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If you’re ready to buy properties to add to your investment portfolio, you might wonder, “What is a real estate agent, and do I need one?”
Working with a real estate agent has many benefits, whether you buy or sell properties. Here’s everything you must know.
What Is a Real Estate Agent?
A real estate agent is a licensed professional who can facilitate the real estate transaction process. Most agents work on commission and can represent buyers or sellers; however, some work as dual agents, representing both parties.
A real estate agent represents the chosen party in the legal negotiations and ensures all necessary pieces work together to complete the process. Real estate agents typically have to share their commissions with the brokerage they work under.
The Role of a Real Estate Agent
A real estate agent does a lot for buyers and sellers, including the following:
Provides extensive knowledge of the area
For buyers, real estate agents help them understand the area, school district ratings, local amenities, and details about specific neighborhoods. They are the eyes and ears of the area and provide their expertise to buyers to help them choose the right property.
Schedules showings
Real estate agents schedule showings for buyers and sellers. This takes the burden off either party, making phone calls and coordinating schedules. The real estate agent works around the buyer’s or seller’s schedule and informs both parties of the scheduled showing.
Facilitates negotiations
Negotiation is the hard part of the process, and fortunately, the real estate agent acts as the buffer between buyers and sellers.
Depending on whom the agent is working for, the agent tries to get the best deal (either the lowest price for buyers or the highest for sellers). The real estate agent also facilitates other negotiations, such as repairs or credits.
Provides referrals
Real estate agents often work closely with other real estate professionals and can help you get the services you need. They may work with mortgage professionals, title companies, appraisers, or insurance agents.
Helps complete paperwork
Real estate agents also assist buyers and sellers in sifting through the piles of required paperwork. While some documents require the attention of the buyer or seller, the real estate agent helps makes it as stress-free as possible and ensures all deadlines are met to avoid any delays.
Types of Real Estate Agents
Real estate agents can work for one side of the real estate transaction or both if they wish. Here’s how it works.
Buyer’s agent
A buyer’s agent strictly represents buyers. The agent searches the MLS listings and keeps their eyes and ears open for new homes going on the market. They set up appointments for buyers to view the properties if they like what the agent shows them and handles the negotiations for the buyer.
The buyer’s agent accompanies the buyers to the properties and helps them determine if it’s a good fit based on what they want and can afford.
A real estate agent can help buyers locate mortgage financing, determine the right offer, and complete all the necessary paperwork to purchase the home.
Seller’s agent
A seller’s agent or listing agent represents the sellers. The agent helps the sellers stage the house, recommending any necessary repairs or changes to make the home the most attractive for the area’s typical buyers.
A seller’s agent also provides sellers with a comparative analysis so they can determine the right asking price based on recent sales in the area.
Seller’s agents coordinate with buyer’s agents for potential buyers to view the home, but typically aren’t present during the showing, as that’s the buyer’s agent’s job.
Dual agent
A dual agent represents buyers and sellers in the same transaction. This isn’t legal in all states. Currently, it is illegal in the following eight states:
- Alaska
- Colorado
- Florida
- Kansas
- Maryland
- Texas
- Vermont
- Wyoming
Sometimes it’s beneficial to work with a dual agent, especially if it’s your agent who listed a property you’re interested in purchasing. As long as you don’t feel the conflict of interest is too great and both parties receive ample representation, it can make the process go quicker, with more seamless communication between parties.
Benefits of Working With a Real Estate Agent
Some people assume they can work without a real estate agent. While it’s possible, there are many benefits to doing so, no matter what type of real estate transaction you’re conducting.
Buyer’s benefits
Buyers don’t pay real estate agent commissions, which is the largest benefit for them. You get to use the services and not pay anything. The seller is responsible for the commission. While the fee is likely wrapped into the home’s sales price, you aren’t paying yourself.
Other benefits you may realize as a buyer include:
- Access to more listings faster, since the agent has access to the MLS
- Support during negotiations, knowing how much to bid and when to counteroffer
- Guidance through the paperwork and other legalities of buying a house
- Learn in-depth information about the area
- Real estate agents know the market and the best time to place an offer.
Seller’s benefits
Sellers pay the real estate agent’s commission but get many benefits from paying this commission. The listing agent shares commissions with the buyer’s agent, which is why the buyer doesn’t pay anything.
The benefits of sellers using a real estate agent include:
- More opportunities to advertise the home for sale to a larger audience
- Help with negotiations, ensuring sellers get top dollar for the home
- Help with paperwork and the legalities that pop up when selling a home
- Real estate agents know the market and the best time to list your property for sale.
- A lower risk of dealing with unqualified buyers or buyers who aren’t serious about buying the home.
Investor’s benefits
Investors also benefit from using a real estate agent. Even though you aren’t buying a home to live in yourself, there are benefits you enjoy, including:
- Find the hottest deals to help you profit off fix and flips or rental properties.
- Learn about properties that hit the market or are about to so you can jump on them early.
- Someone to handle the legwork and paperwork involved in buying and selling properties.
- An expert to inform you of market changes and when you should make a move, whether buying or selling.
Real Estate Agent FAQs
What is the difference between a real estate agent and a broker?
A real estate agent is a single person who can represent buyers or sellers. They have a real estate license and can facilitate the process. A real estate broker also has a real estate license, but they also have a broker license, which requires an additional exam.
Brokers can hire agents to work under them, handle escrow money transfers, and deal with legal disputes. Real estate agents share commissions with their brokers.
What is the difference between a real estate agent and Realtor®?
Real estate agents and Realtors® are both licensed in real estate.
The difference is that Realtors joined the National Association of Realtors®, a trade association that represents Realtors across the country. All Realtors pledge to follow a strict code of ethics, and they get special perks to help boost their careers.
How do real estate agents get paid?
Sellers pay real estate agents. The commission goes to the seller’s agent but is split between buyer and seller professionals, starting with the broker, if there is one.
The typical real estate commission is 6% of the sales price. From there, the commission is split between the seller’s and buyer’s brokerages, who then split it with their agent. This is usually a 50/50 or 60/40 split, but each brokerage works differently.
Final Thoughts
Now that you know the answer to what is a real estate agent, you can see that it’s an important decision to include one in your real estate transactions. Buyers and sellers benefit from their expertise and don’t have to worry about the legalities and extensive paperwork real estate transactions include.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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