What Is a Real Estate Agent?

By 

Josiah Wilmoth

Updated 

November 20th, 2020

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Duties | Pay | Types | Licensing | Agent vs. Realtor | Vs. broker | Vs. salesperson | Do I need an agent? | Become an agent | FAQ

A real estate agent is a person licensed to represent buyers or sellers in real estate transactions.

In general, real estate agents earn commission instead of drawing a salary. That means they pocket a percentage of a property's sale price when they close a deal.

But there's a catch: real estate agents usually don't make anything when a sale falls through.

Agents work for a brokerage, a company that handles the nuts and bolts of real estate transactions, serving as a middleman between the buyer and seller.

» LEARN: How to become a real estate agent

What does a real estate agent do?

A real estate agent's job description includes a myriad of duties, but they all add up to two goals:

  1. Making their client's sale or purchase a success
  2. Making the process less daunting

What real estate agents do for sellers

A skilled real estate agent helps a seller maximize their odds of selling their home quickly for the best price possible.

Preparing to sell

Before the house goes up for sale, the agent advises the seller on how to increase its marketability. They recommend repairs and updates that raise the home's value, plus provide tips on how to boost its "curb appeal" to lure potential buyers.

Once the seller is ready to put their home on the market, the agent helps them decide on a list price. This involves performing a comparative market analysis (CMA), a professional evaluation of what the property is worth in the current market.

Marketing the home

The agent markets the home by posting it on the Multiple Listing Service (MLS), a private database where local brokerages advertise the properties they're selling. They may also market the home in other ways, including displaying it on their website, sharing the listing on social media, distributing flyers, or even posting an ad in the local newspaper.

Negotiating and closing the deal

The agent fields offers, helps the seller evaluate them, and negotiates on their behalf until they strike a deal with the buyer.

Finally, they assist with the paperwork and other logistics involved with getting to the "closing table," where the seller officially transfers ownership of the home to the buyer.

» MORE: 7 Benefits of Hiring a Real Estate Agent to Sell Your Home

What real estate agents do for buyers

A seasoned real estate agent boasts the expertise and market knowledge to help home buyers find the right property for their lifestyle and financial situation.

Finding the right home

The agent advises the buyer about the advantages and drawbacks of different neighborhoods, then leverages their MLS access to send the buyer new listings in their preferred location as soon as they hit the market. And when they show the buyer homes, they're often able to highlight features and faults the average person might miss.

Negotiating and handling home buying surprises

The agent negotiates on the buyer's behalf and serves as a resource during the "due diligence" process all the way through closing. 

Along the way, the agent counsels the buyer about what home inspections they should perform, recommends service providers, and helps the buyer evaluate any issues an inspection uncovers.

» MORE: What Does a Real Estate Agent Do for a Buyer?

How much real estate agents make - and how they get paid

Most real estate agents get paid based on performance rather than collecting a salary. They earn a "commission" — usually expressed as a fixed percentage of the sale price — when they help arrange a transaction.

How real estate commission works

At the completion of a real estate sale, the seller pays their agent's brokerage a fee for handling the logistics of the transaction. The average real estate commission rate is 5-6% of the sale price, although this fee is negotiable.

» MORE: Negotiating Realtor Commission: Tips for Reducing Fees

Six percent of a home's sale price might seem like a lot, but an individual real estate agent usually earns only a fraction of the total commission.

  • First, the commission is divided between the two brokerages representing the buyer and seller.
  • Then, each brokerage splits their share of the commission with the agent who participated in the sale.

Commission split ratios vary quite a bit. A rookie agent might keep as little as 50% of the fees they earn and give the other half to their brokerage, while an experienced agent might keep 90% or more. However, many brokerages put an annual "cap" on how much commission an agent must split with the firm.

One other important note about real estate commission: agents typically don't earn anything when a deal falls through, no matter how much time and effort they spent trying to complete the sale.

How much real estate agents make

Real estate agent income varies widely based on license level and experience.

How much agents earn at different license levels

Agents with entry-level real estate licenses — usually called "salesperson" or "sales agent" licences — earn a median of $35,000 in gross income. Agents with broker licenses make a median of $78,900; that's more than twice as much as their lower-level counterparts[1].

License level
Median gross income
Salesperson
$35,000
Broker
$78,900
Source: National Association of Realtors (NAR) 2020 Member Profile

There are two reasons that brokers earn so much more than entry-level agents. First, agent experience correlates closely with income, and agents ordinarily can't become brokers until they've spent multiple years working as full-time salespeople.

Second, many brokers start their own firms. This allows them to collect a share of the commission their agents earn, as well as keep 100% of the commission on sales they make themselves.

