The Evolution of Real Estate Professionals in America

Our Mission

At HomeFinder, we believe in making the home buying and selling process transparent, efficient, and accessible to everyone. By understanding the rich history and evolution of the real estate profession, we can better appreciate the value that real estate professionals bring to one of life's most significant transactions. Our mission is to connect you with qualified real estate professionals who uphold the highest standards of integrity and expertise, continuing the long tradition of guiding clients through the complex world of real estate.

Introduction

The profession of real estate agents in the United States emerged out of economic growth, legal necessity, and social change. Over the past century, it has evolved from informal land trading into a highly organized industry with over two million licensed agents today. This comprehensive overview explores why realtors became necessary, examining the factors that led to their rise, key historical moments that shaped the profession, and how their role has evolved over time.

Early Land Deals and the Need for Intermediaries

In colonial and 19th-century America, real estate transactions were often unregulated and handled informally. Land was frequently sold or exchanged directly by owners, speculators, or land companies, with land speculation becoming a popular (if risky) activity as the nation expanded westward. These early "land traders" were precursors to modern agents, but they operated with far less structure or oversight.

As U.S. cities grew during the 19th century and industrialization took hold, the demand for urban land and housing skyrocketed. By the late 1800s, it became increasingly difficult for ordinary people to negotiate land and home purchases due to the complexity of property laws and the potential for fraud. There was a genuine need for intermediaries with real estate knowledge who could connect buyers and sellers and negotiate transactions on their behalf.

However, in these early days, virtually anyone could claim to be a real estate broker. There were no licensing requirements or formal qualifications before the 20th century. By the late 1800s, this lack of regulation led to a "Wild West" environment in real estate sales. Unethical or untrained individuals freely operated as agents, often engaging in dubious tactics. These unscrupulous brokers, nicknamed "curbstoners," would quickly flip properties for profit without regard for clients' interests. It was common to see front yards littered with dozens of signs from competing salespeople all trying to hawk the same property.

In this chaotic atmosphere, an agent might sit at one house all day from 9 a.m. to 9 p.m. hosting an "open inspection" for buyers, only able to show that one property at a time. Clearly, the real estate market needed more order, trust, and professionalism. Both the public and honest practitioners saw the need to rein in unethical behavior and bring structure to the home-buying process.

Emergence of Real Estate Associations (1880s–1900s)

Economic growth and urbanization in the late 19th century fostered the rise of real estate brokers as specialized intermediaries. By the 1880s, brokers in major cities began to organize to improve their credibility and cooperation. A milestone came in 1883, when the Chicago Real Estate Board (today the Chicago Association of Realtors) was formed – widely regarded as the first organized real estate association in the U.S. These early local boards were initial attempts to standardize practices and share information among agents.

By 1900, the stage was set for a more unified professional identity. Realtors as we know them today truly began to coalesce in the early 20th century. Facing the "wild west" climate of their industry, many reputable real estate practitioners wanted to elevate standards and protect the public.

The Birth of the National Association of REALTORS®

The turning point came in 1908, when real estate leaders from across the country met in Chicago to establish the National Association of Real Estate Exchanges (the precursor to today's NAR). The new Association started with 120 members representing 19 local realty boards and aimed "to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests." In other words, they sought to both advocate for the industry and instill professional ethics among agents.

This founding of NAR in 1908 (renamed the National Association of Real Estate Boards in 1916, and later the National Association of REALTORS®) was a turning point. It signaled that real estate brokerage had become a recognized profession in need of standards and collective voice. Local real estate boards affiliated with NAR began cooperating through real estate exchanges. On designated days, brokers would gather and exchange information about properties they had for sale, often literally trading client listing information or even buying each other's listings on behalf of clients.

By the end of the 19th century and into the early 1900s, the term "multiple listing" came into use for this practice of brokers sharing listings with one another. By the 1920s, Multiple Listing Services (MLS) were becoming widely accepted across the country, allowing agents to offer buyers a much wider selection of homes by cooperating with fellow brokers. This greatly increased the efficiency and visibility of properties for sale, and it cemented the realtor's role as a facilitator with access to a broad market inventory.

In 1916, the Association introduced the term "REALTOR®" to identify its members who subscribed to a strict code of ethics. The term was later trademarked in 1949, and today only NAR members may call themselves Realtors. This marked the beginning of real estate as a true profession rather than just an occupation.

Professionalization and Legal Regulation (1900s–1920s)

As the industry organized, it also pursued higher ethical standards and legal recognition. A major social factor driving this was the erosion of public trust caused by the unethical "curbstoner" practices. Honest brokers understood that to be seen as necessary and valuable, they had to differentiate themselves through integrity and expertise.

To that end, the National Association adopted a formal Code of Ethics in 1913, with the Golden Rule ("Do unto others as you would have them do unto you") as its overarching theme. This early code emphasized honesty, integrity, and fair dealing, establishing professional norms that responsible agents pledged to follow.

