Understanding the Difference Between Brokerage and Realtor
The terms "brokerage" and "realtor" are frequently used in real estate, but they refer to completely different things. Understanding the difference between brokerage and realtor is crucial for anyone involved in or entering the real estate industry.
According to the National Association of Realtors (NAR), there are over 1.5 million real estate licensees in the United States, but only members of NAR can use the term "Realtor®." Meanwhile, there are over 86,000 licensed real estate brokerages. These are two distinct concepts that work together in the real estate ecosystem.
This guide clarifies the difference between brokerage and realtor, explaining what each term means, how they differ, and how they work together in real estate transactions.
Quick Answer: What's the Difference?
Brokerage: A brokerage is a business entity (company) licensed by the state to facilitate real estate transactions. It's the legal structure that employs agents and brokers.
Realtor: A Realtor® is a real estate professional (agent or broker) who is a member of the National Association of Realtors (NAR). It's a professional designation, not a business entity.
Key Difference: A brokerage is a business/company, while a Realtor is a person with a professional designation. A brokerage can employ Realtors, but not all agents/brokers are Realtors.
What is a Real Estate Brokerage?
A real estate brokerage is a business entity licensed by the state to facilitate real estate transactions. It's the legal structure that employs or contracts with real estate agents and brokers.
Key Characteristics of a Brokerage
- Business Entity: A company (corporation, LLC, partnership, or sole proprietorship)
- State Licensed: Must be licensed by the state real estate commission
- Employer: Employs or contracts with licensed real estate agents
- Legal Structure: Provides legal authority for agents to represent clients
- Oversight: Supervises agent activities and ensures compliance
- Business Operations: Operates as a for-profit business
What Brokerages Do
Brokerages:
- Employ or contract with real estate agents
- Provide legal authority for agents to practice real estate
- Supervise agent activities and transactions
- Ensure compliance with state and federal regulations
- Facilitate real estate transactions
- Process commissions and handle financial matters
- Provide training, support, and resources to agents
- Manage business operations and marketing
See our comprehensive what is a real estate brokerage guide for detailed information.
Examples of Brokerages
- Keller Williams Realty (franchise brokerage)
- RE/MAX (franchise brokerage)
- Coldwell Banker (franchise brokerage)
- Independent local brokerages
- Virtual brokerages (cloud-based operations)
What is a Realtor?
A Realtor® (note the registered trademark symbol) is a real estate professional who is a member of the National Association of Realtors (NAR). It's a professional designation, not a job title or business entity.
Key Characteristics of a Realtor
- Professional Designation: Membership in NAR, not a license type
- Trademarked Term: "Realtor®" is a registered trademark of NAR
- Code of Ethics: Realtors must adhere to NAR's Code of Ethics
- Can Be Agent or Broker: Both agents and brokers can be Realtors
- Voluntary Membership: Not required to practice real estate
- Professional Association: Part of a professional organization
Requirements to Become a Realtor
To become a Realtor, you must:
- Hold a valid real estate license (agent or broker)
- Join your local Realtor association (affiliated with NAR)
- Pay annual membership dues
- Complete required training on NAR's Code of Ethics
- Agree to abide by NAR's Code of Ethics and standards
What Realtors Do
Realtors are real estate professionals (agents or brokers) who:
- Represent clients in real estate transactions
- Adhere to NAR's Code of Ethics (higher standards than state requirements)
- Participate in professional development through NAR
- Have access to NAR resources, tools, and data
- Can use the Realtor® designation in marketing
Important Note
Not all real estate agents or brokers are Realtors. Only members of NAR can use the term "Realtor®." Many licensed professionals choose not to join NAR and are still fully licensed and qualified to practice real estate.
