In any industry you have to learn a new language and sometimes have to work through the alphabet soup of acronyms. We call it Realtor®-speak. Here is a start but there is much more the deeper you get.
Your Identity Crisis!
The Real Estate Agency (REA) only knows you as a Licensee. Their job: to license qualified people and then regulate their licensees.
In our Associations (NAR, OAR, YCAR or PMAR) you are a Realtor®. This term can only be used by one who is a member of the National Association of Realtors®. Many times commercial brokers and property managers are not Realtors® and in some places significant numbers of licensees are agents, not Realtors®.
Are you a real-i-tor, or a real-tor? It is the latter; someone who works with real estate!
Agent refers to your function of representing clients. You act in behalf of another.
Sales Associate is obsolete but may still be used in a traditional firm to keep lines of authority clear. This is a term used before agents became brokers.
We are brokers in that we broker sales for someone and are paid commissions. In 2002 all sales associates were required to upgrade their education and be licensed as full brokers. This was in response to increased abilities and responsibilities associates were able to take on because of technology.
Principal Broker is a higher level of licensing which allows a licensee to function independently (think sole-proprietor) with direct legal and ethical accountability. A Principal Broker in a brokerage can also be designated and charged with supervision of other licensees and accountable for their practice. In the world of our Associations, the “Designated Broker” is the ultimate responsible and accountable PB in the office. At Bella Casa, we have multiple Principal Brokers and some of them supervise others, many do not.
Where You Will Work
Brokerage: This is an office where brokers work and is the most common term for a real estate office.
Agency: This is an office where agents work and can be used interchangeably with brokerage. Sometimes this refers more narrowly to a franchise organization emphasizing that this office is an agency of the parent company or brand (e.g. common in insurance).
Firm: Usually refers to a partnership type of ownership, hence law firms. In real estate often refers to multiple offices/brokerages owned by the same owner(s) even though they may share a national brand name with others.
Office: Used synonymously with brokerage but is particular to a branch or independent standing.
Corporate terms apply when offices are incorporated (Inc, LLC, S-corp)
Who owns the business???
Might be a ‘national store’; e.g. owned by C-21 or Coldwell Banker
Might be owned by a regional owners (Re/Max Equity Group; Prudential Northwest Properties )
Might be owned by collection of agents (Keller Williams)
Any national or regional brand might be owned by small or larger groups of investors, local or not. Could be owned by a family or individual.
What does local ownership mean?
See our article called Local Ownership Considerations.
Compensation Related Definitions
Commission split: What percentage of the gross commission do you get when the sale closes? From this number there may be additional royalties, fees, and expenses taken before you see the net amount your receive. As an independent contractor, you will then be paying many of your own business taxes and your own expenses before seeing your ‘take-home money’! Does this percentage slide based on sales or other considerations?
Commission cap: Is there a point at which your brokerage will no longer take their split and you will be enabled to keep all the gross commission?
Royalties: Is there a national or regional brand or corporate office which gets some of your commissions on each sale? Does it cap or apply to every sale?
Fees: see article on Commission Compensation to see examples of these
Expenses: You will have brokerage expenses (like copies, or space/desk rental), and your own business expenses like your cell phone and computer etc.
Working in Sales
Lead: Raw opportunity for you to explore. You hope some leads will turn out to be prospective buyers or sellers for you.
Prospect: A qualified lead that you have connected with who is a prospective client of yours.
Client: Someone who is committed to working with you for their sale or purchase, or someone you have worked with in the past.
Colleagues: Our preferred term for our fellow Realtors® whether in our own company or not. At some level we are all competitors, but we also work together as colleagues in our industry.
Randy McCreith, Principal Broker Bella Casa Real Estate Group