The term “real estate agent” informally encompasses just about every type of professional supporting a real estate transaction. But there are significant differences between the different types of real estate agents, including licensing, education levels, experience, fiduciary responsibilities, and expertise. Below, we break down the five different types of residential real estate agents, their roles, and forms of compensation.
The five types of real estate agents in the residential sector
All of the following types of real estate agents are licensed through their state and have completed all of the education and examination requirements. Every type of real estate agent is legally obligated to act in the best interests of their client, putting their needs above their own and avoiding conflicts of interest. This means agents have fiduciary responsibilities and hold a position of trust and confidence when acting on behalf of another party in a real estate transaction.
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The buyer’s agent
This type of real estate agent represents and advocates for buyers’ interests when purchasing a property. They owe a fiduciary responsibility to their client and take on a wide range of duties.
These include:
- Creating a list of potential properties based on buyer preference
- Acting as a local market expert
- Arranging property walkthroughs
- Preparing price evaluation for properties
- Writing offers and assisting with negotiations
- Walking the client through the closing process
- Guiding clients through the due diligence process, arranging property inspections, reviewing disclosures, and addressing any concerns or issues that arise
The buyer’s agent is traditionally compensated through the commission paid on the sale of a property. The seller’s agent generally splits their commission with the buyer’s agent. However, cooperative compensation is changing. While it’s possible that buyer’s agents will still receive commission payment from the seller via the seller’s agent, there are new restrictions around how that process is advertised and negotiated. Buyer’s agents can also charge their clients hourly or flat rates in exchange for their services.
The seller’s agent
Also known as a listing agent, this real estate professional lists, markets, and sells a property while advocating for and owing a fiduciary responsibility to the seller during the real estate transaction.
A seller’s agent:
- Provides an in-depth understanding of local markets and property evaluation to help a client accurately price their property through a comparative market analysis
- Markets a property, arranges for photography and videography
- Optimizes a home for walkthroughs, tours, and open houses
- Lists the home on the MLS and other databases
- Negotiates offers
- Helps sellers navigate offers, contingencies, and terms
- Manages the transaction, from listing agreement to closing
Seller’s agents are paid a commission that’s a percentage of the property’s sale price. Generally, the seller agent will split the commission with the buyer’s agent’s brokerage. The commission is negotiated and outlined in the listing agreement.
The dual agent
Often referred to as “double-ending the deal,” a dual agent serves as a single point of contact for both sides of a transaction throughout the entire process. The dual agent role assumes the responsibilities of both a buyer’s and seller’s agent.
The fiduciary responsibilities of a dual agent are limited because representing both parties simultaneously can create conflicts of interest. This is particularly evident when it comes to offering advocacy and advice. Because dual agency can lead to potential conflicts of interest, it is not legal in some states.
The dual agent:
- Facilitates communication and ensures transparency between the buyer and seller
- Acts as a mediator during the negotiation process
- Provides market information to both parties
- Maintains neutrality and confidentiality, ensuring the fair treatment of both parties
- Prepares documentation and makes sure all legal requirements are met and paperwork is properly executed
- Assists in coordinating the closing process, ensuring that all necessary steps are completed smoothly and efficiently
Dual agents are paid commission, but clients may be able to negotiate a more competitive rate as the dual agent’s offerings are limited.
Dual agent vs. designated agent
While a dual agent represents both sides of the real estate transaction, a designated agent is slightly different. Brokers often appoint a designated agent to represent a client in a transaction where the brokerage is representing both the buyer and seller. It’s a way to avoid conflicts of interest while still allowing the same brokerage to handle both sides of the transaction. In the case of an especially complex transaction, there may be two designated agents, one to assist with each element of the purchase.
The real estate broker
Often providing an oversight function for real estate offices, brokers are highly accredited, management-level professionals who may oversee teams of agents while also acting as agents themselves. States require brokers to obtain a higher level of education and licensing and maintain in-depth knowledge about real estate taxes, laws, and finance.
Unlike agents, brokers may work independently and start their own real estate firms or brokerages, where they hire and manage real estate agents.
Other duties may include:
- Ensuring compliance with state and federal regulations
- Reviewing contracts and documents for every transaction
- Recruiting and hiring new agents
- Training, supporting, and supervising agents
- Providing agents with all necessary paperwork and legal disclosures
- Offering support and advice to agents throughout the closing process
Brokers are compensated through commissions on the sale or purchase of a property within their brokerage. The agent involved in the transaction splits their commission with the broker. Brokers can also charge desk fees to agents in their brokerage to cover administrative or technological expenses.
It’s important to note that some states use different terminology to refer to this role. For example, in North Carolina, Illinois, and Colorado, all real estate agents are referred to as “brokers,” regardless of licensing level. In such cases, these states will often refer to the broker role as a managing broker, designated broker, or broker-in-charge.
The Realtor
Though they’re often used interchangeably, Realtors are not the same thing as agents. A real estate agent is a licensed individual with the knowledge and expertise necessary to help carry out real estate transactions for their clients. A Realtor is a real estate professional who maintains active membership in the National Association of Realtors (NAR). One of the largest trade associations in the country, NAR holds its members to a high standard of ethics in return for increased professional prestige.
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