Buying or selling real estate is a complex and lengthy process. It is therefore wise to enlist the help of a real estate agent. A real estate agent can provide many useful services and work with you in different ways.
Very few consumers are familiar with the duties and responsibilities of their real estate agent or broker. As a result, a number of problems can arise during the various steps of a real estate transaction when consumers are not aware of their rights.
This article addresses the various types of working relationships that may be available to you. It should help you decide which relationship you want to have with a real estate agent. It will also give you useful information about the various services real estate agents can provide buyers and sellers, and it will help explain how real estate agents are paid.
In some real estate transactions, the agent works for the seller. In others, the seller and buyer may each have their own agent. And sometimes the same agent works for both the buyer and the seller. It is important for you to know whether an agent is working for you as your agent or simply working with you while acting as an agent of the other party.
A listing agent is also known as a seller's agent because they represent the seller. A listing agent can be a real estate broker or a real estate agent. These types of agents owe a fiduciary responsibility to the seller under a listing agreement and must protect that interest.
The seller's agent helps determine the price of the home, suggests how to market the home, schedules advertising and open houses, shows the home to prospective buyers, and otherwise facilitates the sale.
Your property will be listed with the agent's real estate brokerage. You will be asked to sign a "listing agreement" authorizing the brokerage and its agent to represent you in your dealings with buyers as your seller's agent. Be sure to read and understand the listing agreement before you sign it.
For representing you and helping you sell your property, you will pay the listing firm a sales commission or fee. The listing agreement must state the amount or method for determining the commission or fee and whether you will allow the firm to share its commission with agents representing the buyer.
A buyer's agent is known as the "showing agent" and works with buyers to find a suitable property, contacts the listing agents, negotiates the best possible price and terms for the buyers, monitors the transaction, and sometimes help to obtain financing.
In most cases, the seller pays the sales commission that is shared by the two agents. However sometimes you may be required to pay your buyer's agent out of your own pocket if the listing agent refuses to pay. Whatever the case, be sure your compensation arrangement with your buyer's agent is spelled out in a buyer agency agreement before you make an offer to purchase property and that you carefully read and understand the compensation provision.
Buyer's agents may or may not require a buyer to sign a buyer's broker agreement, depending on local custom.
Dual agency occurs when a real estate agent is representing both buyer and seller in the same transaction. Dual agency can happen even if the there are two agents involved—a listing agent and a buyer's agent—if both agents work for the same broker. That's because it is the real estate broker who creates the agency.
It may be difficult for a dual agent to advance the interests of both the buyer and seller. Nevertheless, a dual agent must treat buyers and sellers fairly and equally. Although the dual agent owes them the same duties, buyers and sellers can prohibit dual agents from divulging certain confidential information about them to the other party.
Some firms also offer a form of dual agency called "designated agency" where one agent in the firm represents the seller and another agent represents the buyer. This option (when available) may allow each "designated agent" to more fully represent each party.
If you choose the "dual agency" option, remember that since a dual agent's loyalty is divided between parties with competing interests, it is especially important that you have a clear understanding of what your relationship is with the dual agent and what the agent will be doing for you in the transaction,