Is it possible to go through the whole process of buying or selling a house without a real estate agent?
Yes, you can do it alone, but don’t rule out hiring an agent. An agent simplifies the process for you, explains what needs to be done, and assists you with the paperwork, among other things.
Because agents are valuable in the home buying or selling process, the majority of home buyers and sellers in the US work with real estate agents. According to the National Association of Realtors, 91% of sellers sold homes through an agent while 87% of buyers bought homes with the help of agents.
Do I need a real estate agent? If you find yourself asking this question, it’s time to learn what an agent truly does.
By the end of this article, you’ll learn what a real estate agent is, the difference between a real estate agent and broker, how to find a real estate agent, and other agent-related information that will help you understand the importance of having an agent to represent you when buying or selling a home.
What is a real estate agent?
A real estate agent is a professional who “arranges” real estate transactions between buyers and sellers. They usually mediate the transactions and assist their respective clients (the buyer or the seller) through the entire process – from home search to closing.
To be a real estate agent, you need to be at least 18 years old, complete a pre-licensure class and pass the real estate agent licensure exam in your state.
Real Estate Agent Vs Broker
While it’s easy to confuse a real estate agent with a broker, there is a significant difference between them. Both real estate agents and real estate brokers working with buyers and sellers to successfully close a deal.
However, real estate brokers have more experience than a real estate agent. Brokers should have at least 2 years of experience as a real estate agent. They should also complete additional training and pass the real estate brokers licensure exam. A real estate broker can also own their own brokerage firm and hire real estate agents to work for them.
Real estate agents, on the other hand, are prohibited to work independently and are not allowed to receive a commission directly from their clients. Real estate agents may only work under the employment of a licensed broker.
Agent Vs Realtor
What’s the difference between a realtor and a real estate agent?
In the United States, Realtor is a registered trademark under the National Association for Realtors (NAR). Realtor is technically a term which should only apply to NAR members but most people use realtor and real estate agent interchangeably.
Since NAR is not an exclusive organization for real estate agents, Realtor may also refer to brokers and broker-associates who are NAR members.
What does a real estate agent do?
An agent manages the interaction between buyer and seller and makes sure the process is moving along by acting as an intermediary between the parties.
What does a day in the life of a real estate agent look like?
Well, every day in the life of a real estate agent is different. Some days it’s all about house hunting or accompanying a potential buyer to open houses. Other days are filled with tons of paperwork and calls.
The tasks and responsibilities of a real estate agent depend on who their clients are and where these clients are in the buying or selling process. So it’s not always the same for every real estate agent. These responsibilities of agents also depend on the kind of agreement they have with their clients.
This means that every real estate job description is unique. The actual role an agent plays depends on what kind of agent you are dealing with. Here’s a list of the most common types of real estate agents you may encounter:
- Buyer’s agent. These professionals assist individuals looking to buy a home.
- Seller’s agent. A seller’s agent collaborates with the sellers in putting out the properties in the market. They are also called the listing agents.
- Dual agent. While the first two agents represent either the buyer or the seller, dual agents represent both buyer and seller in a transaction. Dual agents are allowed in some states, but only with the written consent of both the buyer and the seller.
- Commercial real estate agent. These agents work with commercial properties, like leasing, buying, and selling commercial properties. They also provide substantial financial information and analytical data to their clients on top of performing regular agent duties (as described in the next section).
- Foreclosure real estate agent. A foreclosure agent specializes in helping families sell their foreclosed homes and also in assisting buyers in purchasing foreclosed real estate properties.
- Investment real estate agent. These agents assist clients in transacting real estate properties for investment.
- Rental real estate agent. These agents focus on helping clients manage their rental properties by helping them find potential tenants. They also assist in the lease renewal and may also provide their services to existing tenants.
What does an agent do for a seller?