Key Differences Between Brokerage and Realtor
Understanding the difference between brokerage and realtor requires understanding these key distinctions:
1. Type of Entity
- Brokerage: A business entity (company, corporation, LLC)
- Realtor: A person (individual agent or broker)
2. Legal Status
- Brokerage: Licensed business entity by the state
- Realtor: Professional designation from membership organization
3. Purpose
- Brokerage: Facilitates real estate transactions, employs agents, ensures compliance
- Realtor: Professional designation indicating membership in NAR and adherence to Code of Ethics
4. Requirements
- Brokerage: State licensing, business registration, designated broker, E&O insurance
- Realtor: Real estate license + NAR membership + Code of Ethics training
5. Relationship
- Brokerage: Employs or contracts with agents/brokers
- Realtor: Can work for a brokerage (or own one)
6. Scope
- Brokerage: Can employ multiple agents and brokers
- Realtor: Individual designation for one person
7. Necessity
- Brokerage: Required for agents to legally practice (agents must work under a brokerage)
- Realtor: Optional professional designation (not required to practice)
Brokerage vs Realtor: Side-by-Side Comparison
Here's a comprehensive comparison table showing the difference between brokerage and realtor:
| Aspect | Real Estate Brokerage | Realtor® |
|---|---|---|
| Type | Business entity (company) | Professional designation (person) |
| Legal Status | Licensed by state real estate commission | Member of National Association of Realtors |
| Purpose | Facilitate transactions, employ agents, ensure compliance | Professional designation indicating NAR membership |
| Requirements | State license, business registration, designated broker, insurance | Real estate license + NAR membership + Code of Ethics training |
| Who/What | A business/company | A person (agent or broker) |
| Can Employ | Yes, employs agents and brokers | No, a Realtor is an individual |
| Can Work For | N/A (brokerage is the employer) | Yes, Realtors work for brokerages |
| Necessity | Required for agents to practice | Optional professional designation |
| Number in US | 86,000+ licensed brokerages | 1.5+ million Realtors (NAR members) |
| Examples | Keller Williams, RE/MAX, local independent brokerages | Individual agents/brokers who are NAR members |
How Brokerages and Realtors Work Together
Understanding the difference between brokerage and realtor includes understanding how they work together:
The Relationship
Here's how brokerages and Realtors work together:
- Brokerage Structure: A brokerage is the business entity that employs or contracts with agents and brokers
- Realtor Affiliation: Some (but not all) of the agents/brokers working for the brokerage may be Realtors
- Transaction Facilitation: Realtors working for the brokerage facilitate transactions on behalf of the brokerage
- Compliance: The brokerage ensures all agents (Realtors and non-Realtors) comply with regulations
Example Scenario
ABC Realty Brokerage (the brokerage) employs:
- John Smith, Realtor® (agent who is a NAR member)
- Jane Doe, Realtor® (agent who is a NAR member)
- Bob Johnson (agent who is NOT a Realtor, just licensed)
- Sarah Williams, Realtor® (broker who is a NAR member)
In this example:
- ABC Realty Brokerage is the brokerage (business entity)
- John, Jane, and Sarah are Realtors (NAR members)
- Bob is a licensed agent but not a Realtor
- All agents work for the brokerage, but only some are Realtors
Can a Brokerage Be a Realtor?
No. A brokerage cannot be a Realtor because:
- A Realtor is a person (individual), not a business
- Only individuals (agents or brokers) can join NAR and become Realtors
- However, a brokerage can have Realtors working for it
- Some brokerages may have all Realtors, some may have none, most have a mix
Broker vs Realtor: Additional Clarification
To fully understand the difference between brokerage and realtor, it's also helpful to clarify broker vs Realtor:
What is a Broker?
A broker is a licensed real estate professional who has completed additional education and experience requirements beyond an agent. Brokers can:
- Work independently (under their own brokerage)
- Own or manage a brokerage
- Supervise other agents
See our broker job description for details.
Broker vs Realtor
Broker and Realtor are different things:
- Broker: A license type (agent → broker progression)
- Realtor: A professional designation (NAR membership)
- Can Overlap: A broker can also be a Realtor (if they join NAR)
- Not Required: A broker doesn't have to be a Realtor
| Professional | License Type | Can Be Realtor? | Example |
|---|---|---|---|
| Agent | Agent license | Yes, if NAR member | John Smith, Realtor® (agent + NAR member) |
| Broker | Broker license | Yes, if NAR member | Sarah Williams, Realtor® (broker + NAR member) |
| Non-Realtor Agent | Agent license | No (not NAR member) | Bob Johnson (licensed agent, not NAR member) |
| Non-Realtor Broker | Broker license | No (not NAR member) | Mike Brown (licensed broker, not NAR member) |
Agent vs Realtor: Understanding the Distinction
Another common confusion is agent vs Realtor. Here's the distinction:
Real Estate Agent
A real estate agent is:
- A licensed professional who has completed state requirements
- Must work under a broker/brokerage
- Represents clients in real estate transactions
- May or may not be a Realtor
Realtor (Agent)
A Realtor who is an agent is:
- A licensed real estate agent
- Who is also a member of NAR
- Can use the Realtor® designation
- Adheres to NAR's Code of Ethics
Key Point
All Realtors are agents or brokers, but not all agents/brokers are Realtors. Being a Realtor is an additional professional designation on top of the license.
