Real Estate Agents: Everything You Need To Know
Jeff SeehorschJanuary 08, 2020
A real estate agent's job seems very easy – if you want to buy a house, they help you look for one; if you're going to sell your home, they help you put it on the market.
But what if I told you a real estate agent does more than just help you buy or sell your home, they help you with the much more complicated processes that go into those actions, like negotiation and marketing.
In this post, we will help you understand everything you need to know about a real estate agent and how to find one to help you with your specific home buying or selling needs.
What Is A Real Estate Agent?
A real estate agent is a licensed professional who must successfully complete the required Salesperson Pre-license Course.
This course must be completed at a school approved by their state’s real estate commission.
Once licensed, a real estate agent usually decides to be either a buyer’s agent (an agent that helps clients buy their home) or a seller’s agent (an agent that helps clients sell their home.)
To keep their license active, a real estate agent must maintain annual or biannual continuing education depending on the state that they live in.
Real estate agents also can help with negotiations, showing properties and completing contracts.
They are most often paid by commission, which is a percentage of the property’s purchase price.
However, as we will discuss below, some agents work on-site (on-site agent), and they are paid a salary plus a smaller commission.
What Does A Real Estate Agent Do?
As we discussed earlier, depending on their preference, a real estate agent could be a buyer's agent, a seller's agent, or an on-site agent.
When you decide to work with an agent, their goal is to be the action taker, director, problem-solver, peacemaker, negotiator, transaction handler and so much more.
If something is going to play an essential role in you buying or selling a home, your real estate agent should be your go-to source for information.
Below we discuss (in more detail) precisely what the different real estate agents do:
A buyer's agent is responsible for a ton of things. Here are a few of them:
Understanding A Client's Needs – It is critical that a buyer's agent understand their client's needs and wants when it comes to purchasing a new home. They should understand the area the client wants to live in and take into consideration their whole family structure. Will someone be biking to work? Are there great schools around if their client has kids?
Explaining The Buying Process – Your agent should be able to walk you through the entire process of buying your home. From walk-throughs to inspections, there shouldn't be any confusion as to what your steps will be to purchase your home.
Using Tools Like The MLS To Find Your Home – Real estate agents have access to a system called the Multiple Listing Service that allows them to see homes that are for sale. This is another reason working with an agent is excellent – they have access to all houses for sale in your state.
Meeting With The Seller And Seller's Agents For Information – An experienced real estate agent is going to make sure they get the best deal for their client. They will meet with the seller's agent on your behalf to get more information about the property.
Negotiating Terms And Purchasing Prices – Since most agents know the current market, they will do their best to make sure their client gets the best purchasing price. They’ll also help you come up with specific terms or contingencies to make sure you have a firm contract before you close on your home.
Recommending And Meeting Contractors – You’re going to probably need help finding inspectors and appraisers and insurance agents – pretty much anyone who helps make sure your house is in tip-top condition before you buy. An agent can suggest and help you meet these professionals.
Helping With Closing Paperwork – Finally, your agent should be able to assist you with completing all of your paperwork for closing on your home.
Keep in mind that the paperwork required to buy a home is no joke.
Between offer sheets, purchase agreements, tax forms, disclosures, insurance documents and many other forms, you'll have to understand and sign off on a giant stack of papers before you get the keys to a new home.
One small error or oversight can cause delays, loss of funds, or massive legal headaches.
For a real estate agent, completing these forms is standard procedure.
Your agent can explain each required document, answer any questions, and make sure everything is in order and on schedule. An agent handling the paperwork will save you time and give you peace of mind.
Learning A Client's Needs In Selling– It’s essential that a seller's agent understands and learns their client's needs and wants when it comes to selling their home. They should understand the price range the client should be listing the house for based on comps, as well as the time frame they should expect for the home to sell based on the market.
Explaining The Sales Process– Your agent should be able to walk you through the entire process of selling your home. From staging your home to open houses, there shouldn't be any confusion as to what your steps will be.
Staging Your Home For A Showing – Part of selling your home is about how welcoming it looks for the type of family you expect to purchase it. An experienced seller's agent will know the best way to stage your home to help it sell faster.
Setting Up The Open House/Showings– Open houses could be crucial in selling your home, and an agent will know how to schedule them around your life as well as the best times to hold them. This is another reason why working with an agent is significant for someone selling a home.
Using Tools Like The MLS To List Your Home– Real estate agents have access to a system called MLS that allows them to list your home for sale.
Meeting With Buyers And Buyer's Agents For Information – An experienced real estate agent is going to make sure that they get the best deal for their client. They will meet with the buyer's agent on your behalf to get more information about the buyer.
Negotiating Terms And Purchasing Prices – Since most agents know the current market, they will do their best to make sure their client gets the best selling price. They will also help you understand the specific buyer's contingencies that are standard when selling a home.
Helping With The Closing Process – Lastly, your agent should be able to assist you with the paperwork for finishing up the closing process.
Real Estate Agent Vs. Real Estate Broker
It’s easy to assume that a real estate agent, broker, and REALTOR® are one and the same; however, they are entirely different.
This difference becomes especially apparent when it comes to their qualifications, requirements to do business, and how long they have been in the industry.
