When buying or selling a home, you will work with a real estate agent, but what do they do? We will look at the real estate agent definition to make the process more transparent.
Most people do not realize that a real estate agent, broker, and REALTOR® are different. We will clear up the confusion.
What is a real estate agent?
Real estate agents help buyers find their ideal home, and sellers get the price they want for their property. They are licensed professionals who work with their clients to represent their interests during the real estate transaction.
A real estate agent is usually paid by commission. This will be a percentage of the price the home is sold for, and they will only be paid when the sale closes.
Most real estate agents have to be part of a brokerage, where there is a typically more experienced and licensed real estate broker to oversee the transaction. The real estate agent definition includes professionals dealing with residential homes and those specializing in commercial properties.
How a real estate agent helps their client
The real estate agent’s role will differ depending on whether they represent the buyer or the seller.
A seller’s or listing agent will help price the home and prepare it for sale. They can provide important advice that will help attract a buyer and sell the property for more money. The real estate agent will market the home using listing services, advertisements, and through their contacts with other agents.
An agent hired by a buyer will work with them to find out what they are looking for in their next home and arrange appointments for showings at suitable homes. When a buyer finds a home they want to make an offer on, their agent will use comparable sales data to help them decide how much to offer.
Real estate agents will pass offers and counter offers between the buyers and sellers. When the seller agrees to the offer, things don’t end there. There is paperwork, inspections, possible further negotiations, and more. There can be many loose ends to tie up before closing.
Some agents practice dual agency
Usually, the agent will represent either the buyer or the seller, but in some situations, they can represent both. This is called dual agency and can lead to a conflict of interest. Due to the problems with dual agency arrangements, the practice is illegal in some states.
How are real estate agents paid?
It is normal for real estate agents to be paid by commission based on the home’s selling price. This means that the price the property is sold for is linked to the earnings of the real estate agent. However, this is beginning to change thanks to the ease of searching online property listings.
There are also flat fee arrangements, where the homeowner only pays for their required services. Some brokerages can also charge lower commissions on more expensive homes.
What is the difference between real estate agents and brokers?
The exact rules and responsibilities vary between different states, though. Generally, someone who earns a real estate license is considered a real estate agent. They take courses and pass exams to become qualified to assist home buyers and sellers.
Brokers have gone through real estate agent training and licensing but have continued with more education and exams. They are also usually required to have at least a few years of experience before they can train to become a real estate broker.
The broker’s job is to deal with the technical side of real estate transactions. The buyer or seller’s contract is with the brokerage, which authorizes them to deal with the legal side and financial responsibilities.
Brokers can work by themselves but often own a brokerage or franchise. If they want to employ agents, they will need additional training. When they hire agents, the broker will share the commissions with them.
Are real estate agents and REALTORS® the same?
Realtors are members of the National Association of REALTORS® (NAR). This is a trade association that agents, brokers, and other real estate professionals can join. Agents and brokers that join the NAR can call themselves Realtors.
The NAR has a code of ethics that they must follow when dealing with clients, members of the public, and other agents. A Realtor also has to join local or state real estate associations.
This means that while all REALTORS® are agents, brokers, or other professionals in the industry, not all agents or brokers are Realtors.
Whether buying or selling, it is vital to understand your agent’s role. Knowing the differences between common terminology for a real estate agent is essential.
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 35 years.