How much agents earn based on experience

A real estate agent's average earnings grow enormously the deeper they get into their careers. While the median gross income for agents with fewer than two years of experience is just $8,900, agents who've been at it for 16 years or longer earn a median of $86,500 — more than double the median U.S. wage of $39,810[2].

Agent experience
Median gross income
0-2 years
$8,900
3-5 years
$45,400
6-15 years
$68,300
16+ years
$86,500
Source: National Association of Realtors (NAR) 2020 Member Profile

Types of real estate agents

Real estate agents may be categorized by their license level, specialty, or role in an individual transaction.

Real estate license types

There are two main types of real estate agent licenses:

Salesperson license

Getting an entry-level real estate license — called a "salesperson" license in most states — is usually fairly easy.

Requirements vary between states, but aspiring agents must spend a few dozen hours in a classroom, pass a licensing exam, and find a broker to "sponsor" their license.

An entry-level license authorizes the agent to arrange real estate transactions — but only under a broker's supervision. Technically, the agent's brokerage represents the client, while the salesperson serves as a "sub-agent" for the firm.

Importantly, a salesperson license does not authorize an agent to start their own real estate brokerage firm or manage other agents.

Broker license

After acquiring several years of experience, an agent becomes eligible to "upgrade" to a broker license.

A broker license broadens an agent's career options. It allows them to supervise other agents, open their own brokerage, and hire agents to work for them.

In most states, a broker license requires multiple years of full-time experience as a salesperson, additional education, and a passing score on the licensing exam.

Note: in a handful of states, the entry-level real estate license is called a "broker" license. These licenses are still essentially the same as salesperson licenses in other places.

Real estate agent specializations

Real estate is a broad career field, so many experienced agents choose to specialize in a particular niche.

Types of agents involved in a real estate transaction

Whether an agent specializes in a particular real estate niche or not, they wear different "hats" depending on who they represent in an individual transaction.

Here are the common roles agents play in real estate sales, along with who each type of agent represents:

Agent role
Who the agent represents
Listing agent
Represents the seller's interests exclusively
Selling agent
Represents the buyer's interests exclusively
Dual agent
Represents both the seller and buyer
Designated agent
Represents either the seller or buyer while another agent in the same brokerage represents the other party
Transaction agent
Mediates a transaction between the seller and buyer but officially represents neither of them

Real estate agent vs. Realtor

While “real estate agent” is a term for anyone with a license to arrange real estate transactions, the title "Realtor" is technically reserved for members of the National Association of Realtors (NAR).

NAR is a private trade association founded to advance the interests of real estate professionals. It currently has around 1.4 million members, more than two-thirds of all active U.S. real estate licensees.

In addition to the right to use the Realtor trademark, members receive benefits like:

  • Access to exclusive tools and resources
  • Networking opportunities
  • Professional development
  • Group rates on insurance and other products

It's important to note that although most agents are Realtors, NAR is a private organization — not a licensing board. Membership is not necessary for an agent to practice real estate.

Moreover, Realtor membership is open to any real estate professional, including non-agents.

» MORE: What Is a Realtor?

Real estate agent vs. salesperson

A salesperson is a real estate agent with an entry-level license.

In most states, there are two main types of licensed real estate agents: salespeople and brokers. The salesperson license is easier to get, but salespeople can participate in real estate transactions only as a sub-agent of a broker.

Virtually all agents begin their careers with a salesperson license because it requires a little education but no previous experience. Many agents remain salespeople throughout their careers. Others upgrade to broker status so they can manage other agents or start their own brokerage.

Real estate agent vs. broker

A real estate broker is an agent with an "upgraded" license that authorizes them to perform certain duties agents with "basic" licenses can't, including opening their own brokerage and supervising other agents.

Broker licenses require additional education and experience compared to entry-level licenses. While new agents can typically get licensed after spending as few as 40 hours in a classroom and passing an exam, aspiring brokers must work as a full-time agent for multiple years before they're eligible to sit for the licensing exam.

Note: in some contexts, "broker" may mean "real estate brokerage" — a company that mediates real estate transactions between buyers and sellers.

» MORE: What Is a Real Estate Broker?

Do I need to hire an agent?

A real estate transaction is one of the most complex financial journeys you'll ever take, and you're more likely to achieve a successful outcome with an expert to guide you.

Why buyers should hire an agent

Working with an agent should be an easy decision for most home buyers. Ninety-two percent of buyers say their biggest challenge is either finding the right house, staying on top of paperwork, or understanding how the purchase process works. Each of those steps is a lot simpler when you have an agent on your side.

Besides, most buyers don't face any direct costs when hiring an agent — commission fees usually come out of the seller's proceeds — so it's rarely a good idea to buy a house without a professional to represent your interests.

