At Bankrate, we strive to help you make smarter financial decisions. Although we will adhere strictly
, this post may contain references to products from our partners. Here is an explanation for
ON THIS PAGE
Jump to
What is a real estate agent?
Licensing and requirements
Open page navigation
Types of real estate agents
If you’re planning to buy or sell a home—or any kind of building, for that matter—you’ll likely end up working with a real estate agent. Real estate agents are licensed professionals who receive compensation for representing buyers and sellers in property transactions.
Listing/Seller’s agents
For sellers, they help list a home, set a price and prepare it for sale, schedule open houses and viewings, and solicit offers. This may interest you : Sell Yourself: Your Plan to Earn Multi-Million Dollar Ads. For buyers, they help find properties: They scour and send listings, visit homes with them, help them make an offer and fill out applications.
Buyer’s agents
On both sides of the equation, real estate agents can assist in negotiations and act as an intermediary for the buyer and seller while a property is under contract and through the final closing. This may interest you : What is most important in business? Passion or profit?.
Dual agents
The real estate agent profession dates back more than a century: In the US, real estate agents began showing homes for lease or purchase around 1900. In 2022, there are more than 4 million licensee records in the Association of Real Estate License Law Officers (that is, people with active real estate licenses) in their database. Read also : It makes no sense to think you can buy a good business for $ 0 Down. Membership in the National Association of Realtors, a real estate industry organization, numbers 1.5 million (Most Realtors are agents, but not all agents are Realtors – more on that later).
During the 21st century, the field of real estate has expanded and contracted with the real estate market itself, but it has grown overall (from 1.35 million Realtors in 2006). The US Bureau of Labor Statistics (BLS) estimates an expected growth of 4 percent in the occupation between 2020 and 2030.
Accredited agents: Realtors, brokers, speciality certifications
Real estate agents are usually required to have a license to work in a jurisdiction. Licensing requirements may vary from state to state, but generally mandate that candidates be at least 18 years old, complete several hours of real estate education courses (along with a pre-licensing course from accredited real estate licensing school) and pass. licensing exam, according to the BLS.
There are many types of real estate agents. Each has a different purpose or has different levels of education and certification.
Listing and seller agents work for the person who owns a property and wants to sell it. These agents are responsible for:
Designated agents
A buyer’s agent represents the interest of a person or group of people who wish to purchase a property. Their responsibilities include:
How does a real estate agent differ for buyers and sellers?
A dual agent represents both the seller and the buyer in a real estate transaction. It is not very common, and some states actually prohibit it, due to conflict of interest issues of having the same agent represent both sides.
However, dual agents are appealing to some people because there are fewer parties involved, and a dual agent may charge slightly lower sales commissions.
Some real estate agents choose to obtain additional certifications or accreditations to further their education and provide better services to their customers.
How are real estate agents compensated?
For example, Realtor is a special designation used by real estate agents who belong to the National Association of Realtors. Joining the organization indicates that they have passed the association’s course and agreed to follow its bylaws and code of ethics, among other factors.
A broker is an additional certificate, one issued by the state. It indicates a higher level of experience and education, and passing the additional examination. Being a real estate broker gives an agent the right to own their own company, such as an agency or brokerage, and to complete real estate transactions. Real estate agents are usually required to work for a brokerage (unless they are brokers themselves).
A named agent is a real estate professional assigned by a supervising broker to serve a client and another licensed professional is assigned by the same supervising broker to represent the other client in the transaction.
Do you need a real estate agent?
Real estate agents serve a different purpose for both buyers and sellers. Although agents in both cases act as an intermediary with the other party and can assist in the negotiations, they have different tasks.
For example, a buyer’s agent will help find homes to tour and come up with a price for when the buyer decides they want to make an offer. Once the home is in contract, they may help find real estate attorneys, home inspectors and other professionals.
On the other hand, the seller’s agent (or listing agent) will help the seller price and advertise their home, prepare it for showings, and schedule open houses.
Real estate agents are compensated on a commission basis. That means they only get paid when they close a deal.
Finding the best real estate agent
Typically, the home seller 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 that hires each agent will get the commission, take a cut, then give the rest to the agent.
There is no legal requirement that you work with an agent to buy or sell a home. And in the Internet Age, many people are feeling like they can handle many of the pro services—from searching listings to drawing up contracts—on their own.
FAQs
If you are a homeowner, the process is called FSBO (for sale by owner). There are different ways to do it. Sellers can consider working with 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 these apps.
There are also brick-and-mortar companies located throughout the US that try to buy homes quickly and cheaply to renovate and resell them. These firms usually do not use an agent.
Buyers can also skip using an agent if they want – especially if they plan to pay for the house entirely in cash.
When buying or selling your home, the better your agent, the better for you. Don’t be afraid to interview a potential agent and ask questions before hiring them.
Another good way to find a good agent is referral. If you know someone who has recently bought or sold a home, ask about their experience with their agent. If their agent was knowledgeable and easy to work with, you might try to hire them.
Before settling on an agent, it’s a good idea to do some background research. Look for reviews online to see if there are any red flags. You might also consider checking your state’s real estate licensing website to make sure his license is valid and up-to-date, and that there are no records of disciplinary action.
