What exactly Is A REALTOR®

A REALTOR® is a licensed real estate salesperson who belongs to the National Association of REALTORS®, the largest trade group in the country.  Every real estate agent is not a REALTOR®, but most are.  If you’re unsure, you can ask your agent if they’re a licensed REALTOR®.  They are held to a higher ethical standard than licensed  real estate agents and must adhere to a Code of Ethics.  Some REALTORS® are brokers, while some are agents. Unfortunately, people use the term interchangeably but there are some differences.

Principle Brokers are usually managers. They run an agency and have REALTORS® working under them as salespeople. They might own a real estate brokerage or manage a franchise operation. They must take additional courses and pay additional fees to maintain their state-issued broker license.  A real estate agent, on the other hand, is a salesperson selling on behalf of the broker.  Real estate agents are also state licensed and must pass a written test before legally acting as a real estate agent.  Each state has its own licensing laws and standards.

The Typical REALTOR®

There is a stereotype of the typical REALTOR® that must be dispelled: the stereotypical agent works a few hours a day and makes millions of dollars a year.  Reality TV shows perpetuate this myth.  On television, buyers find the perfect house after visiting just three homes—and write an offer that is accepted immediately. The next thing you know, they’re moving in!

Nothing could be further from the truth.

The typical buyer searches with a REALTOR® for about 12 weeks and looks at about 10 properties before selecting a home, according to the National Association of REALTORS®.  They then wait about 35 days—on average— for the deal to close.  The agent is only paid once the deal closes.  If the buyer decides to sign another lease—or not to buy—that agent is not compensated. The same is true of listings.  If the listing does not sell, the agent is not paid.

Selling real estate is a commission-only business. That means an agent can work with a buyer for months without ever making a commission, because deals fall though and not every listing sells.  It’s a business run on trust and faith.  Also, many people see the commission check at the closing table and have no idea how the money is split.  They think their agent walks away with all of it—that’s just not true.

Remember, agents work for brokers.  The commission check is made payable to the brokerage which then cuts a check to the listing agent and the selling agent.  Both agents also must pay a percentage of their earnings to their broker.  Generally, agents also are responsible for paying their own federal and state income taxes, social security tax, and health insurance.

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