- Putting out the home in the market (whether locally or online)
- Advertising the listing to their network of brokers, agents or buyers
- Helping the seller prepare their home for open houses or showings and managing the open house
- Forwarding offers to the seller
- Working with the seller in coordinating the transaction with the people involved and helping the seller produce the documents needed in the deal
- Assisting the seller in negotiating the deal with the buyers
- Helping the seller from start to finish, helping them close the deal
What does a real estate agent do for a buyer?
- Assisting buyers in their search for a home; helping them identify what they want in a house, where they want to live and how much they can afford
- Coordinating visits to open houses and properties buyers are (or would be) interested in
- Informing the buyer of the requirements and documents they need to buy a home. In some cases, agents also assist in getting these documents for the buyer
- Assisting the buyer to create their home offer and helping the buyer understand and negotiate contingencies in the contract
- Coordinating the transaction process on the buyer’s end in case the purchase contract comes through
- Coordinating inspections and repair negotiations
- Recommending trustworthy professionals such as inspectors to the buyer
- And in summary, helping the buyer from start to finish, from their search to closing day
Apart from the tasks listed above, there are plenty of responsibilities taken on by real estate agents. Overall, a good real estate agent is someone who performs his responsibilities from start to finish, making the buying or selling process more manageable to his clients.
How much is the salary of an agent?
How much does a real estate agent make? According to the Bureau of Labor Statistics in the US, the median yearly real estate broker salary is $58,210, while real estate agents make an average of $48,690 yearly.
Agents are paid on a commission basis, so their income depends on the value of the property they are helping their clients buy or sell. Agents get a commission of about 5 to 6% of the property price. Usually, the listing agent the buyer’s agent split this commission in half.
If a real estate agent works for a firm or a broker, agents won’t take home their full share of the commission. According to NAR statistics, 36% of agents in the US have a fixed split arrangement with their broker. Only 13% of agents get 100% of the commission but firms offering this program usually charge a transaction fee for every settlement. However, these fixed fees tend to be higher than the cut brokers take in a fixed split.
In some cases, the agent or broker allocates a certain percentage of the commission as a rebate for the buyer.
What is an agent rebate?
Real estate agent rebate refers to a portion of the real estate commission a buyer’s agent willingly gives to the buyer (his client) as an incentive.
In some cases, home buyers work with agents offering commission rebates. This means that the buyer will receive an agreed percentage of the commission earned by the buyer’s agent, should they choose to work with that agent.
HomeFlow, for instance, offers up to 50% commission refunds to buyers who work with our agents.
Giving commission rebates is legal and even encouraged by the law to help buyers increase their savings. However, not all states welcome the idea of buyer rebates. Nine states (Alabama, Alaska, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee) currently have the ban on commission rebates.
Moreover, not all agents and brokers offer commission refunds, so you would have to check with your agent if they have this in place.
How to become a real estate agent
According to the NAR report in 2018, there are about 1.30 million NAR registered realtors in the United States alone. There has been an increase in the number of agents in the past decade, because of the flexibility and financial benefits offered by becoming a real estate agent.
So, how does one become a real estate agent?
While there is great potential for earning more by becoming a real estate agent, there are several things you may need to go through before you land your first deal.
You can get your real estate license by following a few simple steps. However, it’s important to keep in mind that regulations vary from one state to another, so you have to check specific agent requirements in your state.
4 steps to becoming a real estate agent:
- Check your state’s minimum age and education requirements. While a real estate agent license doesn’t require a bachelor’s degree, there are minimum education requirements for an agent license. In New York, for instance, 18 is the minimum age requirement and must possess at least a high school diploma.
- Take the required real estate agent classes as mandated by the state. Some states will require you to take a minimum number of hours of instruction before you can earn your license (NYC requires you to complete a 75-hour class, for example). You can take a real estate agent course online or locally, from schools offering accredited courses valid across states. These classes usually cost a minimum of $300.
