What is a real estate agent?

0

If you’re thinking of buying or selling a home – or any type of building, for that matter – you’ll probably end up working with a real estate agent. Realtors are licensed professionals who are paid to represent buyers and sellers in real estate transactions.

For sellers, they help list a home, price and prepare it for sale, schedule open houses and viewings, and research offers. For buyers, they help find properties: they browse them and send them ads, walk around houses with them, help them make offers and fill out applications.

On both sides of the equation, real estate agents can help with negotiations and mediate between buyer and seller while a property is under contract and through to final closing.

What is a real estate agent?

The profession of real estate agent dates back more than a century: in the United States, real estate agents began showing homes for rent or purchase around 1900. In 2022, the Association of Real Estate database License Law Officials has over 4 million licensee records (i.e. people with active real estate licenses) in its database. Membership in the National Association of Realtors, a real estate industry organization, is 1.5 million (most realtors are agents, but not all agents are realtors – more on that later).

Throughout the 21st century, the real estate field has grown and contracted along with the real estate market itself, but has grown overall (by 1.35 million real estate agents in 2006). The US Bureau of Labor Statistics (BLS) estimates an expected growth of 4% in the profession between 2020 and 2030.

Licensing and requirements

Real estate agents generally must be licensed to work in a jurisdiction. Licensing requirements can vary from state to state, but generally require applicants to be at least 18 years old, complete a certain number of hours of real estate education courses (plus a pre-licensing course from an accredited real estate licensing school) and pass a licensing exam, according to the BLS.

Types of real estate agents

There are several types of real estate agents. Each serves a different purpose or has different levels of education and certification.

Seller’s advertisers/agents

Listing agents and sellers work for the person who owns a property and wants to sell it. These officers are responsible for:

  • Sale of real estate
  • Help prepare the house for visits
  • Help set the price of the house
  • house advertising
  • Planning open days and screenings
  • Represent vendors in negotiations
  • Preparation of the purchase contract
  • Closing aid

Buyer’s Agents

The buyer’s agent represents the interest of a person or a group of people who wish to buy a property. Their responsibilities include:

  • Help buyers find and visit the properties that interest them
  • Perform a comparable analysis to determine the fair value of the house
  • Recommend offer, negotiate with seller’s agent
  • Make changes to the purchase agreement
  • Recommend professionals like real estate lawyers or building inspectors
  • Dealing with unexpected setbacks such as inspection or financing issues
  • Closing aid

Double agents

A dual agent represents both the seller and the buyer in a real estate transaction. This is not very common, and some states actually prohibit it, due to conflict of interest issues caused by both parties being represented by the same agent.

However, double agents appeal to some people because there are fewer parties involved and a double agent may charge slightly lower sales commissions.

Accredited agents: Real estate agents, brokers, specialized certifications

Some real estate agents choose to obtain additional certifications or accreditations to further their education and provide better services to their clients.

For example, Realtor is a special designation used by realtors who belong to the National Association of Realtors. Joining the organization indicates that they have successfully completed the association’s course and have agreed to follow its bylaws and code of ethics, among other factors.

Broker is an additional certification, one issued by the state. It indicates a higher level of experience and education and the passing of an additional exam. Being a real estate broker gives an agent the right to own their own business, i.e. an agency or brokerage, and actually enter into real estate transactions. Realtors generally must work for a brokerage (unless they are brokers themselves).

Designated officers

A designated agent is a real estate professional designated by a supervising broker to serve a client while this same supervising broker has another authorized professional designated to represent the other client in the transaction.

How is a real estate agent different for buyers and sellers?

Realtors have a different focus for buyers and sellers. While in both cases agents mediate with the other party and can assist in negotiations, they have different tasks.

For example, a buyer’s agent will help find homes to view and offer a price when the buyer decides to make an offer. Once the home is under contract, they can help find real estate attorneys, home inspectors, and other professionals.

On the other hand, a seller’s agent (aka a listing agent) will help the seller price and advertise their home, prepare it for viewings, and schedule open houses.

How are real estate agents paid?

Real estate agents are paid on commission. This means they only get paid when they close a deal.

Typically, the seller of a home pays the commission, which is then split between the buyer’s agent and the seller’s agent. Typical commissions are around 5 or 6. So if a house sells for $300,000, the seller can expect to pay $15,000 to $18,000 in commissions.

Usually, the broker who employs each agent will receive the commission, take a share, and then give the rest to the agent.

Do you need a real estate agent?

There is no legal requirement that you work with an agent to buy or sell a home. And in the age of the Internet, many people feel they can handle many of the services of professionals themselves, from viewing listings to drafting contracts.

If you are the owner, the process is called FSBO (For Sale By Owner). There are a variety of ways to do this. Sellers can consider working with an iBuyer, an online platform that relies on big data and statistical tools, such as home valuation models, to make a quick offer to buy your home. Opendoor and Offerpad are two examples of such apps.

There are also brick-and-mortar businesses located in the United States that try to buy homes quickly and cheaply to renovate and resell. These companies generally do not use an agent.

Buyers may also opt out of using an agent if they wish, especially if they plan to pay cash for the home.

Find the best real estate agent

When buying or selling your home, the better your agent is, the better for you. Don’t be afraid to interview a potential agent and ask them questions before you hire them.

Another good way to find a good agent is to make a recommendation. If you know someone who has recently bought or sold a home, ask them about their experience with their agent. If their agent was knowledgeable and easy to work with, you could try hiring them.

Before settling on an agent, it’s also a good idea to do some background research. Look for reviews online to see if there are any red flags. You may also consider checking your state’s real estate licensing website to ensure that their license is valid and up-to-date, and that there are no records of disciplinary action.

FAQs

Before hiring a real estate agent, consider these common questions.

Share.

About Author

Comments are closed.