Selling their home isn’t something most people do once a day (or once in a decade), so it’s only natural to enlist a real estate professional to help with the process. Enter the real estate agent – more commonly known as a seller’s agent. AKA a listing agent, these reps price and advertise your home, organize showings, negotiate with potential buyers and represent the seller throughout the entire real estate transaction, from the initial listing to the final closing.
While you don’t need to work with a listing agent to sell your home, many people choose to do so because they can help the process go more smoothly and maximize the sale price of the home.
What is a seller’s agent or listing agent?
A seller’s agent is a real estate professional (realtor, real estate agent, or real estate broker) who helps prepare and list a property for sale (the latter is why they are called listing agents). They represent the person selling the property and must act in their best interest.
Seller’s agents perform many tasks related to selling a home, including:
- Helping to analyze the market to know that it is a good time to sell
- We advise you to increase the value of your property
- Connecting you with other professionals to prepare or improve your home
- Preparing your home
- List your home on multiple listing services
- Helping you pay the price of your home
- Marketing the home: Running tours, organizing open houses.
- Serve as a mediator between negotiations with buyers
- Preparing the purchase agreement
How are sales agents paid?
Sales agents are paid on commission. This means they will not be compensated until they close the deal.
Typically, when you sell a home, you must pay a percentage of the sale price—typically 5-6 percent—in realtor fees. When the home sale closes, this fee is deducted from your proceeds and paid to the agent’s broker (unless the agent is a broker himself). The broker takes a cut and distributes the remainder to the agent who assisted you in the transaction. In most cases, the total fee is split between the buyer’s agent and the seller’s agent.
This form of compensation can be beneficial to sellers because it is an incentive for the agent to help you sell your home for a higher price.
Who does the seller’s agent represent?
A seller’s agent’s job is to represent current homeowners who are putting their property on the market. Many agents, especially realtors, subscribe to a fiduciary-like code of conduct that requires them to disclose compensation, be open and honest in all matters, and always put their clients’ interests first.
However, there are some cases where a seller’s agent only represents the seller.
Dual agency is a situation where the same real estate agent represents both parties in a transaction – ie, the buyer and the seller.
This is great for the agent because it means they get the full commission for the transaction instead of splitting it with another agent (the buyer’s agent). Because they’re getting the whole thing, dual agents can generally receive a slightly lower fee – more for the seller. And some feel the whole transaction goes faster and smoother, with only three parties involved.
However, this dual agency situation is also the perfect situation for conflicts of interest. Even in real real estate transactions, the buyer and seller generally have opposing goals.
The seller wants to secure the highest price and the least contingencies and conditions. The buyer wants to pay the least amount possible and get discounts from the seller. Having a single agent representing these competing interests can be problematic. At the end of the day, whose side are they on? Or who do you support?
In fact, some states, like Alaska, Colorado and Florida, prohibit dual agency altogether.
Does the seller’s agent represent the broker?
Although a seller’s agent represents you, the homeowner, they also represent someone else: the real estate broker. A broker – another, more experienced professional or larger firm – is technically licensed to sell property and conclude real estate transactions. All real estate agents must work through a real estate broker.
When you work with a seller’s agent, you are actually working with a broker. An agent, like a real estate agent, is someone involved with the day-to-day process of selling your home. The broker has a fiduciary responsibility to put your best interests first, at the closing stage of the transaction, when actual money changes hands.
It’s like a bartender working in a restaurant. The bartender serves a variety of drinks and wines, mixes your cocktail and collects your money. But they are not allowed to sell you alcohol – the restaurant (or restaurant owner) holds the liquor license. You are technically buying booze from them; The barkeep acts as a representative of the restaurant serving you.
It gets confusing because agents and brokers overlap. A real estate professional can be both an agent and a broker. In fact, most brokers start out in real estate, and after years of experience, additional education and licensing exams earn their broker’s credential. Many continue to work as agents and actively sell properties.
Seller’s agent with buyer’s agent
A seller’s agent is someone who helps someone sell their home, while a buyer’s agent is someone who helps someone buy a home.
Responsibilities of seller’s agents and buyer’s agents are relatively similar, with clear exceptions required for being on different sides of the transaction.
For example, while seller’s agents help homeowners prepare their properties for sale, buyer’s agents prepare their clients by helping them consider what features are important in a home and by checking multiple listing services to show homes for sale in the area.
Buyer’s agents are responsible for helping buyers tour homes, negotiating offers and strategies, and making inquiries or presenting offers to the seller’s agent. Once the agreement is signed, they will go over the contract with their client, citing any changes or contingency clauses.
A buyer’s agent is often referred to as a seller’s agent after a home contract, because, by producing a buyer, they made the sale. So, even though they look almost the same, be careful not to confuse a sales agent with a sales agent.