- Pass your licensure exam. After completing your state-required real estate agent class, you need to pass the licensure exam. You have to check the passing score for your state since different states have different passing rates. New Mexico, for instance, will require a 75% or higher score, while others like California may need 70%. Be prepared to pay anywhere from $15 to $60 for the exam fee.
And after you pass the exam, you need to apply for your real estate license which would cost you another $50 to $250.
- Join a brokerage/work for a broker. As a new agent, you can’t represent clients on your own, so you need to work under a licensed broker. A broker can also teach you about the required paperwork. Working with a broker helps you learn how to gain experience in the field. Your experience will help you interact with clients and other real estate professionals to help you close more deals in the future.
After working under a broker for two years, you have the option to apply for a real estate broker license. Depending on what state you plan to practice your broker’s license, you may need one to three years of experience before you can pursue becoming a licensed broker.
You need to invest time and money to become a real estate agent requires an investment in your time. Getting your real estate license or working for a firm or broker isn’t exactly free, so it’s wise to have something set aside in case you decide to become an agent.
While there are only 4 steps here, becoming a real estate agent requires continuous learning. However, most of the things you need to learn as an agent you learn from actually doing the work.
Real estate agent marketing: How does it work?
Successful agents agree that their work is not just about marketing properties and helping clients sell or buy homes. It’s also about “selling” themselves to potential clients. Agents usually join a firm or a team to expand their network, but they may also do self-advertising through agent business cards, flyers, billboards, blogs, and website advertising.
How to find a real estate agent
If you’re interested in buying or selling a home, you can benefit from having a real estate agent.
So, how can you find a good real estate agent to help you?
Here are some pointers to help you find the right real estate agent:
1. Get referrals from your network and find an agent who is familiar with the location you are targeting. It would be difficult to work with a real estate agent who is not familiar with the local real estate scene. If you’re relocating, it’s better to look for a local real estate agent who is familiar with your target community.
Where do you usually find a real estate agent? You can find referrals both online and offline. Yelp, Zillow and online ads are some of your options for online agent hunting. Besides researching online, you may also find agents through recommendations from your own network and by visiting open houses and real estate agencies in your area.
Trustworthy agents are often referred by their former clients, so it’s good to hire an agent via referral.
2. Do your research. You can examine real estate agent reviews on legit review platforms or on the agent’s website or blog.
Find someone who’s known not just for successfully negotiating and closing deals, but also as an agent who takes good care of his clients. It’s better to work with a seasoned agent or broker because experienced professionals can get the job done in less time.
3. Interview at least 3 agents. Before hiring an agent, consider several candidates. This way, you can see how well they connect with you and if they understand what you need. Don’t forget to ask for references to have an overview of how they work.
Here are some sample questions to ask if you’re interviewing a realtor when buying a home:
- How long have you been working as an agent? How about in my specific area?
- Do you have other side jobs?
- What percentage of your clients are buyers or sellers?
- How many clients do you represent at the same time?
- Where do most of your clients come from? If he or she says referrals that’s a very good sign!
- Which neighborhoods do you work in?
- How often can I expect updates?
- How can I get in touch with you?
4. Go with your gut. While choosing a real estate agent takes a good amount of research and reviewing credentials, in the end, it’s all about connecting with your agent as a person.
How does she treat you? Do you think she genuinely cares about your needs as a seller or a buyer? Does she evade tough questions? The signs of a bad real estate agent are obvious even from the beginning, so don’t ignore the warning signs.
Take a look at how your potential agent treats you during your interview and go with your gut about who you think is the best person you can work with.
Hire A Real Estate Agent To Make Your Life Easier
Buying or selling a home without an agent is possible, but it is risky business to dive into the real estate jungle without a guide. Nevertheless, it’s your decision to make.
A real estate agent can be an invaluable asset whether you’re a home buyer or a seller. Your agent can make the buying or selling experience pleasing or a nightmare, so choose your agent carefully.
If you do decide to hire a real estate, make sure to do your research. Interview several candidates so you can find someone who knows how to help you with what you need.