Broker vs agent vs Realtor
| Sales agent | Broker | Realtor | |
|---|---|---|---|
| What it is | A licensed person who helps clients buy, sell and rent property | A licensed person who can also run their own brokerage | A member of the National Association of Realtors (NAR) |
| Works independently? | No; must work under a broker | Yes | Can be an agent or a broker |
| Extra requirement | State license | Broker license; most states require agent experience first | NAR membership and its Code of Ethics |
What does a real estate agent do?
Real estate brokers and sales agents help clients buy, sell and rent properties. For buyers that usually means finding homes, arranging tours, writing and negotiating offers, and coordinating inspections and closing. For sellers it means pricing the home, marketing it, handling showings and offers, and seeing the sale through to closing. A broker can do all of this and also manage agents, hold client funds and run the business.
Realtor vs real estate agent
REALTOR® is a collective membership mark owned by NAR. In NAR's words, only members of NAR can call themselves a Realtor. It isn't a type of license and isn't a generic word for an agent. Members agree to follow NAR's Code of Ethics. Many agents and brokers are Realtors; some aren't.
Licensing
All states require real estate brokers and sales agents to be licensed. Becoming an agent typically means a high school diploma or equivalent, a set of real estate courses and a licensing exam. Most states require candidates for a broker's license to have experience as a licensed sales agent. Every state has a real estate licensing agency, and most let you look up a license online by name.
How brokerage commissions flow
Brokers and sales agents earn most of their income from commissions on sales. The commission is paid to the brokerage, not directly to the agent. The brokerage then pays the agent their share under their agreement.
Example: a $400,000 sale with a 2.5% commission to one side's brokerage is $10,000. If the agent's split with the broker is 70/30 (an example), the agent receives $7,000 before their own expenses and the brokerage keeps $3,000. Try the numbers with the real estate commission calculator.
What changed after the 2024 NAR settlement
New NAR practice rules took effect on August 17, 2024:
- No offers of compensation on the MLS. Listing brokers can no longer advertise on the MLS what they'll pay a buyer's broker. Sellers can still offer to pay a buyer's agent outside the MLS, and can offer buyer concessions such as help with closing costs.
- Written buyer agreements before touring. Agents working with a buyer must sign a written agreement before touring a home, including live virtual tours. It must state the compensation amount or rate (or how it's determined) in a specific, objective way, not open-ended; bar the agent from receiving more than that from any source; and say that commissions are fully negotiable and not set by law.
Commissions were always negotiable, and still are. Who pays the buyer's agent is now spelled out up front: the buyer, the seller, or a mix, as negotiated. See how much realtors make and how to choose a real estate agent.
Sources: U.S. Bureau of Labor Statistics: Occupational Outlook Handbook; NAR: Membership Marks Manual; NAR: what the settlement means for buyers and sellers.
Every worked example on this page was checked with Calcist's own engine and an independent reference.