Embarking on your homebuying journey can be stressful, whether it’s your first home purchase or not. Working with a real estate agent can help relieve a lot of that stress and help you smoothly navigate the market and know what to expect and look out for. Having a real estate agent by your side to help point out red flags in a house, such as; dry rot on a roof, electrical panel deficiencies, and other potential issues that only an experienced eye might spot, can save you big in the long term. With so much at stake, it’s essential to ensure you’re hiring the right real estate agent to fit your needs.
What does a real estate agent do?
First, let's cover what a real estate agent does. According to a definition from Investopedia, a real estate agent is a licensed professional who arranges real estate transactions, putting buyers and sellers together and acting as their representatives in negotiations. Real estate agents usually receive compensation solely on commission – they receive a percentage of the final purchase price of the property. In many states, a real estate agent must work for or be affiliated with a real estate broker who is licensed to a higher degree.
The difference between a Realtor® and a Real Estate Agent
Often these terms are used interchangeably, and it's important to know that there is a difference. The most significant difference between a Realtor® and a Real Estate Agent is the certifications each receives. And while they each provide similar services, they are held to different standards, which have been established by the National Association of Realtors (NAR).
Note: Do you want to learn more commonly used terms in the home-buying process? Visit our homebuyer glossary – an extensive list of terms widely used in the purchase process. Whether you are a first-time homebuyer or not, knowing these terms can help you educate yourself on real estate transactions.
Helpful questions when looking for a real estate agent to represent you.
1. Do you work mainly with buyers or sellers?
By asking this question, you are asking the real estate agent where their area of expertise lies. Some agents may be more versed in working with sellers than buyers and therefore be more successful on the seller side of the transaction. Alternatively, you might find an agent with a wealth of experience handling both sides of the real estate transaction, giving you insight into both sides of the process.
2. How long have you been working as a real estate agent?
A seasoned professional can bring tried and true negotiation tactics to the table to get you the best deal. In this industry, experience goes a long way.
3. How many transactions have you closed this year?
An agent who can demonstrate that they consistently close deals can give you confidence knowing they can likely do it for you too. On the other hand, if they have an inconsistent success rate, they may not be a reliable professional to move forward with.
4. How will you be compensated?
In most cases, a buyer does not pay their agent anything. The agent’s fee is usually rolled into the closing costs paid for by the seller. Usually, the seller pays their broker, who splits the commission with your agent. Knowing how your agent intends to be paid will save you from surprises down the road.
You can gather a lot of information by asking the right questions and asking your prospective agent some clarifying questions about their success rate, their experience, and where their expertise lies can help you move confidently forward in selecting the right agent.