Many people hear the terms Realtor and Broker thrown around when it comes time to buy or sell their home in Minnesota. But what is the difference?
There are differences in all three in the state of Minnesota. Let me explain. I’ll start with the most common term used; Realtor.
A REALTOR is a agent who is licensed in Minnesota and is a member is The National Association of Realtors (NAR). Only agents who are members can claim to be a Realtor. NAR is important to the real estate industry because it has standards and rules called “Code of Ethics” to which Realtors must follow of they can be punished and be kicked out of the club more or less.
NAR protects the consumer as well by fighting for consumers and Realtors on both the state and national level. In fact, NAR is one of the most powerful associations in the country with thousands of professional members including myself.
- Real Estate Agent
A real estate agent (a salesperson) is a person who is NOT a member of the NAR. Simply put they are licensed by the state of MN to sell real estate for other people. While the state oversees all three levels of licenses, real estate agents do not necessarily have the same code of ethics since they are not Realtors.
A lot of big builders have real estate agents on staff. Since the big builders have a lot of business the real estate agent really has no need to be a Realtor because the business is provided for them by their employer and they are not independent professionals.
A real estate agent can buy and sell real estate for people on behalf of the broker they are licensed under. The broker hires agents usually on an independent contractor basis to perform sales for the broker to which the broker will pay the agent a portion of the commissions when a property closes for their work.
A broker is the top of the food chain when it comes to buying and selling homes for a third party. I explain it to people much like a doctor and nurse relationship. The doctor is licensed to practice medicine and give orders to treat someone. The nurse practices medicine but must follow the Dr’s orders and cannot work on their own. They must receive orders from a Dr. to do their work. This is also the same for Paramedics, they must work under a Dr. to perform their work. Does that mean nurses and medics don’t know what they are doing? No way. they are often just as smart as the Dr’s they are just not licensed to practice the same way a Dr is. Realtors and real estate agents are the same, they are trained and smart but hold less accountability than a broker.
A broker is licensed by the state of MN to buy and sell real estate. All Realtors and real estate agents MUST work under a broker and that brokers license. Ultimately the broker is responsible for all actions of their agents and Realtors much like a Dr. is responsible for the nurses care of the patient.
I am a broker and maintain my NAR membership also giving me the right to claim myself as a Realtor and a broker.
You go to school to be a real estate agent. You must be a licensed real estate agent to become a Realtor. To become a broker you must have been a real estate agent or Realtor and actively practicing before you can go to school and take the brokers exam.
All three levels are licensed under the MN Dept. of Commerce and must follow state law when practicing.