When you’re looking to sell or buy a home, you’ll see a range of titles attached to professionals who can help you navigate the process: Agent, Associate, Broker, Realtor. While all of these people are able to offer advice, it’s important to understand what it means when you see “estate agent” next to someone’s name.
What is a real estate agent? A definition
A real estate agent with a capital R – also often spelled with all capital letters as REALTOR® – is a licensed real estate professional who is also a member of the National Association of Realtors (NAR). The word is a registered trademark, hence the capital letter; you will also often see a trademark symbol next to it. It is certainly possible to be a fully licensed agent or broker who is not a member, but they are not called real estate agents.
How many real estate agents are there?
How do real estate agents make money?
Realtors facilitate real estate transactions for clients buying and selling homes. They work on a commission model, which means they earn a percentage of what a property sells for. Historically, these commissions were typically around 6%, with 3% to the buyer’s agent and 3% to the seller’s agent, and were covered by the seller. However, commissions are often negotiable, and they have dwindled in the pandemic-fueled housing market.
Realtors can also pay a portion of their earnings to their brokerage, along with a range of other expenses. These may include marketing, membership dues to various organizations, access to local MLS, and other business costs.
What is the difference between a real estate agent and a real estate agent?
A real estate agent is a real estate agent, but the titles are not identical. All real estate agents are licensed to help buy and sell properties through training courses and passing a state exam. A real estate agent has done all of this and is, on top of that, a member of the National Association of Realtors. Joining the organization indicates that they have successfully completed the association’s course and have agreed to follow its bylaws and code of ethics, among other factors.
What is the real estate agent’s code of ethics?
Although the job responsibilities of real estate agents may differ, they all agree to the same code of ethics. This is a lengthy document that binds anyone with the realtor designation to a high level of professionalism and integrity. It also aims to protect consumers. The principles of the code include:
- Never mislead a landlord about the market value of a property
- Never lie about the potential savings and benefits of working with them
- Submit offers and counter-offers as soon as possible
- Fully disclose compensation amounts
- Provide equal professional services to clients regardless of race, color, religion, sex, disability, marital status, national origin, sexual orientation or gender identity
- Use honest and truthful advertising
- Never make false or misleading statements about other real estate professionals, their business or their business practices
Do you need a real estate agent?
Buyers and sellers are not required to work with a real estate agent, or any agent. Here are some common alternatives.
sell it yourself
Some owners take the FSBO – For Sale By Owner route. According to the most recent data from NAR, 7% of homes are owner-sold. While doing it yourself eliminates commissions, it also tends to eliminate some of the profit potential: FSBO homes tend to sell for less than traditionally listed homes. In 2020, the typical FSBO home sold for around $260,000, while those sold with an agent fetched $318,000, according to the association.
Use an iBuyer
Instead of dealing with traditional open houses and tours, some owners sell directly to iBuyers such as Opendoor and Redfin Now, which use algorithms to give you an instant deal. It’s convenient, but it also comes at a cost. Since iBuyers usually aim to turn around and flip your home for another sale, they will likely offer you a lower price in order to increase their profits.
Shop for yourself
You can also buy a house without a real estate agent. But if you’re considering this option, be prepared for a lot of work. You’ll have to do all the negotiating yourself, and there’s a mountain of paperwork, including complex disclosures and legal contracts. It’s a bit overwhelming, and it’s nice to have an agent who understands all of this and works on your behalf.
Help finding a real estate agent
Finding a real estate agent is not difficult. After all, you probably see billboards and sales boards with names and contact information all the time. However, you shouldn’t hire just anyone to help you make one of the most important financial decisions of your life. You will want find the best real estate agent for your individual needs.
It’s wise to start by asking friends, family, and colleagues for recommendations. However, don’t just take their word for it. Be sure to interview a few different candidates and ask the real estate agent these essential questions to get an idea of how they will approach your home hunting or selling needs. The more you click with your real estate agent, the better your transaction experience will be.