Before I entered the real estate business, I had no idea the difference between an agent, a broker, or REALTOR®, or if there even was a difference. (I especially didn't know that REALTOR® was supposed to be written in all caps with the registered trademark symbol after it!) I knew that people worked for real estate brokerage firms, but I didn't understand the relationship between the two.

Anybody thinking of a real estate career, however, as well as anyone ready to use an agent would benefit from understanding these relationships and terms. Luckily, I'm in the mood to clarify!

Technically speaking, "real estate agent" refers to anyone aiding in a real estate transaction: from consultants to salespeople to assistants.  A real estate broker, however, goes a step further.  Brokers are licensed to actually sell real property.  So a broker is an agent (a helper in the transaction), but an agent is not necessarily a broker.

In the state of Washington, a broker license requires 90 hours of coursework and a state-sponsored exam. Once the exam is passed, we'll answer to just about anything: broker, agent or licensee (because...ta da...we hold a license). 

NOTE: Many people at this point add the generic term: realtor.  This is inaccurate.  REALTOR® is actually a title or designation of one belonging to the National Association of REALTORS®.  Most brokers are REALTORS®, but not all of them.  (More on why that makes a difference in another post.)


For the sake of this article, I'm going to use agent, broker and licensee interchangeably (as most people do). 

A freshly minted licensee is affectionately termed a "baby broker" by those in the business. Since 90 hours of coursework is hardly adequate to teach everything there is to know about real estate, new brokers are required to join a brokerage firm. In fact, a licensee's license is not even released until it can be sent to a named brokerage.  

In each brokerage, there is at least one managing broker and a designated broker. The designated broker is generally the owner or at least has a controlling interest in the firm as assigned by a larger company. A managing broker, under the direction of the designated broker, oversees the "baby brokers" as well as seasoned agents. Designated and managing brokers bear the brunt of the liability and ensure that each transaction is completed according to the law. 

The brokers themselves, however, are independent contractors, meaning that they are essentially small business owners...of themselves*. What does this mean to the clients? It means that real estate brokers don't get paid unless they close a deal. And it also means that agents are not interchangeable. Broker etiquette asks that if you start with an agent, stay with that agent. It's a good idea to shop around to find a broker that you trust and who works well with you before starting a home search.

Understanding the terminology of the real estate players can help in navigating a real estate purchase. It might also come in handy for a game of Trivial Pursuit. And now that you know what to call us, you can call us to help buy your dream home!


*Every brokerage firm runs a little differently, but generally speaking brokers are independent contractors.