Why sellers should hire an agent

Hiring an agent is an investment that pays off for most home sellers.

Many cost-conscious sellers believe they'll save money by listing their house for sale by owner (FSBO) or using a discount real estate broker. However, although reducing or even eliminating agent commission is an alluring prospect, the "savings" could turn out to be deceptively expensive in the long run.

In 2019, FSBO sellers sold their homes for a median of $80,000 less than sellers who used agents. So, while going the FSBO or discount broker route may make sense for some people, it might not be worth the hassle in your situation — and it won't necessarily net you more money.

If you think you're equipped to sell your home without an agent, check out our comprehensive guides on listing a house for sale by owner and selling with a discount broker.

We recommend finding ways to save on your home sale without cutting corners, including negotiating a lower commission rate with a top agent in your area.

Next Steps: Find an agent!

Clever can connect you with top local listing agents who work for pre-negotiated low rates: just $3,000 for any home under $350,000, or 1% for more expensive homes.

You can interview your Clever agent matches, get free pricing estimates, and compare marketing plans — all with no strings attached.

Ready to learn more? Submit the form below for a free phone consultation with one of our Licensed Concierges.

How to become a real estate agent

Becoming a real estate agent is relatively straightforward. Below, we've outlined the steps to become an agent, basic requirements to obtain an entry-level license in each state, and how to decide whether you should launch a new career in real estate.

Real estate agent licensing requirements: a state-by-state guide

Basic requirements and steps to licensure

Aspiring real estate agents face a relatively low barrier to entry. In most states, applicants for an entry-level license must be at least 18 years old, possess a high school diploma or GED, be eligible to work in the United States, and be able to pass a background check.

Before sitting for the licensing exam, applicants must complete their state's required pre-licensing education, which may be a specific course or a set number of classroom hours. Many states allow applicants to satisfy some or all of the education requirements if they've completed college-level coursework in real estate or have a law degree.

After passing their state's real estate exam, prospective agents must find a broker to "sponsor" their license. Remember: entry-level agents must work under a broker's supervision.

The final step is officially applying for licensure and paying the associated fees, which generally add up to a few hundred dollars. Agents must also complete continuing education to remain eligible to renew their licenses when they expire.

State-by-state guide

Find your state in the chart below to learn about the basic requirements to become an agent in your area, including what license you'll need and how much education you must complete.

The table below contains additional information about getting licensed as an agent in your state:

State
Basic real estate license requirements
Alabama
License type: salesperson
Age: 19
Education: 60 hours
Learn more.
Alaska
License type: salesperson
Age: 19
Education: 40 hours
Learn more.
Arizona
License type: salesperson
Education: 96 hours
Learn more.
Arkansas
License type: salesperson
Education: 60 hours
Learn more.
California
License type: salesperson
Education: 135 hours
Learn more.
Colorado
License type: associate broker
Education: 168 hours
Learn more.
Connecticut
License type: salesperson
Education: 60 hours
Learn more.
Delaware
License type: salesperson
Education: 99 hours
Learn more.
District of Columbia
License type: salesperson
Education: 60 hours
Learn more.
Florida
License type: sales associate
Education: 63 hours
Learn more.
Georgia
License type: salesperson
Education: 75 hours
Learn more.
Hawaii
License type: salesperson
Education: 60 hours
Learn more.
Idaho
License type: salesperson
Education: 90 hours
Learn more.
Illinois
License type: broker
Education: 75 hours
Learn more.
Indiana
License type: broker
Education: 90 hours
Learn more.
Iowa
License type: salesperson
Education: 96 hours
Learn more.
Kansas
License type: salesperson
Education: 60 hours
Learn more.
Kentucky
License type: sales associate
Education: 96 hours
Learn more.
Louisiana
License type: salesperson
Education: 90 hours
Learn more.
Maine
License type: sales agent
Education: 55 hours
Learn more.
Maryland
License type: salesperson
Education: 60 hours
Learn more.
Massachusetts
License type: salesperson
Education: 40 hours
Learn more.
Michigan
License type: salesperson
Education: 40 hours
Learn more.
Minnesota
License type: salesperson
Education: 90 hours
Learn more.
Mississippi
License type: salesperson
Education: 60 hours
Learn more.
Missouri
License type: salesperson
Education: 72 hours
Learn more.
Montana
License type: salesperson
Education: 60 hours
Must have completed 2 full years of high school
Learn more.
Nebraska
License type: salesperson
Age: 19
Education: 66 hours
Learn more.
Nevada
License type: salesperson
Education: 90 hours
Learn more.
New Hampshire
License type: salesperson
Education: 40 hours
Learn more.
New Jersey
License type: salesperson
Education: 75 hours
Learn more.
New Mexico
License type: associate broker
Education: 90 hours
Learn more.
New York
License type: salesperson
Education: 75 hours
Learn more.
North Carolina
License type: provisional broker
Education: 75 hours
Must complete 90 hours of post-licensing education
Learn more.
North Dakota
License type: salesperson
Education: 45 hours
Learn more.
Ohio
License type: salesperson
Education: 120 hours
Learn more.
Oklahoma
License type: provisional sales associate
Education: 90 hours
Must complete another 45-hour course within a year of obtaining provisional license
Learn more.
Oregon
License type: broker
Education: 150 hours
Learn more.
Pennsylvania
License type: salesperson
Education: 75 hours
Learn more.
Rhode Island
License type: salesperson
Education: 45 hours
Learn more.
South Carolina
License type: salesperson
Education: 60 hours
Learn more.
South Dakota
License type: broker associate
Education: 116 hours
Learn more.
Tennessee
License type: affiliate broker
Education: 90 hours
Learn more.
Texas
License type: sales agent
Education: 180 hours
Learn more.
Utah
License type: sales agent
Education: 120 hours
Learn more.
Vermont
License type: salesperson
Education: 40 hours
Learn more.
Virginia
License type: salesperson
Education: 60 hours
Learn more.
Washington
License type: broker
Education: 90 hours
Learn more.
West Virginia
License type: salesperson
Education: 90 hours
Learn more.
Wisconsin
License type: salesperson
Education: 72 hours
Learn more.
Wyoming
License type: salesperson
Education: 54 hours
Learn more.

