What is a Real Estate Agent?

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Definition:

A real estate agent is a licensed professional who manages real estate transactions and can help people sell, buy, or rent properties.

🤔 Understanding real estate agent

Real estate agents are licensed professionals who help people buy, sell, or rent properties. These transactions can be complex and often involve multiple steps, which is why many people use an agent to help them through the process. An agent selling a house may put together a property listing and set up open houses so potential buyers can see the property. Or an agent assisting buyers can help find mortgage lenders, arrange inspections, and negotiate a selling price. Agents must typically complete coursework and sit for a licensing exam.

Example

Suppose you’ve decided to buy your first home. Searching online, you find several attractive houses. One of the listings invites you to contact Sherry, a real estate agent, so you send her a message. Sherry offers to set up an appointment at the house.

You visit the property and find it has everything you want. It’s a bit out of your price range, but Sherry advises you to make an offer. You do, and the home owner accepts! Sherry then helps you choose a mortgage lender, arrange inspections, and close the deal.

Takeaway

A real estate agent is kind of like a nature guide…

Except rather than guiding you through safaris and jungles, a real estate agent helps you navigate the complexities of real estate transactions. An agent can advise buyers, sellers, and renters to help them successfully execute a variety of agreements involving real estate.

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What is a real estate agent?

A real estate agent is a person who helps clients sell, buy, or rent properties, including homes and offices. He or she may also go by the title “real estate sales agent” or “real estate salesperson.” An agent typically works for a licensed real estate broker, who has additional training and experience.

Buying, selling, and renting a property is a complex process. A single transaction may involve a lot of paperwork, and there are often many steps between listing a property for sale and closing a deal. Considerable sums of money can exchange hands, so the stakes are high. Many people rely on real estate agents to manage the process and to provide advice.

Real estate agents must typically take and pass a licensing exam, which varies from state-to-state. Real estate agents often focus on specific geographic areas, allowing them to learn the market. They may also specialize in certain types of properties, such as luxury homes or commercial office space.

What does a real estate agent do?

Real estate agents often have dynamic, challenging careers. Many agents work irregular hours and must accommodate their clients’ schedules. They may spend time in an office and also on-site at properties. A real estate agent may manage many of the steps in a real estate transaction but often also works with other agents and experts.

Before putting a property on the market, a real estate agent must know how much it’s worth. Agents will generally complete a Competitive Market Analysis (CMA) by examining recently sold comparable properties or “comps.” Agents look for homes sold in comparable neighborhoods that are roughly the same size and offer similar amenities (such as a pool or patio).

Once the property is on the market, the agent must attract prospective buyers. An agent may list a property on a Multi Listing Service (MLS) — A system that allows agents to share a property’s details with other agents. This makes it easier for agents to cooperate. When one salesperson introduces a buyer to another agent, she or he will typically earn part of the commission if the sale closes. There are roughly 800 MLSs in the United States, and many of them are regional.

Agents may prepare a property’s MLS listing by writing descriptions and highlighting sales points (such as location). A sales agent may take pictures of the property or hire a professional photographer. Some websites, like Realtor.com, gather MLS listings that the public can search. Real estate agents can leverage these sites to attract prospective buyers.

Presentation is essential for selling properties, including homes and commercial facilities. Agents can help owners present their properties. This could mean recommending a cleaning service or helping sellers declutter. Professional photos and staging may make the home look more attractive.

Real estate agents can also hold open houses. Prospective buyers can visit the property, and the agent will give a tour. The agent might go through a sales pitch, pointing out amenities and explaining why the house is a good deal.

Many real estate agents help buyers. Since many agents already know the local market, they can help buyers narrow down their choices and find properties that meet their needs. The purchasing process is complex, but an agent can often guide a buyer through the entire process.

A real estate agent can typically assist buyers with negotiating prices, recommend home inspectors, suggest a mortgage lender, and more. For example, many buyers have the property inspected to ensure there are no major problems, such as mold.

If you’re renting out a property, you could use a real estate agent to show the property to prospective renters. He or she can also put up listings and handle inquiries. If you’d prefer to be a hands-off landlord, agents may also help you find a property management company.

Likewise, an agent can sometimes assist renters looking for a property. People looking to rent in areas with large numbers of renters, such as San Francisco, are more likely to use real estate agents than people in less crowded markets.

How do you become a real estate agent?

To become a real estate agent, you typically have to pass a licensing exam. Before doing so, you must meet basic eligibility requirements, which vary from state-to-state. Many states, including Georgia and Florida, require individuals to first complete high school or an equivalent (e.g. a GED). Other states, such as California and New York, don’t require a diploma or equivalent. In some states, such as Ohio and Louisiana, brokers have to sponsor aspiring sales agents. Most states also set a minimum age (e.g. 18 or 19).

Check with your local state authority to determine specific eligibility requirements. Your state may have a Department of Real Estate, Real Estate Commission, or other established authority. Sometimes, the Department of Commerce or a similar agency may manage licensing.

Most states also require you to complete coursework before sitting for the exam with specific courses varying by state. In California, you must take three college-level courses: Real Estate Principles, Real Estate Practice, and an approved elective. Prospective agents in Ohio must complete coursework totaling 120 hours covering real estate principles and practices, law, appraisal, and finance. In Virginia, courses take 60 hours (minimum) to finish.

Once you complete the coursework, you can typically sit for the exam. The number of questions you must answer and time limits vary by state.

How much can you make as a real estate agent?

Real estate brokers and sales agents earn a median pay of $48,930 per year according to the U.S. Bureau of Labor Statistics (BLS). Both earn most of their income through commissions — meaning they collect a percentage of the final selling price (the amount agreed between the buyer and seller).

Sellers typically pay a 6% commission to sell their home but may negotiate a lower fee. The buyer’s agent and seller’s agent will generally divide the fee. Agents may agree to split commissions 50-50 or arrange something different.

A real estate agent must work under a real estate broker. The agent and broker usually split the commission based on their specific agreement. Some agents receive a base salary but most earn only commission.

Since agents earn much of their pay through commission, earnings vary considerably between top-performing and less-successful agents. The BLS reports that the lowest 10% of real estate agents earned less than $24,930, while the top 10% earned $111,800 or more.

Can a real estate agent sell both commercial and residential real estate?

Yes, a real estate agent can generally work with both commercial and residential properties, but rules and regulations vary from state-to-state. However, agents often specialize in specific property types as both the properties and the clients’ needs usually differ from sector to sector.

Some organizations offer specialized certifications and training. For instance, real estate agents can obtain accreditation for office space and industrial facilities or land consulting. An agricultural company looking for farmland may prefer working with an Accredited Land Consultant. Or a tech firm might work with an agent that specializes in office spaces.

What is the difference between a real estate agent and a broker?

Real estate agents are licensed to assist people in buying, selling, or renting properties, but must work underneath a licensed real estate broker. Brokers take additional coursework and examinations. Many states also require them to work as agents for a minimum number of years (e.g. two years). Some states also require brokers to have a four-year degree. Brokers can own or manage real estate businesses and oversee real estate agents.

What is the difference between a real estate agent and a realtor?

A realtor is a sales agent that is a member of the National Association of Realtors (NAR). This means he or she must adhere to NAR's code of ethics and the standards of the association. To join NAR, you must first join a local association, which often requires paying fees. You must also pay annual dues to NAR, which totaled $150 in 2020.

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