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If you’re planning to buy or sell a home — or any sort of building, for that matter — you’ll likely wind up working with a real estate agent. Real estate agents are licensed professionals who get compensated for representing buyers and sellers in property transactions.
For sellers, they help with listing a home, setting a price and preparing it for sale, scheduling open houses and viewings, and digging up offers. For buyers, they help find properties: They scour and send them listings, tour homes with them, assist them with making an offer and filling out applications.
On both sides of the equation, real estate agents can help with negotiations and serve as a go-between for the buyer and seller while a property is in contract and through the final closing.
What is a real estate agent?
The real estate agent profession dates back to more than a century: In the U.S., real estate agents began showing homes for lease or purchase around 1900. In 2022, the Association of Real Estate License Law Officials database contains more than 4 million licensee records (that is, people holding active real estate licenses) in its database. Membership in the National Association of Realtors, a real estate industry organization, numbers 1.5 million (most Realtors are agents, but not all agents are Realtors — more on that later).
Throughout the 21st century, the real estate field has expanded and contracted with the real estate market itself, but grown overall (from 1.35 million Realtors in 2006). The U.S. Bureau of Labor Statistics (BLS) estimates an expected growth of 4 percent in the profession between 2020 and 2030.
Licensing and requirements
Real estate agents typically need to have a license to work in a jurisdiction. The licensure requirements can vary from state to state, but usually mandate that candidates to be at least 18 years old, complete a number of hours of real estate education courses (plus a pre-licensing course from an accredited real estate licensing school) and pass a licensing exam, according to the BLS.
Types of real estate agents
There are multiple types of real estate agents. Each serves a different purpose or has different levels of education and certification.
Listing and seller’s agents work for the person who owns a property and wants to sell it. These agents are responsible for:
- Listing a property for sale
- Helping prepare the home for viewings
- Helping price the home
- Advertising the home
- Scheduling open houses and showings
- Representing the sellers in negotiations
- Preparing purchase agreement
- Assisting with closing
A buyer’s agent represents the interest of a person or group of people who want to buy a property. Their responsibilities include:
- Helping buyers find and visit properties they’re interested in
- Performing comparable analysis to determine a fair value for the home
- Recommending offer, negotiating with the seller’s agent
- Making tweaks to purchase agreement
- Recommending professionals like real estate attorneys or home inspectors
- Dealing with unexpected setbacks such as inspection or financing issues
- Assisting with closing
A dual agent simultaneously represents both the seller and the buyer in a real estate transaction. It’s not very common, and some states actually prohibit it, due to conflict of interest issues caused by having both sides represented by the same agent.
However, dual agents are appealing to some people because there are fewer parties involved, and a dual agent may charge slightly lower sales commissions.
Accredited agents: Realtors, brokers, speciality certifications
Some real estate agents choose to get additional certifications or accreditations to further their education and provide better services to their customers.
For example, Realtor is a special designation used by real estate agents who belong to the National Association of Realtors. Joining the organization indicates that they have passed the association’s course and have agreed to follow its bylaws and code of ethics, among other factors.
Broker is an additional certification, one awarded by the state. It indicates a higher level of experience and education, and the passing of an additional exam. Being a real estate broker gives an agent the right to own their own company, aka an agency or brokerage, and to actually conclude real estate transactions. Real estate agents typically must work for a brokerage (unless they are brokers themselves).
A designated agent is a real estate professional assigned by a supervising broker to serve a client while that same supervising broker has another licensed professional assigned to represent the other client in the transaction.
How does a real estate agent differ for buyers and sellers?
Real estate agents serve a different purpose for both buyers and sellers. While in both cases, agents serve as a go-between with the other party and can assist with negotiations, they have different tasks.
For example, a buyer’s agent will help find homes to tour and come up with a price when the buyer decides they want to make an offer. Once the home’s in contract, they might help finding real estate attorneys, home inspectors and other professionals.
On the other hand, a seller’s agent (aka a listing agent) will help the seller price and advertise their home, get it ready for showings, and schedule open houses.
How are real estate agents compensated?
Real estate agents are compensated on a commission basis. That means that they only get paid when they close a deal.
Typically, the seller of a home pays the commission, which is then split between the buyer’s agent and the seller’s agent. Typical commissions are about 5 or 6 So, if a home sells for $300,000, the seller can expect to pay $15,000 to $18,000 in commissions.
Usually, the broker that employs each agent will receive the commission, take a cut, then give the remainder to the agent.
Do you need a real estate agent?
There is no legal requirement that you work with an agent to buy or sell a home. And in the Internet Age, many people are feeling they can handle a lot of the pro’s services — from perusing listings to drawing up contracts — on their own.
If you’re the homeowner, the process is called FSBO (for sale by owner). There are a variety of ways to do it. Sellers can consider working with an iBuyer, an online platform that relies on big data and statistical tools, such as home valuation models, to make a quick offer to buy your home. Opendoor and Offerpad are two examples of these apps.
There are also physical companies located around the U.S. that try to buy homes quickly and cheaply to renovate and resell. These businesses usually don’t use an agent.
Buyers can also skip using an agent if they want — especially if they plan to pay for the home all in cash.
Finding the best real estate agent
When buying or selling your home, the better your agent, the better it is for you. Don’t be afraid to interview a potential agent and ask questions before hiring them.
Another good way to find a good agent is through a referral. If you know someone who recently bought or sold a home, ask how their experience with their agent was. If their agent was skilled and easy to work with, you might try to hire them.
Before you settle on an agent, it’s also a good idea to do some background research. Look for online reviews to see if there are any red flags. You could also consider checking your state’s real estate licensing website to make sure their license is valid and up to date, and there are no records of disciplinary action.
Before you hire a real estate agent, consider these common questions.