Yes, the terminology can be confusing. While it may not seem important to know the difference between these terms, there are some common traits and useful distinctions to be aware of when you look to buy or sell a home.
Let’s start with the most commonly misused term, “agent.” While most people use this term to describe the individual real estate professional assisting them, it’s not technically correct. Legally, “agent” is actually the term given to the brokerage (the company) that represents you as the buyer or seller. An agency relationship is formalized when you sign a contract, either in the form of a buyer representation agreement or a typical listing agreement. These agreements are between buyer/seller and the brokerage, not the individual representative.
A real estate salesperson, or broker, will be the person who presents and explains the representation agreement to you on behalf of the brokerage. In most cases, they will also usually be the same person who represents you during the buying or selling process, on behalf of the brokerage.
Both salespeople and brokers are real estate professionals who are subject to regulation under the Real Estate and Business Brokers Act, 2002. They must be employed by a real estate brokerage and must be registered with RECO in order to trade in real estate in Ontario.
Education is what distinguishes a broker from a salesperson. A salesperson achieves the broker designation by passing additional courses and exams that then allow the individual to manage a brokerage. A brokerage must be managed by someone who has the broker designation.
It’s unlikely that you will be dealing directly with the manager, called the broker of record, but they will be in the background managing the business, reviewing details of transactions and, if needed, serving as a resource for your real estate representative. Just like any business owner or manager, it’s in their interest to make sure their clients are satisfied, and that the brokerage and its brokers and salespersons are complying with the rules and regulations. If you have any questions or concerns your representative can’t address, you could speak with the broker of record.
Regardless of their designation, it’s important to know there are significant benefits to working with a registered real estate professional, including valuable consumer protections. Those protections revolve around three pillars:
- Knowledge: Once real estate professionals complete the courses required to enter the field, they must complete ongoing, mandatory continuing education to keep their knowledge up-to-date and their skills sharp.
- Professional standards: Your real estate representative is also required to uphold professional standards that emphasize treating anyone involved in a transaction with fairness, honesty and integrity, and following rules and regulations that are there to protect consumers. In the rare instance that something goes wrong and you want to complain about your representative or the brokerage, RECO will investigate the complaint and take steps to hold the real estate professional accountable for their actions.
- Insurance: Deposit insurance provides you with peace of mind knowing that your hard-earned payment will be held in trust and insured against loss, insolvency or misappropriation by a brokerage.