Do you need a real estate agent?
Table of content:
- Finding the best real estate agent
- How does a real estate agent differ for buyers and sellers?
- How are real estate agents compensated?
- Licensing and requirements
- Types of real estate agents
There is no legal requirement that you work with an agent to buy or sell a home. And in the Internet Age, many people feel they can handle a lot of the pro’s services — from perusing listings to drawing up contracts — on their own.
If you’re the homeowner, the process is called FSBO (for sale by owner). There are a variety of ways to do it. 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 these apps.
There are also physical companies located around the U.S. that try to buy homes quickly and cheaply to renovate and resell. These businesses usually don’t use an agent.
Buyers can also skip using an agent if they want — especially if they plan to pay for the home all in cash.
Finding the best real estate agent
When buying or selling your home, the better your agent, the better it is 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 through a referral. If you know someone who recently bought or sold a home, ask how their experience with their agent was. If their agent was skilled and easy to work with, you might try to hire them.
Before you settle on an agent, it’s also a good idea to do some background research. Look for online reviews to see if there are any red flags. You could also consider checking your state’s real estate licensing website to make sure their license is valid and up to date, and that there are no records of disciplinary action.
How does a real estate agent differ for buyers and sellers?
Real estate agents serve different purposes for both buyers and sellers. While in both cases, agents serve as a go-between with the other party and can assist with negotiations, they have different tasks.
For example, a buyer’s agent will help find homes to tour and come up with a price when the buyer decides they want to make an offer. Once the home’s in contract, they might 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, get it ready for showings, and schedule open houses.
How are real estate agents compensated?
Real estate agents are compensated on a commission basis. That means that 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 about 5 or 6 So if a home sells for $300,000, the seller can expect to pay $15,000 to $18,000 in commissions.
Usually, the broker that employs each agent will receive the commission, take a cut, then give the remainder to the agent.
Licensing and requirements
Real estate agents typically need to have a license to work in a jurisdiction. The licensure requirements can vary from state to state but usually mandate that candidates be at least 18 years old, complete a 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 multiple types of real estate agents. Each serves a different purpose or has different levels of education and certification.
Listing/seller’s agents
Listing and seller’s agents work for the person who owns a property and wants to sell it. These agents are responsible for:
- Listing a property for sale
- Helping prepare the home for viewings
- Helping price the home
- Advertising the home
- Scheduling open houses and showings
- Representing the sellers in negotiations
- Preparing purchase agreement
- Assisting with closing
Buyer’s agents
A buyer’s agent represents the interest of a person or group of people who want to buy a property. Their responsibilities include:
- Helping buyers find and visit properties they’re interested in
- Performing comparable analysis to determine a fair value for the home
- Recommending the offer, negotiating with the seller’s agent
- Making tweaks to the purchase agreement
- Recommending professionals like real estate attorneys or home inspectors
- Dealing with unexpected setbacks such as inspection or financing issues
- Assisting with closing
- Dual agents
- Before you hire a real estate agent, consider these common questions.
A dual agent simultaneously represents both the seller and the buyer in a real estate transaction. It’s not very common, and some states actually prohibit it, due to conflict of interest issues caused by having both sides represented by the same agent.
FAQs
How important is it to hire a trusted real estate agent?
When hiring a real estate agent, trust is absolutely essential. Your agent is representing you in one of the largest transactions you’ll ever complete in your life, so you want to make sure they are operating in your best interests.
What are the primary duties of a real estate agent for a seller?
- A seller’s agent represents the interest of the person selling the home. Their duties include:
- Pricing and listing the home
- Preparing the home for showings
- Placing advertisements
- Scheduling open houses and showings
- Representing the sellers in negotiations
- Draw up a purchase agreement
What are the primary duties of a real estate agent for a buyer?
- The buyer’s agent helps buyers find homes and represents them in negotiations. Their duties include:
- Finding homes that might interest the buyer
- Scheduling tours
- Helping buyers determine a fair offer price and reasonable budget
- Representing the buyer in negotiations
- Advising on the purchase agreement