If you’re like most people, you’ll work with a real estate agent when it comes time to buy or sell your home. According to the 2013 Profile of Home Buyers and Sellers, an annual survey conducted by the National Association of Realtors, 88% of buyers purchased their home through a real estate agent or broker, and 88% of sellers were assisted by a real estate agent or broker when selling their home.
One of the terms that real estate buyers and sellers are likely to come across is "realtor." Many people use the terms "real estate agent" and "realtor" interchangeably; however, they are not the same thing. Although both real estate agents and realtors are licensed to assist buyers and sellers through the real estate transaction process, realtors are members of the National Association of Realtors and are bound by its strict Code of Ethics. Of the more than 1.84 million active licensed real estate professionals in the U.S., one million are members of NAR. Here's what realtors bring to the table and how doing business with one can affect both buyer and seller.
The National Association of Realtors (NAR) represents more than 1.2 million members – salespeople, brokers, property managers, appraisers, counselors and others participating in all aspects of residential and commercial real estate. It was founded as the National Association of Real Estate Exchanges in May 1908, with 120 members, 19 Boards (local associations) and one state association. Its objective was to standardize real estate practices and to “unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests.” The NAR Code of Ethics was adopted in 1913.
Over the years, the association’s name changed several times until, in 1972, it became the National Association of Realtors. Today, its mission is “to help its members become more profitable and successful,” by "influencing and shaping the real estate industry"; advocating for "the right to own, use and transfer real property"; and "developing standards for efficient and ethical real estate business practices." In addition to its million-plus members, NAR has 54 state [and territorial] associations (including Guam, Puerto Rico and the U.S. Virgin Islands) and more than 1,400 Boards.
Who Can Join
The principal of a real estate firm must join a realtor association before any non-principal in the firm can join (principals can be sole proprietors, partners in a partnership, corporate officers or branch-office managers acting on behalf of a principal). After the principal has joined a realtor association, all agents, brokers and appraisers who are licensed or affiliated with the principal have the option of joining as members of the association. (If the principal does not join a realtor association, none of the individuals affiliated with the principal can become realtor members of the association.) Members of local associations are automatically given membership in the state and national associations. For a list of local and state associations of realtors, see the NAR website.
Annual NAR membership dues ($120 per member for 2014 and 2015, with a $35 assessment for the NAR's Consumer Advertising Campaign) are billed through the members’ local associations and are pro-rated monthly for new members. In accordance with the Tax Reform Act of 1993, any portion of dues attributable to lobbying and political activities at the State and Federal levels is considered nondeductible for income tax purposes – this portion is disclosed annually to members.
NAR members receive a variety of benefits, business tools, real estate market data, research and statistics, educational opportunities and discount programs geared towards helping real estate professionals succeed in business. For example, only realtors have access to the Realtors Property Resource (RPR), a national database of information on every property in the U.S., built from public-record and assessment data. It includes facts on zoning, permits, mortgage and lien data, schools and a large database of foreclosures.
NAR Code of Ethics
Realtors must subscribe to NAR’s strict Code of Ethics as a condition of membership. NAR adopted its Code of Ethics in 1913, becoming the second trade or business group in the U.S. to adopt mandatory ethical standards.
In a press release marking the 100th anniversary of the Realtors Code of Ethics, NAR President Gary Thomas said, “Protecting the interests of consumers demands high standards of professional conduct and training, and the Code of Ethics is the golden thread that binds the realtor community together.”
The Code of Ethics includes a Preamble and sections covering Duties to Clients and Customers, Duties to the Public, and Duties to Realtors®. Each section contains Articles and Standards of Practice defining the realtors' ethical obligations. For example, Article 1 of Duties to Clients and Customers states: “When representing a buyer, seller, landlord, tenant or other client as an agent, Realtors® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve Realtors® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors® remain obligated to treat all parties honestly.”
All realtors must be trained in the Code of Ethics. “Through the Code of Ethics, realtors are providing consumers with a promise to protect and promote their best interests throughout the entire home buying, selling or investing process,” said Thomas.
You can read the complete Code of Ethics on the National Association of Realtors website.
What the Term Realtor Means to Buyers and Sellers
Because realtors are pledged to uphold NAR's Code of Ethics, a buyer or seller who believes that a realtor has violated one or more of its articles can file an ethics complaint through the local association of which the realtor is a member. (Search a member’s local affiliation at www.realtor.org.) NAR also sets standards for its local, state and territorial associations of realtors.
The comprehensive and up-to-date market data provided through RPR enables realtors to help consumers buy and sell properties more quickly and efficiently. Members also have access to the world’s largest real estate library and to real estate training, including classroom and online courses, training towards earning designations and certifications, a speaker series, webinars, webcasts and a Master of Real Estate degree offered by Realtor University.
The Bottom Line
The National Association of Realtors works to protect private property rights, promote home ownership, and maintain reasonable credit and other standards at the federal level so that real estate professionals can help their clients buy, sell and rent real estate in a fair and profitable market environment. NAR considers this advocacy to be one of the most valuable benefits of membership. Members have access to a variety of benefits and tools designed to enhance their real estate businesses.
For consumers, working with a realtor can provide added assurance that the real estate professional will act in their best interests because all realtors must subscribe to NAR’s Code of Ethics. Visit the National Association of Realtors website at www.realtor.org for more information.