While ethical guidelines helped curb bad behavior, legal measures were needed to eliminate unqualified or dishonest operators. Realtors themselves lobbied for government oversight. In fact, NAR was an early advocate for state licensing laws to regulate who could practice real estate brokerage.

The Development of Licensing and Regulation

These efforts bore fruit in 1917 when California passed the nation's first real estate licensing law. Although that initial 1917 law was struck down by courts as unconstitutional, a revised California Real Estate Act of 1919 was upheld by the state Supreme Court as a valid exercise of the state's power to protect the public.

California's success opened the floodgates: 1919 also saw Michigan, Oregon, and Tennessee enact their own real estate license laws, and in the years following, many other states did the same. These laws required agents to meet certain qualifications (like passing an exam and upholding ethical standards) to obtain a license, and they set penalties for misconduct. Over time, all 50 states and D.C. established regulatory bodies and licensing requirements for real estate agents, professionalizing the field and providing legal recourse against fraud.

As a result of these developments by the 1920s, the era of the rogue "curbstoner" was fading. The dubious practice of plastering yards with signs without owners' permission disappeared. In its place rose the tradition of agents securing exclusive listing contracts from sellers – that is, homeowners would formally agree to let a particular agent represent their property. Gaining a seller's trust and permission became the proper way to market a home, rather than the old haphazard approach.

The standard practices we recognize today—such as open houses and guided property tours—also began to take shape at this time. The first open houses appeared in the 1910s; early on, an open house event could last for weeks as a way to introduce a property to the public! By 1925, the idea of staging and furnishing homes for showings had been introduced in industry publications, and by the 1930s and 1940s, shorter open house showings (often on Sunday afternoons) had become a common marketing tool for realtors.

By the 1920s the real estate agent's role was firmly established and "necessary" in American life. Economically, the booming property markets required skilled intermediaries to handle the volume and complexity of sales. Legally, the new licensing regimes and organizational codes weeded out chaos and ensured a baseline of competency and fairness. Socially, the public was coming to see the Realtor as a trusted guide in the home buying process rather than a mere seller.

Key Moments Shaping the Realtor Profession

The Great Depression (1929–1930s)

The economic collapse had a severe impact on real estate, testing the young profession. Home construction virtually halted (down 95% between 1929 and 1933) and foreclosures skyrocketed. Property values plummeted by roughly one-third, leaving many brokers without business.

In response, the federal government intervened with New Deal measures that forever changed real estate finance – and by extension, the realtor's world. The Home Owners' Loan Corporation (HOLC) and Federal Housing Administration (FHA) were created in 1933–1934 to refinance mortgages and insure new home loans, introducing long-term, low-interest mortgages that made homeownership more attainable. The creation of Fannie Mae in 1938 provided a secondary market for home loans.

These reforms reinvigorated the housing market and laid the groundwork for the post-WWII housing boom by making affordable 20-30 year mortgages the norm. Realtors adapted by learning the intricacies of these government-backed loan programs and guiding clients through the increasingly complex purchase process.

Post–World War II Housing Boom (1940s–1950s)

After WWII, the United States experienced an unprecedented housing boom. Millions of returning G.I.s and their families were eager to purchase homes, fueled by the G.I. Bill's low-cost VA mortgages and a strong post-war economy. A wave of suburbanization swept the country as developers created new neighborhoods outside crowded cities to meet the demand.

Realtors played a crucial role in this era: they helped match returning veterans with new homes, often in brand-new suburban subdivisions, essentially acting as the bridge between large-scale homebuilders and the public. During the 1940s and 1950s, real estate firms grew in size to handle the surge in transactions – many brokers took on multiple sales agents, forming the first multi-agent brokerages.

This era also saw women enter the real estate profession in significant numbers. While a few trailblazing women had become Realtors as early as 1910, the post-war period dramatically increased women's participation. Real estate sales offered flexible hours and entrepreneurial potential, attracting women who were often barred from other industries. By the 1960s, women comprised a substantial portion of Realtors; today about 63% of all Realtors are women.

Civil Rights and Fair Housing (1960s)

A major social and legal turning point affecting realtors was the push for equal housing opportunity. For much of the early 20th century, unfortunately, many real estate boards and agents openly practiced racial discrimination, enforcing segregated housing patterns.

In 1947, African American real estate professionals formed the National Association of Real Estate Brokers (NAREB) as an alternative to NAR, since NAR's local boards at the time excluded Black members. NAREB (whose members are called "Realtists") was dedicated to promoting fair housing and professional opportunities for minorities, foreshadowing broader changes to come.

The watershed moment arrived with the Fair Housing Act of 1968, a landmark federal law that prohibited discrimination in the sale, rental, and financing of housing based on race, religion, national origin or sex. This legislation forced the real estate industry to change its practices. After 1968, it became illegal for agents to refuse service or mislead clients on the basis of race or other protected characteristics.

