15 January 2011

Guide to Real Estate Transactions: Agents, Brokers and Realtors®

Following the post on Foreclosures and Short Sales (11 Dec 2009), I'd like to briefly delve into the differences between real estate agents, real estate brokers and Realtors®.

Riveting, isn't it?

(Below is based on Florida law; most other US states follow the same or a similar route, albeit sometimes with different names. As an example, only two years ago North Carolina renamed Agents and Brokers, now called Brokers and Brokers-in-Charge. Perhaps they wanted to avoid a discrimination lawsuit by the CIA?)


In order to broker real estate in the U.S., one has to be properly licensed. Most states have a two-tiered system: pass the first state exam and become an agent, pass the second (more demanding) exam and become a broker. 

The former always work under a broker's supervision, while the latter may work either for another broker or self-employed. Both must renew their license every two years. All real estate professions are supervised by state authorities.

Unless you are a highly experienced investor, you really should use a real estate agent (following for agent or broker) when buying or selling any property. And even investors tend not to go at it alone. Your chosen one should fulfill these qualifications:
  • A valid Real Estate license for the state (s)he operates in,
  • For residential transactions: membership in the local Board of Realtors (see below),
  • Experienced in the type of property you consider.


An agent may call himself a Realtor® only if he (following for he or she) belongs to the local Board of Realtors®, of which there are ca. 800 throughout the U.S. These Boards are voluntary regional professional associations, imposing certain business and ethical guidelines which often exceed state law. 

Membership in a Board of Realtors® is the only way for full access to and listing privileges in a proprietary computer database called MLS, which contains all properties in the region offered on the market by MLS participants. 

As an example, the Southeast-Florida-MLS, consisting of several Boards and reaching from Homestead to Fort Pierce, connects approximately 23,000 agents and approximately 95,000 properties and businesses for sale. Because of this, buyers can concentrate on working with one single agent who is able to offer and sell any property shown in the MLS, not only the ones offered by his own firm. Properties in the MLS cover ca. 85 – 95% of all properties offered for sale. 


Your choice of an agent comes down to
  • the level of expertise and competence (e.g., don't hire a downtown condo expert to buy a resort home in the mountains),
  • the range of services offered, 
  • personal recommendations and references, and
  • a feeling of trust, comfort and confidence – not much fun working with someone you don't like.
It's important that your agent is experienced in transactions similar to what you plan and also knows what you are expecting from him. 

He should explain the complete process to you in plain language and guide you through the deal. Finally, if there are any international components involved, you will most likely be served best by an agent who is certified as a CIPS (Certified International Property Specialist).
Questions? Comments? I look forward to hearing from you!

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