Ask Andrew: Realtor VS Broker

By: Andrew Goodman

Ask Andrew – Realtor vs BrokerQ: What is the difference between a Realtor and a Broker?

A:  A Broker is one who acts as a point of contact between two or more people in negotiating the sale, purchase, or rental of property.

A Realtor® is salesperson who is a member of the National Association of Realtors (NAR). Most real estate agents call themselves Realtors®, however they must be a member of the National Association of Realtors® in order to do so. For the remainder of this column, I will refer to such agents as salespeople to prevent any misunderstanding.

A broker is fully responsible for the actions performed in the course of the real estate business by all persons licensed under the broker. In turn, all of the salesperson’s activities must be performed in the name of the supervising broker. The salesperson can carry out only the responsibilities assigned by the broker with whom he or she is affiliated with and can receive compensation only from that affiliated broker. As an agent of the broker, the salesperson cannot prepare or submit contracts or receive compensations from any other party. The broker is liable for the acts of the salesperson within the scope of their employment agreement. A salesperson can only work for one broker in a given jurisdiction unless both brokers agree to the salesperson working for both.

A broker can also hire employees who may or may not be licensed to handle other office matters, but those employees cannot work with clients/customers as a licensed salesperson nor act as a licensed salesperson. A salesperson is typically considered an independent contractor. A salesperson acts differently than a normal employee. The broker cannot control the salespersons activities like an employee. The broker can supervise what the salesperson does, but cannot control how they do it.

The bottom line here is that a salesperson must work for a broker. A broker is ultimately responsible for the salespersons acts. A broker can also be a salesperson and can perform the same activities as a salesperson, but is also responsible for all salespeople that he/she is supervising. I am a broker. I own the brokerage of Goodman, Realtors® and I am responsible for all salespeople within my brokerage. However, I still help clients with their real estate needs in the same capacity as a salesperson.

A broker can be a salesperson, but a salesperson is not necessarily a broker. Think of a broker as the boss. The broker is responsible for the salespeople in the brokerage. Meaning, any contract written, any lease prepared, any client/customer that the salesperson is working with, etc. is the responsibility of the broker. The broker’s job is to train and make sure the agents that he/she is the supervising broker of follow all of the local, state, and federal real estate laws.

There is also an agent who holds the title of Associate Broker. An Associate Broker is a salesperson that has the same licensing credentials as a broker, however works under a licensed broker. An Associate Broker is still a salesperson and must abide by the rules and regulations of a salesperson.

Please note sales agents and brokers are not Realtors® unless they are members of the National Association of Realtors®.