Do Realtors Make More Than Real Estate Agents? The Key Differences Explained

Do Realtors Make More Than Real Estate Agents? A Deep Dive into the Real Estate Industry

The real estate industry can often seem confusing, especially when you start hearing terms like "realtor" and "real estate agent." If you’re considering entering the world of real estate or just curious about how these professionals operate, you may have asked, "Do realtors make more than real estate agents?" The short answer might surprise you. In this article, I’ll break down the differences between realtors and real estate agents, explore their earning potentials, and explain why these differences exist. If you're trying to figure out which role might be a better fit for you or how much you could earn, this article will give you the insight you need.

1. Understanding the Difference Between Realtors and Real Estate Agents

At first glance, it may seem like “realtor” and “real estate agent” are two terms for the same job, but there’s an important distinction. Both realtors and real estate agents are licensed professionals who help people buy, sell, or rent properties. However, the title “realtor” refers to someone who is a member of the National Association of Realtors (NAR). This membership comes with specific ethical standards and guidelines that are not a requirement for all real estate agents.

Real estate agents, on the other hand, may work independently or under a broker but do not have to belong to the NAR. Realtors, in addition to their real estate license, commit to a code of ethics and are required to stay updated with the latest industry regulations and trends. This extra commitment often leads to a stronger reputation and increased trust among clients, which can translate into more business and higher earnings.

2. How Real Estate Agents Make Money

Real estate agents are typically paid on commission, meaning their earnings are directly tied to the number and value of transactions they handle. On average, the commission is about 5-6% of the final sale price of a home, which is split between the buyer’s and seller’s agents. For example, if you help sell a $400,000 home, you could earn up to $24,000—before any splits with your brokerage or other fees.

However, not every real estate agent earns the same amount. Success in the industry depends on factors like experience, location, the number of clients, and marketing strategies. Many agents find that the more effort they put into networking and building relationships, the more successful they become. This explains why some agents can have a very high income, while others may struggle to make ends meet.

3. Why Realtors Might Earn More Than Real Estate Agents

As mentioned earlier, all realtors are real estate agents, but not all real estate agents are realtors. So, why might a realtor make more money than an agent who isn't part of the NAR? There are a few key reasons:

• Access to Exclusive Resources: Realtors have access to exclusive industry resources and networks, which can help them secure more clients and close more deals.
• Higher Credibility: Being a realtor often provides a higher level of credibility. Clients are more likely to trust a professional who adheres to a specific code of ethics, which can translate into more business opportunities.
• Better Marketing Opportunities: Realtors often benefit from NAR’s marketing resources and branding opportunities, which help them stand out in a competitive market.

While realtors may have an advantage in terms of reputation and marketing tools, it’s important to note that earnings ultimately depend on individual effort and market conditions. Many successful real estate agents without the “realtor” designation still thrive in their careers.

4. Factors Affecting Earning Potential for Both Realtors and Real Estate Agents

While being a realtor can provide extra tools and advantages, it doesn’t automatically guarantee higher income. Several factors influence a realtor’s or real estate agent’s earning potential:

• Location: Agents in large metropolitan areas or luxury markets often have higher earning potential due to higher-priced properties and more active real estate markets.
• Experience: Experienced agents and realtors are more likely to have established client bases, higher referral rates, and a strong reputation, all of which can contribute to higher earnings.
• Specialization: Realtors who specialize in high-demand markets, such as commercial real estate or luxury homes, can often command higher commissions.
• Networking and Marketing: The more effort agents and realtors put into networking and marketing, the more successful they tend to be. Building a strong brand and personal reputation can help them secure more clients and close more deals.

5. Can a Realtor or Real Estate Agent Make Six Figures?

It’s definitely possible for both realtors and real estate agents to earn six figures, but it’s not typical for everyone in the industry. Earning potential depends largely on the factors I mentioned earlier, like experience, location, and specialization. According to the U.S. Bureau of Labor Statistics, the median annual wage for real estate agents in 2020 was around $51,000, with the top 10% earning more than $112,000 per year.

Realtors, especially those who focus on high-end markets, can make significantly more. However, it’s important to note that real estate is often a commission-based profession, meaning income can fluctuate greatly depending on the market and personal effort.

6. Conclusion: How to Choose Between Becoming a Realtor or a Real Estate Agent

Ultimately, whether you choose to become a realtor or a real estate agent depends on your career goals, personal preferences, and willingness to commit to professional development. If you want the added benefits of a professional network, exclusive resources, and enhanced credibility, becoming a realtor might be the right path for you. However, if you’re just starting out or prefer a less formal approach to the business, becoming a real estate agent can still be a rewarding career choice.

In either case, the real estate market offers ample opportunities for growth, success, and high earning potential. By dedicating yourself to providing excellent service, building a strong client base, and continuously improving your skills, you can carve out a lucrative career in the real estate world—whether you’re a realtor or an agent.