There is no question that real estate transactions are some of the biggest – if not the biggest – transactions anyone will make in their entire lives. Whether you’re purchasing your first home or you’re an experienced property investor, you may be wondering what the benefits are to working with a real estate attorney. After all, in many cases you’re likely already working with a real estate agent – so what’s the difference? In this post we’ll explore the difference between real estate agents, attorneys, and REALTORS® and dig into why it’s generally considered good practice to have a real estate attorney on your side.
What is the difference between a real estate broker, salesperson, REALTOR®, and a real estate attorney?
Many people use the terms “real estate agent” and “REALTOR®” interchangeably, but in truth – they aren’t. While all REALTORS® are real estate agents, all real estate agents are not REALTORS®. So, what’s the difference? And where do real estate attorneys come into play?
Real Estate Agent/Salesperson
All real estate agents/salespeople are individuals who have completed a training and licensure program set forth by their states’ governing board. Some individuals may even be licensed in more than one state, which is very common here in the Rhode Island and Massachusetts markets. (Fun fact: while many real estate agents in Southern Massachusetts hold dual licensure in Rhode Island, many agents in Northern Massachusetts hold dual licensure in New Hampshire or Maine, and in Western Massachusetts they may hold it with Connecticut.) Once an individual has obtained their real estate salesperson license, they are legally allowed to practice real estate under the guidance of a real estate broker.
Brokers
Brokers have more in-depth experience and knowledge of real estate, having completed a minimum number of transactions, practicing for a minimum number of years, and taking additional licensure courses/exams, and trainings.
Both real estate agents/salespeople and real estate brokers must maintain a certain number of continuing education credits on an annual/bi-annual basis and must renew their licenses regularly and adhere to all state guidelines.
REALTORS®
REALTORS®, however, are slightly different. Being a REALTOR® is a designation that real estate agents/brokers may opt in to. It is not a requirement for an agent or broker to become a REALTOR®, however there are some real estate firms that require their agents/brokers to attain the designation. The National Association of REALTORS® is an umbrella organization that provides additional oversight, training, and guidance to real estate agents/brokers on a national level. So, while not all agents and brokers are REALTORS®, all REALTORS® are real estate agents – and may be (if they’ve decided to further their career) brokers.
Real Estate Attorneys
And then, there are real estate attorneys. Throughout the course of their legal education, lawyers spend a great deal of time learning the ins and outs of property law within their states. Therefore, after they have completed a certain number of law school courses or have obtained their degree (depending on each states’ requirements) they may be automatically eligible to also hold a real estate license. In some states they may only hold a real estate agent/salesperson license, while in others they are able to become brokers. Additionally, some attorneys may choose to specialize in real estate/property law.
Due to the age of some parcels of property in Rhode Island and Massachusetts (dating back to the 1600s in some cases!) property law in this area can sometimes be a bit complex, as titles and surveys may need to be researched going back many decades or even centuries. There are even some cases when a particular parcel started its existence being a part of one state but then was transferred to another when boundary lines were redrawn. And that’s before you get into all of the usual complexities of property law – which is also very deeply rooted in contract law. After all, no real estate transaction is complete without at least two contracts in place – the initial offer to purchase and then purchase and sales agreements.
Due to the way that real estate is governed in Massachusetts and Rhode Island, there are some standard contract templates (mostly available through the state REALTOR® associations) that can be used to handle transactions – and for simple transactions that may be sufficient. But for transactions that are more complex it’s always preferential to have a lawyer review them. And – unfortunately – you may not realize that a transaction is complex until you’ve begun negotiating the sale or your mortgage company (if you’re working with one) begins asking questions about titles or surveys.
Additionally, as a seller it’s important to keep in mind that the buyers – either directly or indirectly – are almost guaranteed to have a lawyer on their side. If the buyers are working with a bank, and they likely as the vast majority of transactions involve a mortgage, the bank will have an attorney reviewing all purchase and sales agreements, addendums, and preparing the closing documents. It may be prudent – especially in more complex transactions – to have an attorney to represent you in the sale as well, especially if there are circumstances involved such as the property being owned by multiple parties (not a husband and wife) or being managed as part of a trust or estate.
If you are planning to sell your property as a For Sale By Owner (or are purchasing a FSBO) it’s doubly important to work with an attorney. Real Estate agents are well-versed in preparing the necessary contracts and negotiating on behalf of their clients, when you take them out of the mix simple transactions could become accidentally messy without the proper language included in an offer or purchase and sales agreement. And, of course, you’ll want a lawyer to prepare and review the closing documents.