After all, if you’re thinking about buying or selling a home — or any type of building — you might want to start working with a real estate agent. Real estate agents are licensed professionals who are compensated to represent buyers and sellers in real estate transactions.
They help sellers by listing, pricing and preparing homes for sale, arranging open houses and viewings, and digging up offers. They help buyers find properties: they send out listings, tour homes with them, make offers and help them fill out applications.
Real estate agents on both sides of the deal can assist in negotiations and act as an intermediary for the buyer and seller while the property is under contract and at the final closing.
What is a real estate agent?
The real estate agent profession is over a century old: In the US, real estate agents began showing homes for lease or purchase around 1900. As of 2022, the Real Estate Licensing Act Officials Database contains more than 4 million license records (i.e., active real estate license holders) in its database. National association of real estate industry membership 1.5 million (most realtors are agents, but not all agents are realtors – more on that later).
In the 21st century, the real estate field has expanded and contracted along with the real estate market, but has grown overall (from 1.35 million realtors in 2006). The U.S. Bureau of Labor Statistics (BLS) estimates that between 2020 and 2030, the occupation is expected to grow by 4 percent.
License and requirements
Real estate agents usually have to be licensed to work in the state. Licensing requirements vary from state to state, but usually require candidates to be at least 18 years old, complete a certain number of hours of real estate education courses (as well as a pre-licensing course from a recognized real estate licensing school) and pass. Licensing test according to BLS.
Types of real estate agents
There are many types of real estate agents. Each serves a different purpose or has a different level of education and certification.
Listing and seller agents work for anyone who owns a property and wants to sell it. These agents are responsible for:
- Listing property for sale
- Help prepare the house for viewing
- Helping the value of the house
- Introducing the house
- Planning open houses and shows
- Representing sellers in negotiations
- Preparing the purchase agreement
- Help with closing
A buyer’s agent represents the interest of a person or group who wants to buy a property. Their responsibilities include:
- Helping buyers find and visit the properties they want
- Conducting an equity analysis to determine the correct value for the home
- Recommended discount, negotiate with the seller’s agent
- Making adjustments to purchase agreement
- Recommend professionals such as real estate attorneys or home inspectors
- Dealing with unexpected obstacles such as inspections or financial issues
- Help with closing
A dual agent represents both the seller and the buyer in a real estate transaction. It’s less common, and some states actually prohibit it, because of a conflict of interest by having both parties represented by the same agent.
But dual agents appeal to some people because there are fewer parties involved and a dual agent can pay smaller sales commissions.
Accredited agents: realtors, brokers, special certifications
Some real estate agents choose to earn additional certifications or accreditations to continue their education and better serve their clients.
For example, Realtor is a special designation for real estate agents who are members of the National Association of Realtors. Joining the organization indicates that they have passed the association’s course and agree to follow its bylaws and code of conduct, among other things.
Brokerage is an additional certification, issued by the state. It means higher experience and education, and passing more tests. Becoming a real estate broker entitles the agent to own his own company, agency or brokerage, and complete real estate transactions. Real estate agents must work for a broker (unless they are a broker themselves).
An appointed agent is a real estate professional assigned by a supervising broker to serve a client, and the same supervising broker has another licensed professional assigned to represent the other client in the transaction.
How is a real estate agent different for buyers and sellers?
Real estate agents serve a distinct purpose for both buyers and sellers. In both cases, agents act as a bridge with the other party and can help in negotiations, they have different tasks.
For example, a buyer’s agent will quote a price when a home is available for viewing and the buyer wants to make an offer. Once the home is under contract, they can help you find real estate attorneys, home inspectors, and other professionals.
On the other hand, a seller’s agent (also called a listing agent) helps the seller price and advertise their home, prepare it for showings and schedule open houses.
How do real estate agents get paid?
Real estate agents are paid on a commission basis. That means they only get paid when they close a deal.
Typically, the home seller 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 house sells for $300,000, the seller can expect to pay $15,000 to $18,000 in commissions.
Usually, the broker who hires each agent receives the commission, takes a cut, and then gives the rest to the agent.
Looking for a real estate agent?
There is no legal requirement to work with an agent to buy or sell a home. And in the age of the Internet, many people feel they can handle most professional services — from looking up listings to drafting contracts — on their own.
If you own a home, the process is called FSBO (for sale by owner). There are different ways to do this. Consider working with iBuyer, an online platform that relies on big data and statistical tools like home price models to help sellers make a quick offer to buy your home. Opendoor and Offerpad are two examples of these apps.
There are also brick-and-mortar companies all over America that try to buy houses quickly and cheaply to renovate and sell. These businesses usually do not use an agent.
Buyers can also use an agent if they want – especially if they plan to pay cash for the home.
Finding the best real estate agent
When buying or selling your home, the better your agent is, the better it is for you. Don’t be afraid to interview an agent and ask questions before hiring them.
Another good way to find a good agent is referral. If you know someone who recently bought or sold a home, ask how their experience with their agent was. If their agent is skilled and easy to work with, you can try hiring them.
Before settling 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 might consider checking your state’s real estate licensing website to make sure their license is valid and current, and there are no records of disciplinary actions.
Questions to be asked
Before hiring a real estate agent, consider these common questions.