Should I become a real estate agent?

Before you invest the time, effort, and cash into getting a real estate license, you should carefully consider whether it's the right career for you.

Real estate is a lucrative profession for top sellers, but it's highly competitive. New agents typically make very little money, and many fail to ever turn selling homes into anything more than a side hustle.

If you want to succeed as an agent, you'll need to be a gifted communicator with a knack for solving problems and managing interpersonal conflicts. And since most agents are paid as independent contractors — not salaried employees — you should be prepared to treat your occupation like a business, even if you never start your own firm.

For more information about life as an agent, read about this career field in the U.S. Bureau of Labor Statistics' Occupational Outlook Handbook.

Top FAQs about real estate agents

Are all real estate agents Realtors?

No. Most real estate agents are Realtors — but not all of them.

"Realtor" is a trademarked term that refers to members of the National Association of Realtors (NAR), a private trade group open to real estate professionals.

An agent doesn't need to be a Realtor to obtain a real estate license or help people buy and sell homes.

However, it's important to note that "realtor" — with a lowercase "R" — is often used interchangeably with "real estate agent." It's like when people use "kleenex" to refer to facial tissue, even when they're not talking about the Kleenex brand. In this sense, all real estate agents are "realtors."

What is a real estate salesperson?

A real estate salesperson is an agent with an entry-level real estate license. The salesperson license qualifies an agent to represent buyers or sellers on behalf of a broker. Salespeople may not facilitate real estate transactions outside of a broker's supervision.

Can I have more than one real estate agent?

Short answer: you can use one agent to sell your home and a different agent to help you buy a new one. In other cases, it depends on your situation and whether you've signed an exclusive contract with a real estate agent.

If you have signed an exclusive representation agreement, you can't hire more than one agent to help you complete the same transaction. Before you can hire someone else, you'll have to terminate your contract with the first agent or wait for it to expire. Otherwise, you may still owe your first agent a commission when the deal closes — even if the other agent was the one who helped you complete the sale or purchase.

If you're looking to buy a home and you haven't signed an exclusive contract with an agent, you can look at potential properties with more than one agent. However, the agents may be upset when they learn you're working with someone else.

If you're selling a house and haven't signed an exclusive listing agreement, you can technically use more than one agent if they all agree to a non-exclusive listing arrangement. We don't recommend going this route. High-quality agents are more likely to balk at this request because it's more likely to be a waste of time for them, so the agents you do attract may not be the top sellers in your area.

Why does a real estate agent need a broker?

A real estate agent needs a broker if their real estate license does not authorize them to work independently. The majority of agents hold a "salesperson" license, which allows them only to practice real estate only on a broker's behalf.

Agents with broker licenses generally don't need to work for another broker, although regulations vary between states and some brokers choose to remain in salesperson roles even after upgrading their licenses.

ARTICLE SOURCES
[1]

National Association of Realtors. "Highlights from the NAR Member Profile." Accessed November 17, 2020.

[2]

Bureau of Labor Statistics. "May 2019 National Occupational Employment and Wage Estimates." Accessed November 17, 2020. Updated May 2019.