Are you someone getting ready to make the biggest purchase of your life or to sell your most valuable asset? Will you rely solely on advice from family and friends, or also seek help from a trained professional, who understands your housing market and can guide you through what can be a long and arduous process?
For more than 100 years, real estate agents have worked with home buyers and sellers, both educating and ensuring each gets the best deal they possibly can.
But with technology that makes it easier to find a home on your own and a closer examination of how real estate agents are compensated, do you still need someone to guide you through your real estate journey?
Read on to decide for yourself.
What is a real estate agent?
A real estate agent is a trained, licensed professional who works with buyers, sellers, or both to help them buy or sell a home, land, or a commercial property. While many real estate agents specialize in residential sales and others specialize in commercial real estate, some work with both properties.
Real estate agents must be trained in the specific rules and contracts in their state, pass an exam, and often must fulfill specific continuing education requirements.
What are the different types of real estate agents?
While the terms real estate agent, real estate broker, and Realtor are often used interchangeably, they’re not exactly the same. Here are the differences between the various types of real estate agents:
Real estate broker vs. managing broker: A real estate managing broker is a real estate broker who has additional training and experience and has passed an exam to earn a broker’s license. In many real estate companies, agents work for a broker who provides resources and earns part of the agent’s commission.
Real estate broker vs. Realtor: A Realtor refers to a member of the National Association of Realtors, which means they adhere to the association’s Code of Ethics and have access to its continuing education resources.
Real estate agent vs. Realtist: A Realtist is a member of the National Association of Real Estate Brokers, one of the oldest minority trade associations in the US and follows their Code of Ethics. Many Realtists are also Realtors.
Buyer’s agent vs. Seller’s agent: Some real estate agents work only with buyers, and others work solely with sellers. Most represent buyers in some transactions and sellers in other transactions.
Dual agent: A dual agent works with both the buyer and seller in the same transaction but must disclose the relationship with both sides. In some states (Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming), dual agency is illegal.
Buyer’s agent vs. seller's agent
While many buyers find homes online, a real estate agent provides more services than just identifying potential homes.
Buyer’s agent
For home buyers, a real estate agent can:
Explain the process of buying a home in the context of local market conditions
Discuss your priorities, including “must-have” and “want-to-have” features, your neighborhood, home style, and condition preferences in the context of your budget
Identify potential properties and explain their pros and cons
Real estate agents often have information about future listings
Communicate with the seller’s agent to understand the conditions of the sale
Refer you to mortgage lenders, title companies, attorneys, home inspectors, insurance agents, moving companies, and contractors
Help you determine how much to offer on a house
Represent you during negotiations
Seller’s agent
For sellers, a listing agent can:
Advise you on renovations or staging to improve your home’s appearance to buyers
Provide a market analysis to help you price your home
Market your home to potential buyers with photographs, information and listings on a variety of sites
Communicate with buyers and their agents
Check on buyers to make sure they qualify to buy your home
Negotiate offers
Guide the transaction to completion
How to find the best real estate agent for you?
Whether you’re a buyer or a seller, your relationship with your real estate agent will likely be both professional and personal. It’s important to choose someone you feel comfortable with to share financial information and lifestyle preferences.
To find a real estate agent, ask friends and colleagues for referrals, particularly if they have bought or sold a house recently in your price range or preferred neighborhood. Ask a mortgage lender or other real estate professional for recommendations. Check out the websites of a few referrals and schedule an interview to see if your personalities and communication styles match.
At the interview, ask about their experience with buyers or sellers in similar circumstances to yours and how they plan to work with you in your local market. Ask for referrals to past clients you can call for more information.
How are real estate agents paid?
In most cases, real estate agents are paid a commission based on the sales price of a property. Real estate agents representing the buyer and the seller split commissions that average 5% to 6% in total. Sellers can ask agents if they’ll negotiate the size of the commission. Typically, the payment for each real estate agent is subtracted from the proceeds of the sale at the closing.
However, the recent NAR settlement will likely change a lot about the role of real estate agents — including how their commissions work. If the settlement is approved, you may be able to negotiate commissions. And you can, in Washington state.
Potential impact of real estate commission lawsuits
A series of lawsuits in several states brought by consumers in 2023 and 2024 against the National Association of Realtors and multiple large real estate brokerages, such as HomeServices of America, RE/MAX, Keller Williams Realty, and Anywhere Real Estate, accuses them of anticompetitive actions that artificially inflate the commissions paid to real estate agents. In March 2024, the NAR settled a lawsuit and paid $418 million in damages.
The potential outcome of the settlement and its impact on the real estate industry isn't entirely clear yet, but some observers believe the result could be dramatic changes to how real estate agents get paid.
For example, buyers may be required to pay their own agents out of pocket instead of all commissions paid from the proceeds of the sale at the closing. Buyers and sellers may have more leeway in negotiating commissions with agents, such as paying them hourly rates or flat fees rather than as a percentage of the sales price. Overall, some industry observers think the average commission amount will fall, but it remains to be seen when and whether that occurs.
If you have any real estate related questions, do not hesitate to contact me.
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