Buying a Home

A good real estate agent makes the home buying or selling process much more efficient and saves you an incredible amount of work.  Listed below are some frequently asked questions about dealing with real estate agents and brokers.

What is a real estate agent?
Real estate agents are licensed by their state to assist clients in buying and selling property. Agents are required to take courses in real estate, including coursework in real estate law, real estate financing, and listing. After completing their studies, prospective agents must pass both a national and state exam before they can work for a broker. A real estate agent must "affiliate" with a broker once they pass the exam -- they cannot practice real estate on their own.

What is a broker?
A broker is a person licensed to own and operate a real estate firm. Brokers must undergo exhaustive classroom training and pass a stringent examination before they can operate their own firm. The main broker at a firm is called the "Principal Broker" and is responsible for the actions of his or her agents. "Associate Brokers" are real estate agents who have met all of the requirements of a principal broker but are not operating their own firm.

What is a REALTOR®?
A REALTOR®, pronounced "reel-tor" is a licensed real estate agent who is also a member of the National Association of REALTORS® (NAR) trade association.   REALTORS® have sworn to follow a set of prescribed rules and regulations, the most important of which includes standards of conduct and ethics in their dealing with the public.

What does a real estate agent do?
Real estate agents advise and assist you through the entire buying process, from deciding what type of home you want and finding it to tracking the progress of your loan application. Once you have found a home, the agent helps you to prepare an offer and negotiate with the seller.

The agent then follows-up on all the necessary paperwork, including the mortgage application, setting up a home inspection, and coordinating the work of the attorney, title company and any other people necessary to complete the deal.

An agent does not arrange a mortgage or other financial assistance. However, agents can recommend mortgage companies, attorneys, inspectors and other professionals for you to interview.

If you are selling your home through an agent, the agent will provide you with a comparative market analysis (CMA) showing recently sold homes in your area that will help you set a price for your home. They'll also explain their marketing plan of advertising, direct mail campaigns, open houses, promotion of your home to other agents, and other steps they plan to take to ensure a quick sale of your home. They'll also take care of the dozens of critical details that need to be addressed after an offer to purchase your home has been made. Homeowners who elect to sell their home on their own often overlook the fact that a large part of the work is not just marketing and selling the home, but making sure that the sale actually gets to the settlement table.

How is a real estate agent paid?
Most often, real estate agents receive a commission based on the purchase price of the home. This commission varies according to the agent. The seller usually pays an agent’s commission, but this can also be decided as a part of the negotiations.

What is Buyer Broker vs. Seller Agent?
When working with a real estate agent, you need to understand their "agency" relation to you. You want an agent that best represents your interest.

Background. Buyer agency came about in the 1980s as a solution to rising confusion over whom agents work for. Under the conventional system, an agent could work for both a buyer and a seller, which could lead to a conflict of interest. The agent’s obligation was to the person paying their commission, regardless of who contacted the agent first. This meant an agent was not necessarily representing the buyer’s interest in obtaining as low a home price as possible, as well as providing a full selection of properties to choose from.

Buyer Agency. A Buyer's Broker represents the home buyer. They can provide the buyer with information about a home, area, prices, etc. that a seller's agent, by law, cannot and they can also inform the buyer of the bad as well as the good about a property. Since the Buyer's Broker is working for the buyer, he or she does not try to sell a property, but helps in buying one. This makes the home buying process less stressful and intimidating.

When the buyer calls a real estate agent or company off a sign in the yard of a home or an advertisement, or an open house or work with an agent whose company has the property listed, that agent and that company are working for the seller

Seller Agency. A Seller's (or Traditional) Agent represents the seller. They are bound by law to get the seller the best possible price and terms and not divulge any information to the buyer that would be contrary to the seller's best interest. This agent cannot legally negotiate on the buyer's behalf. It is also the duty of the seller's agent to tell the seller any information that you, the buyer, entrust to them. This includes any information that would weaken the buyer's bargaining position.

What is Dual Agency?
As a seller, you should find out about your agency’s policy on "Dual Agency". Dual agency is when an agent in the selling agent’s office brings in a contract on the home. Because both agents are working for the same broker, they cannot provide single agency representation. If the broker does not have a policy, you may want to reevaluate the agency you are using.