Why Become a Realtor?
Agents and brokers become Realtors for:
- Professional credibility and recognition
- Access to NAR resources, tools, and data
- Networking opportunities
- Code of Ethics commitment (marketing advantage)
- Professional development opportunities
- MLS access (in some markets, MLS requires NAR membership)
Licensing Differences: Brokerage vs Realtor
Understanding licensing helps clarify the difference between brokerage and realtor:
Brokerage Licensing
A brokerage must be:
- Licensed by the state real estate commission
- Registered as a business entity (LLC, corporation, etc.)
- Have a designated broker (principal broker)
- Maintain E&O insurance
- Meet state-specific requirements
See our how to open a brokerage guide for licensing requirements.
Realtor Membership
To become a Realtor, you must:
- Hold a valid real estate license (agent or broker)
- Join your local Realtor association (affiliated with NAR)
- Pay annual membership dues (typically $200-$500+ per year)
- Complete Code of Ethics training
- Agree to abide by NAR's Code of Ethics
Key Distinction
Brokerage licensing is mandatory for the business to operate. Realtor membership is optional for individuals—you can be a fully licensed agent or broker without being a Realtor.
Frequently Asked Questions
What is the difference between a brokerage and a realtor?
A brokerage is a business entity (company) licensed by the state to facilitate real estate transactions. A Realtor® is a real estate professional (agent or broker) who is a member of the National Association of Realtors (NAR). The key difference: a brokerage is a business, while a Realtor is a person with a professional designation. Brokerages employ agents and brokers, some of whom may be Realtors.
Is a brokerage the same as a realtor?
No, a brokerage and a Realtor are completely different things. A brokerage is a business entity (company), while a Realtor is a person (individual agent or broker) who is a member of NAR. A brokerage can employ Realtors, but a brokerage itself cannot be a Realtor because Realtor is a designation for individuals, not businesses.
Can a brokerage be a realtor?
No, a brokerage cannot be a Realtor. A Realtor is a professional designation for individuals (agents or brokers) who are members of NAR. Only people can be Realtors, not businesses. However, a brokerage can employ agents and brokers who are Realtors.
Do all agents work for a brokerage?
Yes, all real estate agents must work for a licensed brokerage. Agents cannot work independently—they must be affiliated with a brokerage to legally practice real estate. The brokerage provides legal authority, oversight, and compliance management. Some agents may be Realtors (NAR members), and some may not be.
Do you have to be a realtor to be an agent?
No, you do not have to be a Realtor to be an agent. A Realtor is an optional professional designation for agents and brokers who join NAR. You can be a fully licensed and qualified real estate agent without being a Realtor. Many agents choose to become Realtors for professional credibility, access to resources, and MLS access (in some markets).
What's the difference between a broker and a realtor?
A broker is a license type—a real estate professional who has completed additional education and experience requirements beyond an agent. A Realtor is a professional designation indicating membership in NAR. A broker can also be a Realtor (if they join NAR), but they're different things: broker = license type, Realtor = professional designation.
Are all real estate agents realtors?
No, not all real estate agents are Realtors. Only agents who are members of the National Association of Realtors (NAR) can use the Realtor® designation. Many agents choose not to join NAR and are still fully licensed and qualified to practice real estate. According to NAR, there are 1.5+ million Realtors, but there are more total licensed agents in the US.
What does it mean to be a realtor?
Being a Realtor means you are a real estate professional (agent or broker) who is a member of the National Association of Realtors (NAR). It indicates that you: hold a valid real estate license, are a member of NAR, have completed Code of Ethics training, agree to abide by NAR's Code of Ethics (which is stricter than state requirements), and have access to NAR resources and tools.
Why would someone choose not to be a realtor?
Some agents choose not to become Realtors because: annual membership dues ($200-$500+ per year), they don't need NAR resources, they can practice real estate without it (it's optional), their market doesn't require MLS access through NAR, or they prefer not to be bound by NAR's Code of Ethics. However, many agents find value in the Realtor designation for credibility and resources.
Can a brokerage have realtors working for it?
Yes, absolutely. A brokerage can employ agents and brokers who are Realtors. In fact, many brokerages have a mix of Realtors and non-Realtors working for them. Some brokerages may have all Realtors, some may have none, and most have a combination. The brokerage itself is not a Realtor, but the people working for it can be.
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