Real Estate Thoughts August 23, 2022

Licensed, Unlicensed, and REALTOR: What’s the Difference?

REALTOR discussing with couple

I wanted to take some time today to talk about these three categories of people who can participate in the real estate process, what kind of rules bind each category, and why it’s important to the public to know who they are dealing with.

Unlicensed Individuals & Groups

It’s important that we remember that anyone can buy and sell property. You do not have to be a REALTOR, and you do not have to work with a REALTOR to buy and sell property. In principle it’s not any different than selling that bed on Facebook. If two parties agree to exchange an item then off you go (with a little bit of paperwork).

Where this gets confusing is when private property owners work under their LLC or other official organization. “Real Estate People, LLC” does not mean that entity is licensed or overseen by any licensing force just because they’ve formed a business for it. Why is this important for the public?

Like anything else, there are of course some basic laws that any private citizen has to follow. However, as an unlicensed private citizen they do not have to abide by the license act and further have no code of ethics from the REALTOR organization to oversee them and offer recourse for mistakes or untruthfulness.

I hate to say this, but there are plenty of people out there to scam you in real estate as there are with so many other scams. The unlicensed entity has no ethical obligations to you for disclosure or presenting truthful and accurate data. One of the biggest scams out there, in my opinion, are those going through the assigning process. That is where they make an offer to buy your property and then they sell that contract to another investor. If that person can buy your property, and then sell it for thousands of dollars to another investor, and that investor after all their expenses is still making an acceptable return on their money then the person who sold that property originally is the one getting ripped off.

There are plenty of upstanding private entity’s out there, but beware! The number of unethical groups unfortunately grows every day, and we’ll talk here in a second about why you should always consult with your local REALTOR.

Licensed Real Estate Salesperson

This person is someone who has completed their courses and is officially licensed by their state entity. They must comply with the Real Estate License Act, and there are official methods in place to file complaints if they violate that act. Being licensed does not mean they are a member of the REALTOR organization, they might also not be a member of the local association. This reduces the resources they have access to which can include, but not limited to, MLS, Training, and Broker Support.


Becoming a REALTOR is getting that license and going even further. REALTORS are a membership group that includes further oversight, a code of ethics, additional resources, and more layers of support to the public if the REALTOR violates any rules or makes mistakes.

Going back to my comment on selling a property. If you speak to a REALTOR about selling your potential flip property there are multiple layers of disclosure we are required to discuss with you. We would have to tell you how much the property would sell for as is, the potential upside if you did the remodel work yourself, and then we would tell you what our offer would be to do the remodel and have to disclose how we arrived at that number.

As an investor a REALTOR is no different and still expects to make a return on their money, but we are required to disclose all of that information. This allows you to make an informed decision on how best to proceed with the property to fit your needs. Maybe that is still selling it below market value, and letting someone else do all the work. There is not anything wrong with that, but being informed with truthful and accurate information is a key part of that.

Trust Your REALTOR

We are here for you. To answer your questions. To guide you with expert advice and opinions. To make sure you are making an informed decision about any real estate transaction you are pursuing. Call your REALTOR. Trust your REALTOR. We are committed to the public and protecting your interests, and our organizations take that very seriously if it is ever violated.

I hope you found this informative! Until next time.

-Shay Senter, President BHGRE Senter, REALTORS