Over time, the profession shifted from being part of the segregation problem to being part of the solution, advertising equal housing logos and fostering diversity in their ranks. This expanded the realtor's role to serving all segments of the American public and underscored their responsibility to uphold every buyer's and seller's rights under the law.

Antitrust and Industry Reform (1950s–1980s)

Another legal factor that shaped the profession was the enforcement of antitrust laws to ensure competition. In the mid-20th century, local real estate boards often published suggested commission rates, which in practice led to price-fixing.

The U.S. Supreme Court intervened in 1950 with a landmark case United States v. National Association of Real Estate Boards, ruling that real estate brokerage is engaged in "trade" and thus subject to the Sherman Antitrust Act. The Court made it clear that brokers must not collude to fix commission rates, even under the guise of professional guidelines.

This decision meant that commissions became negotiable and market-driven, encouraging greater competition and innovation in how real estate services are priced. In the 1970s, further scrutiny led to the widespread adoption of buyer agency disclosure and bans on certain kickbacks through the 1974 Real Estate Settlement Procedures Act.

The Modern Era: Increasing Professionalism

Technological Advances (1980s–2000s)

The late 20th century and early 21st brought technology that fundamentally changed how realtors operate, although it did not eliminate the need for their services. The Multiple Listing Service (MLS), which began as books and bulletin boards, became computerized in the 1970s, dramatically increasing the speed and reach of property marketing.

By the 1980s, brokerages were using fax machines and phone networks to share listings instantly. The Internet boom of the 1990s then took things to another level: in 1995, the first online property listings appeared, offering a glimpse of how digitalization would transform real estate. NAR launched its own website Realtor.com to aggregate listings nationwide.

By the 2000s, consumers could browse homes online and get data that once only agents had. This raised the question: with so much information available, are realtors still necessary? The answer has been yes, as evidenced by the continued growth of the profession. Technology changed how agents deliver value, but it didn't remove the underlying need for expert guidance.

The late 20th century saw dramatic changes in the profession:

• Education requirements expanded: Most states now require substantial pre-licensing education, continuing education, and more rigorous examinations.
• Specialization emerged: Realtors began to develop expertise in specific market segments, from commercial real estate to luxury homes.
• Technology transformed the industry: From the introduction of Multiple Listing Services (MLS) to today's digital platforms, technology has continuously reshaped how real estate professionals work.
• Disclosure laws strengthened: Consumer protection increased with mandatory seller disclosures and stricter regulations around representation.

Today's Real Estate Professional

Today's real estate agents operate in a highly regulated environment with clear standards of practice. The profession has evolved from the unregulated "property peddlers" of the 1800s to licensed professionals with fiduciary responsibilities to their clients.

Modern real estate professionals:

• Complete substantial education before licensing
• Maintain credentials through continuing education
• Leverage sophisticated technology platforms (online listings, virtual tours, social media marketing, drone photography, electronic documents)
• Navigate complex legal and regulatory requirements
• Often specialize in particular property types or client needs
• Interpret market trends, advise on pricing, handle negotiations, and navigate legal paperwork

As of the mid-2020s, about 90% of home buyers and sellers use an agent in their transactions, a testament to the enduring necessity of realtors even in the information age.

The Evolving Role and Enduring Need for Realtors

From the late 1800s to today, the role of the realtor in America has continually evolved alongside economic, legal, and social changes. Initially, realtors became necessary to bring order and trust to a chaotic real estate market, acting as intermediaries who knew how to navigate property values, deeds, and negotiations better than the average citizen.

Over time, as homeownership became a cornerstone of the American Dream (encouraged by government policy and economic prosperity), real estate agents proved invaluable in making that dream a reality for millions – guiding first-time buyers, connecting families to new communities, and innovating ways to market homes.

Importantly, the need for realtors adapted rather than disappeared as information became more accessible. If the early 20th-century realtor's value was in having exclusive knowledge of who was selling what, the 21st-century realtor's value is in interpreting a glut of information and providing expert counsel.

Realtors also serve a vital social function: they are community experts, often involved in local networks and knowledge sharing, which makes the real estate market more efficient and transparent for everyone.

Looking Forward

As we move further into the 21st century, real estate professionals continue to adapt to new challenges. From the growing importance of digital marketing to the impacts of climate change on property values, today's REALTORS® must constantly evolve their skills.

The profession that began with handshake deals over handwritten contracts now embraces virtual tours, electronic signatures, and data analytics. Yet the core function remains the same: guiding clients through one of life's most significant financial transactions with expertise and integrity.

The evolution of real estate professionals in America reflects broader societal changes—from unregulated markets to consumer protection, from generalists to specialists, and from localized practice to global perspective.

The historical journey shows how the realtor evolved from a simple middleman into a trained professional integral to the American dream of homeownership. And as the housing market continues to change in the 21st century, the profession will undoubtedly continue to adapt – but the need for knowledgeable, ethical real estate professionals remains as strong as ever.