Real Estate Agents – Are licensed to handle real estate transactions and have to work under a broker or brokerage to complete transactions. Real estate agents, on average, make around $34,000 per year on a national average.
Real Estate Brokers – They are more experienced and have to take and pass an additional state test before they can become a broker. A broker can work as an independent agent or hire other agents to work under them. Brokers can make up to $100,000 per year on a national average.
A broker will also handle more technical aspects of real estate transactions and will be the point of contact for a real estate agent that might need help.
REALTOR® – A REALTOR® is an agent who is part of the National Association Of REALTORS® and can be a broker, an agent, an appraiser, or a sales agent. A REALTOR® is bound by a code of ethics and must be experts in their fields.
A real estate agent who has the “REALTOR®” designation will make around $43,000 annually on a national average.
How Much Do Real Estate Agents Make On A Sale?
About 6% of a home’s sale price goes towards commissions for real estate agents.
This will usually be split 50/50 between a buyer’s agent and a seller’s agent.
Once this percentage is split between the two agents, they will need to split a portion of their commission with their broker.
Let’s say you are a buyer, and your agent helps to find a new home that will cost $300,000.
The way it would work is that 6% of your home’s price, which is $18,000, would be split between your agent (buyer’s agent) and the sales agent who helped sell the house (seller’s agent).
Your agent would get a check cut to them or their brokerage for $9,000.
While this seems like a great deal, it doesn’t stop there.
Your agent will still have fees that go to the broker, which is usually 50% or more.
Their actual take-home pay for that sale would be $4,500, which is closer to about 1.5% of the actual cost of your home.
So there you have it, your average real estate agent is going to make about 1.5% commission based on the cost of your home.
On-Site Agent Commissions
An on-site agent is usually going to make a much smaller percentage of the commission and an hourly salary because they are considered sales reps.
How To Find A Real Estate Agent
All real estate agents are not created equal. As in any profession, there are good ones and bad ones, and many agents have specialties that may or may not be suited to reaching your goals.
For instance, some agents specialize only in relocations, they might not be the best for you if you don’t plan to move out of your state.
Choosing the right agent goes a long way toward having a great home buying experience, so it’s wise to invest a little time upfront and find the one for you.
Figure Out What You Want From A Home
Are you house-hunting in a couple of neighborhoods or considering relocating to a new city or state?
Do you want a two-story home with a basement or a condo with low homeowners association fees and plenty of parking? Knowing the home you want will help you identify the best agent for you.
Most agents specialize in buying certain types of homes in specific areas.
With that being said, the more detailed you can get with your goals, the more likely you’ll be able to find a real estate agent who can reach those goals.
You should also have an idea of the personality traits you would like in your real estate agent.
This may seem odd, but you will be spending a substantial amount of time with them, so you want to make sure it’s someone that will make your buying or selling process fun and as easy as possible.
Research Local Agents
When it’s time to buy a home, most of us find our real estate agent through recommendations from family or friends.
However, that’s probably not always the best place to start. You should look for a trusted real estate resource that prescreens the top agents they work with and connects homebuyers with the best fit.
Once you do that, you can compare the agent your family recommended with the agents on your list and go from there.
Ask Agents The Right Questions
Your conversations with agents will help you decide who to hire. It’s important to hear them explain how they can help you.
Start with the questions below, and don’t be afraid to ask as many as needed to get a good sense of what it’d be like to work with them.
● Which neighborhoods do you primarily work in? You’ll want to make sure the agent has expertise in your desired area. If they don’t, it will probably take them longer to get you the information you need.
● How many buyers did you represent locally in the last year? This will help you gauge the agent’s relevant experience. Ideally, an agent will have at least five – 10 closings under their belt in the previous 12 months. This will let you know that an agent is up on the current market and successfully helping people buy homes.
● What are your hours? An agent must be available on your schedule. Otherwise, there might be a lot of phone tag and waiting for answers.
● What advice can you offer that’s unique to my situation? After you explain what your goals are, this question will help reveal if an agent is qualified. You can also learn a lot about how an agent communicates and get a sense of the kind of expertise they’ll bring to the table.
Don’t Be Afraid To Find A Different Agent
Most real estate agents will ask that you sign a broker’s agreement before working with you. The term is usually negotiable, with most agents asking for a 90-day commitment.
However, this should not mean that you are locked into the arrangement. In fact, you should ask for a guarantee before signing an agreement that if either side decides the relationship isn’t working out, you’ll be released from the contract.
The fact is, sometimes, personalities clash or circumstances change.
Maybe your agent is unresponsive to requests, or the market changes, and the agent can’t find homes in your price range.
If things aren’t going as expected, try being honest about why you feel that way first. See if the agent can perform up to your expectations or make adjustments to smooth things out.
If that doesn’t work, you shouldn’t feel obligated to gut it out. Ask your agent for a Termination of Buyer Agency form, which will cancel oral or written agent agreements.
And don’t let one bad experience deter you. Use your expertise to find someone who’s a better fit, and you can still take advantage of all the free benefits an agent has to offer.
Should You Work With A Real Estate Agent?
Going through the home buying or selling process without an agent is equivalent to using WebMD to both diagnose and treat yourself; it’s probably best to actually consult a doctor.
The best part about having an agent is that it doesn’t cost you anything up-front; you get to use all of the services and get the best deal, and they will be paid at closing.