By Mike Bodeen · 8 April 2024
My friend and client Ty Lomeli sent me the following e-mail last month responding to my Snapshot article regarding the recent commission lawsuit settlement by the National Association of Realtors (NAR). Ty writes:
Mike, you need to create a follow-up to this with regards to the statement “Note: Not every real estate agent is a Realtor.” If I, who have been in the industry as an investor for decades, has never heard this, I doubt many others have as well! This is news to me. I think you should delve into the implications of this in the next article. I thought all agents were Realtors and therefore not been checking on them nor know what the implications of hiring a non-Realtor would even be! Probably shocking to you?? Ty.
Before I delve into this serious discussion, some Realtor humor is in order. I love this:
I have to admit, Ty’s remarks initially did surprise me until I began pondering it. If this smart and sophisticated real estate investor, who’s bought and sold hundreds of homes, wasn’t aware of this critical difference in licensees, how much more most buyers and sellers?
Before we explain what a Realtor® is, let’s first find out what a real estate agent is and what’s required of them to become an agent in Arizona.
An Arizona real estate agent is one who is licensed by the State of Arizona to perform real estate duties on behalf of a principal (buyer or seller), under the oversight of an Arizona licensed Broker.
Hmm; what’s a Broker? A real estate Broker is someone who has taken education beyond the agent level and has a minimum of two years’ actual experience (in some states) as required by state law and who has passed a Broker’s examination, more stringent than a salesperson’s exam.
What does it take to become an Arizona licensee and actually sell real estate? The qualifications to obtain an AZ real estate license are short:
That the applicant is at least 18 years of age when applying for a license.
Complete 90 Hours of classroom education
Fingerprint Clearance Check
Pass the State Exam including a 6 Hour Contract writing class
Pay money
So, how does a Realtor® differ from a real estate agent?
NAR is the largest trade group in the country. As of March 2023, NAR had 1,548,058 Realtors. There are over 2,000,000 total licensees. This equates to about 3 out of 4 licensees being Realtors, therefore, 1 out of every 4 licensees ARE NOT Realtors.
Realtors differ from non-Realtors in that they are held to a higher ethical standard. See our Code of Ethics and Standards of Practice here.
Realtors have an in-house ethical accountability system. When there are disputes or complaints, Realtors and the public can bring their grievance to the local Board of Realtors (e.g., Scottsdale or Phoenix Board of Realtors) before having to engage in a costly legal battle. We have mediation and arbitration avenues available. Continuing Education is abundantly supplied and encouraged to our membership. Non-Realtors, not so with any of this. (note: Jonathan and I belong to both of these mentioned boards)
Does this mean that all Realtors are honest and good, while non-Realtors are evil and corrupt? Of course not. But for my money, if I was a buyer or seller of real estate, I would want to start with the right foundation. Education, ethics oversight, training, and accountability.
After starting with the right Realtor foundation, one should check out the company and individual of the ones who will be handling their biggest financial transaction – perhaps in their lifetime. In a near future Snapshot segment, we’ll take a look at how to choose these key professionals.