What Is a Real Estate Agent?
A real estate agent is a certified professional who facilitates real estate transactions by matching buyers and sellers and representing them in discussions. Real estate brokers are normally paid entirely by commission—a percentage of the property’s purchase price—so their income is contingent on their ability to conclude a transaction. In almost every state, a real estate agent must work for or be linked with a more experienced and licensed real estate broker (an individual or a brokerage organization).
How a Real Estate Agent Works
Commercial or residential real estate is usually the focus of real estate agents. Depending on whether they work for the buyer or the seller, they have various responsibilities. Seller’s agents, also known as listing agents, assist clients on how to price their homes and prepare them for sale, including last-minute modifications that can enhance the price or stimulate quick offers. Listing services, networking, and marketing are all used by seller agents to market the property.
Buyer’s agents look for available residences that fall within the buyer’s price range and wish list. These agents frequently consult previous sales data on comparable properties to assist prospective buyers in making a reasonable offer.
Agents operate as go-betweens for the primary parties, relaying offers, counteroffers, and other questions. Agents on both sides often continue to work after a bid is approved, assisting their clients with paperwork, communicating with them, advising on inspections and relocation, and generally shepherding the sale to completion.
Consumers should be aware of whether a real estate agent represents the buyer, the seller, or both parties; obviously, the agent’s loyalty can have a significant impact on various aspects of the transaction, including the final price. State rules govern whether a real estate agent can represent both parties in a transaction, a practice known as “dual agency.” So that buyers and sellers are aware of any conflicts of interest, agents must disclose their representation.
Real Estate Agents’ Compensation
Traditionally, an agent is paid a commission based on the sale price of the property. The more money an agent makes, the more money the house sells for. The traditional payment structure is evolving as online listings allow consumers to perform much of their buying without the assistance of a salesperson.
For more expensive homes, some brokerages offer a reduced commission, and others handle the entire transaction for a flat price that is significantly less than a typical commission. Other organisations have a fee-for-service pricing model that allows owners to pay only for the services they need, such as listing the property on a multiple listing service (MLS).
Real Estate Agent vs. Real Estate Broker
States have different definitions and distinctions between a real estate agent and a real estate broker. However, anyone who obtains a basic real estate licence (which requires the completion of a set of recognized courses and the passing of an exam) can call themselves a real estate agent. A real estate agent is simply a salesman who is qualified to assist consumers in purchasing or selling real estate.
A real estate broker is the next rung on the career ladder. Most states additionally require brokers to have a specific amount of recent experience as an active real estate agent. Brokers have additional training and education that has prepared them to pass a higher licensing exam. The technical parts of a real estate transaction are handled by brokers. A client enters into a contract with a brokerage rather than with a specific agent. Brokers’ further certification in many states allows them to handle various legal and financial parts of a transaction, such as handling the earnest money deposit and setting up the escrow account.
Brokers are usually the owners of a company or a franchise. They can work as sole practitioners, but if they want to engage agents or other brokers to work for them, they must obtain a higher-level license. As previously stated, a real estate agent cannot normally work alone and must instead work through a real estate broker; the exception is in areas like Colorado and New Mexico, where every real estate professional is required to be registered as a broker.
Agents, on the other hand, usually work for brokers and split commissions with them.
Real Estate Agent vs. Realtor
So, while every real estate broker is (or has been) a real estate agent, not every real estate agent is a broker. What role do realtors play in this scenario?
A realtor belongs to the National Association of Realtors (NAR), which is a trade group. Real estate agents and brokers, as well as property managers, appraisers, and other real estate sector professionals, can all be realtors. Realtors are expected to be specialists in their fields and must adhere to the National Association of Realtors’ code of ethics, which outlines particular responsibilities to clients and customers, the general public, and fellow realtors. Realtors must also be members of a state or municipal real estate group or board in addition to NAR.
Real estate agents or brokers (or something similar) are all realtors, although not all agents or brokers are realtors. The National Association of Realtors (NAR) had almost 1.4 million members as of July 2020. Approximately two-thirds of them were registered real estate agents.
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