When buying property, the most important decision you make may very well be who you hire to represent you — and there are a number of types of real estate professionals you may want to consider. Having an experienced real estate agent on your side can make it easier to find a home you can afford. While you may think that all real estate agents are the same, there are some key differences that you need to be aware of. Knowing what type of real estate professional you need can eliminate some of the stress and headaches involved in buying a home. For help with home buying and all other major financial decisions, consider working with a financial advisor.
Real Estate Agent
In the simplest terms, a real estate agent is someone who’s completed the necessary requirements to become licensed to sell property in their state. Every state requires real estate agents to have a license, which usually involves taking classes and passing a state-administered exam. Real estate agents are employed by a real estate broker and are not allowed to work independently.
Generally, a real estate agent can act on behalf of the buyer, the seller or both. A buyer’s agent represents your interests throughout the home-buying process, from finding the right house to the closing. Typically, their duties include showing you homes, submitting purchase offers, negotiating with the seller, writing up the sales agreement and helping to arrange the closing. Depending on which agency you choose, you may have to sign an agreement stating that the buyer’s agent represents you exclusively.
A seller’s agent, also known as a listing agent, works with individuals who are trying to sell their home. Their job is to represent the seller’s interests and facilitate the sale of the property. A seller’s agent may be responsible for researching comps in your neighborhood to help you decide on an asking price, listing your, conducting open houses and negotiating offers. Typically, most if not all of the contact you have with the seller will be through their listing agent.
In some situations, the buyer’s agent and the seller’s agent are the same person. This is known as dual agency. Typically, an agent has to get consent from both the seller and the buyer before entering into a dual agency role, since it has the potential to a create conflict of interest. Dual agency isn’t allowed in every state so you need to be aware of what the laws are before seeking out this type of agent.
Real Estate Broker
A real estate broker is someone who’s licensed to run their own real estate company. The licensing requirements vary from state to state but generally, you need to have experience as a real estate agent, complete advanced real estate courses and pass a state-administered exam to become a broker. Some states may allow licensed attorneys to obtain a broker’s license without relevant experience as an agent, as long as they can pass the broker’s exam.
Real estate brokers can work independently or employ one or more licensed real estate agents. In some cases, a real estate broker may choose to work for another real estate agency as an associate broker. Associate brokers have the same qualifications as an independent broker or agency owner but they’re not responsible for the other real estate agents they work with. The day-to-day duties of a real estate broker may vary but their primary role is to act as a go-between for buyers, sellers and their respective agents.
Though you may think that “realtor” is just another word for a real estate agent, it’s actually a term with a distinct meaning. The term “REALTOR®” is a registered trademark of the National Association of Realtors. In order for a licensed real estate agent to use this title, they must belong to the NAR and be in good standing. A realtor performs the same functions and duties as any other real estate agent but they’re required to adhere to a specific code of ethics.
The Code of Ethics outlines 17 guidelines realtors must follow and generally holds them to a higher standard of conduct than unaffiliated agents. Keep in mind that both realtors and real estate agents are bound by the same legal standards. The Code of Ethics is designed to impose additional moral rules, rather than legal ones.
The Bottom Line
When you’re shopping around for a real estate professional, there are some questions you can ask to help narrow down your choices. First, you should ask whether or not the agent or broker has their license. Avoid anyone can’t demonstrate a valid license. Next, you should find out how long they’ve been working in real estate, particularly in the market you’re looking to buy or sell in. It’s okay to ask them about their individual track record or request examples of homes they’ve recently closed on.
You should also ask any prospective agent or broker whether they belong to the Local Board of Realtors. Board membership isn’t required but it does give members access to the Multiple Listing Service, which is a nationwide database of homes that are for sale.
Whether you need to use a real estate agent, broker or realtor depends on your personal preference. All three must be licensed and all three perform similar functions, although individual agents, brokers and realtors will vary in terms of their education and experience. Ultimately, finding the right fit means choosing someone you feel comfortable with and whose qualifications match your needs.
Home Buying Tips
If you’re looking to work buying a house into your life, you might want to speak with a financial advisor before you even find a real estate agent. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
Saving is important when you’re looking to buy a house. Setting a budget with SmartAsset’s budget tool can get you on track.
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