If you’re considering adding properties to your investment portfolio, you might be asking yourself, “What exactly is a real estate agent, and do I need one?”
Working with a real estate agent offers numerous advantages, whether you’re buying or selling properties. Here’s everything you need to know.
What Is a Real Estate Agent?
A real estate agent is a licensed professional skilled in facilitating real estate transactions. Most agents work on commission and can represent either buyers or sellers, though some may act as dual agents, representing both parties.
A real estate agent advocates for their chosen party during legal negotiations and ensures all necessary elements come together to complete the transaction. Typically, real estate agents share their commissions with the brokerage they work for.
The Role of a Real Estate Agent
A real estate agent provides a wide range of services for both buyers and sellers, including:
Extensive Knowledge of the Area
For buyers, real estate agents offer detailed insights into the area, including school district ratings, local amenities, and neighborhood specifics. They act as the eyes and ears of the area, using their expertise to help buyers select the right property.
Scheduling Showings
Real estate agents handle the scheduling of showings for buyers and sellers. This relieves both parties of the burden of making phone calls and coordinating schedules. The agent accommodates the buyer’s or seller’s schedule and keeps both parties informed of the showings.
Facilitating Negotiations
Negotiation can be a challenging aspect of the process, but real estate agents act as intermediaries between buyers and sellers. Depending on whom they represent, agents strive to secure the best deal—either the lowest price for buyers or the highest for sellers. They also facilitate negotiations on other aspects such as repairs or credits.
Providing Referrals
Real estate agents often have a network of other real estate professionals and can refer clients to the services they need. This may include mortgage professionals, title companies, appraisers, or insurance agents.
Assisting with Paperwork
Real estate agents help buyers and sellers navigate the extensive paperwork required in real estate transactions. While some documents need the direct attention of the buyer or seller, the agent ensures the process is as stress-free as possible and that all deadlines are met to avoid delays.
Types of Real Estate Agents
Real estate agents can represent one side of the transaction or both, depending on their preference. Here’s a breakdown of the roles:
Buyer’s Agent
A buyer’s agent exclusively represents buyers. Their responsibilities include:
- Searching MLS listings and staying updated on new homes entering the market.
- Setting up appointments for buyers to view properties of interest.
- Accompanying buyers to viewings to help determine if the property is a good fit based on their preferences and budget.
- Handling negotiations on behalf of the buyer.
- Assisting buyers in locating mortgage financing.
- Helping buyers determine the right offer.
- Completing all necessary paperwork for the home purchase.
Seller’s Agent
A seller’s agent, also known as a listing agent, represents sellers. Their responsibilities include:
- Assisting sellers in staging the house and recommending necessary repairs or changes to make the home more appealing to potential buyers.
- Providing a comparative market analysis to help sellers determine an appropriate asking price based on recent sales in the area.
- Coordinating with buyer’s agents to arrange viewings for potential buyers.
- Typically, not being present during showings, as that is the buyer’s agent’s responsibility.
Benefits of Working With a Real Estate Agent
While some people might think they can handle real estate transactions without an agent, there are numerous advantages to working with one, regardless of the type of transaction.
Benefits for Buyers
One of the biggest advantages for buyers is that they don’t pay the real estate agent’s commission—the seller covers this cost. Although the commission may be factored into the home’s sale price, buyers benefit from the agent’s services without directly paying for them.
Additional benefits for buyers include:
- Access to Listings: Agents have access to the MLS, providing you with more listings faster.
- Negotiation Support: Agents know how much to bid and when to counteroffer, offering valuable support during negotiations.
- Guidance with Paperwork: Agents assist with the paperwork and legal aspects of buying a house, making the process smoother.
- Local Knowledge: Agents provide in-depth information about the area, helping you make an informed decision.
- Market Expertise: Agents understand the market and can advise on the best time to place an offer.
Benefits for Sellers
While sellers are responsible for paying the real estate agent’s commission, the advantages often outweigh the cost. The listing agent shares the commission with the buyer’s agent, which is why buyers don’t incur this expense.
Benefits for sellers include:
- Broader Advertising: Agents can advertise the home to a larger audience, increasing visibility and potential buyers.
- Negotiation Assistance: Agents help ensure you get the best possible price for your home.
- Paperwork and Legal Assistance: Agents handle the complex paperwork and legal aspects of selling a home.
- Market Expertise: Agents know the optimal time to list your property for sale.
- Qualified Buyers: Agents help screen buyers, reducing the risk of dealing with unqualified or non-serious buyers.
Benefits for Investors
Investors also gain significant advantages from working with a real estate agent. Even though you’re not buying a home for personal use, the benefits include:
- Access to Hot Deals: Agents can help you find profitable deals for fix-and-flip or rental properties.
- Early Market Access: Agents inform you about new or upcoming properties so you can act quickly.
- Handling Logistics: Agents manage the legwork and paperwork involved in buying and selling properties.
- Market Insight: Agents keep you informed about market changes and advise on the best times to buy or sell.
Real Estate Agent FAQs
What is the difference between a real estate agent and a broker?
A real estate agent is an individual licensed to represent buyers or sellers in property transactions. In contrast, a real estate broker also has a real estate license but holds an additional broker license, requiring an extra exam. Brokers can hire agents to work under them, handle escrow money transfers, and manage legal disputes. Real estate agents share their commissions with their brokers.
What is the difference between a real estate agent and a Realtor®?
Both real estate agents and Realtors® are licensed in real estate. However, Realtors® are members of the National Association of Realtors® (NAR), a trade association representing real estate professionals nationwide. Realtors® pledge to adhere to a strict code of ethics and receive special benefits that can enhance their careers.
How do real estate agents get paid?
Sellers pay real estate agents through a commission, typically 6% of the sales price. This commission is initially given to the seller’s agent and then divided between the buyer’s and seller’s professionals, starting with their brokers if applicable. The commission is usually split between the seller’s and buyer’s brokerages, who then share it with their respective agents. The split can vary, often being 50/50 or 60/40, but it depends on the brokerage’s policies.
Final Thoughts
Understanding what a real estate agent is highlights the importance of involving one in your real estate transactions. Both buyers and sellers benefit from an agent’s expertise, relieving them of the complexities of legalities and extensive paperwork that accompany real estate deals.
