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Real Estate Agents: How They Work, What They Do, and How They Get Paid

Last updated 04/07/2023 by

Allan Du

Edited by

Fact checked by

Summary:
Real estate agents are licensed professionals who help buyers and sellers in real estate transactions, typically working with a real estate broker or firm. They are usually paid on commission, which is a percentage of the sale price of a property. The terms “real estate agent,” “real estate broker,” and “realtor” have a few distinct differences. A real estate agent is someone who helps buyers or sellers in a real estate transaction, while a real estate broker is a higher-level professional who has passed an additional licensing exam and can handle more technical parts of the deal.
A real estate agent is a licensed professional who connects buyers and sellers and helps them negotiate deals, real estate agents are compensated by a percentage of the property’s purchase price, making closing deals crucial to their income. In most states in America, agents must be affiliated with a real estate broker who is more experienced and licensed to a higher degree.

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Navigating a real estate transaction with an agent

If you are in the market to buy or sell property, you’ll likely work with a real estate agent, a licensed professional who can help you through the process. Whether you’re dealing with residential or commercial real estate, agents typically focus on either the buyer or the seller.
Sellers employ listing agents, who suggest the property’s value, advise on improvements to increase value, and handle marketing through advertising and networking. On the other hand, buyer agents search for suitable properties within their client’s budgets and preferences, using sales data to make fair offers.
Real estate agents serve as middlemen between the parties, carrying offers and counteroffers back and forth. They remain involved throughout the process, aiding in paperwork, inspections, moving, and facilitating closing.
It’s important to understand whether the agent is representing the buyer, the seller, or both parties, as this can have an impact on the transaction’s outcome. State laws regulate whether agents can represent both sides, also known as “dual agency.” Agents must disclose their loyalties to ensure no conflicts of interest arise.
Dual agency is illegal in eight states. These eight states are Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, and Vermont. When you work with an agent, make sure you understand their role and representation in the transaction.

Real estate agents’ payments

Real estate agents are typically paid a commission based on a percentage of the sale price of a property. However, as consumers are gaining access to more online tools, the commission structure is changing.
Some brokerages offer a lower commission for higher-priced properties or a flat fee for the entire transaction. Others provide a fee-for-service pricing model, where sellers only pay for specific parts of the sales process.

Real estate agent vs. Real estate broker: what’s the difference?

If you’re looking to buy or sell a property, you may come across terms like “real estate agent,” “real estate broker,” and “realtor.” Let’s break down the differences. In general, a real estate agent is someone who is licensed to help you buy or sell a property.
They earn a basic real estate license by completing accredited courses and passing an exam. On the other hand, a real estate broker is a higher-level professional who has additional training and education and has passed a more advanced licensing exam.
They handle the technical aspects of a real estate transaction, and can even handle legal and financial aspects in some states. Brokers can own their own firm or franchise and can hire agents to work under them. However, in most cases, agents work for brokers and split commissions with them.

Real estate agent vs. realtors

A real estate agent is someone who helps buyers or sellers in a real estate transaction. On the other hand, a real estate broker is a higher-level professional who has passed an additional licensing exam and can handle more technical aspects of the deal.
A realtor is a recognized member of the National Association of Realtors (NAR), a trade association that represents real estate professionals. Anyone can be an agent or broker, but only those who belong to NAR and uphold its code of ethics can be realtors.
This means realtors are expected to be experts in their field, with specific duties to clients, customers, the public, and other realtors. As of July 2020, NAR reported that it had nearly 1.4 million members, and about two-thirds of them held real estate agent licenses. So, there you have it: the difference between a real estate agent, a real estate broker, and a realtor.

Key takeaways

  • Real estate agents are licensed professionals who represent buyers or sellers in real estate transactions.
  • Are usually paid on commission.
  • They typically work with a real estate broker or firm that has a higher level of experience and licensure.

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Allan Du

Allan Du is a personal finance writer passionate about helping people take control of their finances. Allan strives to present readers with the right knowledge and tools, so they can make informed decisions about their money and build wealth. When he is not writing about finance, Allan enjoys pursuing his other interests, including powerlifting, kickboxing, and investing. He is an active follower of economic and political trends, always keeping watch on the latest developments that could impact the financial world.

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