subject: Working with Real Estate Agents: Some Things to Know [print this page] Working with Real Estate Agents: Some Things to Know
As with most professions, there are distinct roles that derive from an individual's rank within an overall system of authority. There are doctors, and then there are nurses. There professors and there are associate professors. It is always helpful to understand the significance of the title assigned to a professional in any industry. This is no less true when it comes to real estate. Not only will knowing some basic terminology will help you understand the professional relationship in which you are about to engage, it will save you time and hassle by avoiding dealing with the wrong type of professional.
Types of agents
A real estate agent is an individual who is licensed by the state to act on behalf of another individual or individuals. As limited agents, real estate agents are retained in order to assist you in searching for a home. In many states, if you are a seller, then the individual you have retained is your agent and not the sellers, and vice versa if you are a seller.
A basic real estate licensee is a salesperson who has passed the required exam and been issued a license to sell real estate under the license of a real estate broker. The education and exam can be quite challenging for many aspiring agents. In addition to passing the exam are continuing education requirements that must be met according to certain timelines. While a salesperson agent operates under a broker it is not necessarily the case that such an individual is less knowledgeable than a broker. Many real estate licensees, for example, actually prefer to associate with a broker than to set up a brokerage of their own.
In contrast to a salesperson licensee, only a broker may collect a commission from a client. The broker will typically split a portion of this commission with the salesperson licensee according to a pre-negotiated commission split. While the salesperson/agent typically rounds up new clients, arranges showings, drives buyers around and , in general, performs all the necessary work to put a deal together the broker typically provides an overall infrastructure, including office space, supervision and other resources. It is uncommon for most real estate agents/salespersons to be compensated as employees. This is mainly due to the unpredictability of their incomes. Thus, most salespersons act as independent contractors and are therefore responsible for paying their own Social Security taxes and all income taxes. They receive no medical benefits from the broker.
Both real estate brokers and basic licensees/agents have a fiduciary responsibility to act in your best interests in any real estate transaction for which you have retained them. Typically, the rate of commission is not something that is "standardized". Rather, it is something that is mutually agreed upon between client and agent/broker. It is always a good idea to get everything in writing.
Whether you choose to work with a salesperson or broker is entirely up to you. Ultimately, it's a matter of personal comfort. The laws that govern real estate agents vary from state to state. So if you are looking at Indianapolis homes for sale, for example, your agent would possibly be subject to different licensing criteria than, say, and agent who operates in a different area of the country, outside the Midwest.
Whatever the case, working with a good agent is essential to a smooth transaction. When challenges always arise, having a knowledgeable and responsible agent can mean the difference between done deal and one that comes undone.
