How to Choose an Agent
Now that you’re preapproved and know how much you can afford, now it’s time to hire an Agent. Agents handle the vast majority of homes that are for sale because most sellers list with one. A single agent often has access to 90 percent or more of the homes currently for sale in an area.
Who Does An Agent Work For?
An agent is a “fiduciary”. That simply means that the agent must act on behalf of, and in the best interest of their client. Because an Agent works for a client, it’s important to understand who that client is.
Different Types of Real Estate Agents and What They Do
In your quest for a new home, the person you’ll interact with most is your real estate agent. Your Agent is a lot more than a smiling face in the classifieds, hovering over pictures of homes for sale. Your Agent is a licensed professional, authorized to negotiate and carry out the sale of real property on behalf of a buyer, a seller—or sometimes both simultaneously.
Agents and Brokers and Realtors
Every state and the District of Columbia require real estate agents to hold a license, but not all licenses are the same. Most states define two types of real estate professionals: broker and agent. But you may come across several other terms as well. Here’s the lowdown:
- Real estate broker. This is an experienced real estate professional who has met state requirements to own, manage, or operate a real estate company. Licensing requirements usually include experience in the industry as a sales agent, advanced coursework, and passing an exam. (In some states, attorneys can become real estate brokers, even if they’ve never worked as real estate agents.) The broker in a real estate firm is its “boss,” the person who takes responsibility for all the agents who work there. Depending on where you live, you may hear real estate brokers referred to as principal brokers or qualifying brokers.
Note: Some licensed brokers choose not to run their own firm but to work as agents for another broker in that broker’s firm. These people are called associate brokers.
- Real estate agent. This is someone who’s taken classes and passed a state-administered exam to get a license to sell property. The educational requirements cover the specific state’s real estate laws and practices. Real estate agents are associated with a real estate broker and act under that broker’s authority. Depending on where you live, real estate agents may be called subagents, sales agents, real estate salespeople, or, confusingly, brokers.
As you look for a home, you’ll probably work primarily with a real estate agent. Real estate agents can represent the seller of a house, the buyer of a house, or both:
- Seller’s agent. Also called a listing agent, this person works exclusively for the seller. Most often, you’ll deal with the seller through the seller’s agent. Except in cases where you have a specific agreement with an agent to represent you as a buyer (see the next item on this list), you should assume that any agent you work with is a seller’s agent. Even if an agent didn’t personally list the seller’s property, any agent involved in the sale of a property is considered a subagent of the listing agent—unless that agent has a contract to represent only you, the buyer (see “Buyers’ Agent” below).
Note: Agency means representation, and an agent is a representative. If you enter into an agency agreement with someone, it means that you’ve both agreed that that person will act as your representative.
- Buyer’s agent. A buyer’s agent works solely for you (the buyer) and represents your interests throughout the real estate transaction, from initial house hunting through closing the deal. Buyer’s agency is a formal agreement, signed by you and a particular real estate agent, saying that the agent represents you and your interests in buying a home.
Tip: In a transaction, the buyer’s agent is called, confusingly enough, the selling agent. To keep from being muddled by the terminology, think of agents’ roles this way: In transactions that have both a listing (sellers) and a buyer’s agent, the listing agent puts a home on the market and represents the current owner; the selling agent facilitates the sale by representing the buyer who makes that sale possible.
- Dual agent. This is a single agent who represents both the seller and the buyer in the same transaction. In most states, dual agency is legal so long as the agent gets the consent of both the buyer and the seller.
Note: Dual agency can also occur when two agents who work for the same broker represent both parties in a real estate transaction.
As a homebuyer, you should work with a buyer’s agent. You want to be sure that your interests are represented in negotiations and that your agent keeps your information confidential.
What a Real Estate Agent Does
Real estate agents are experts in local real estate. They monitor the market daily and look for housing trends (in prices, inventory, location, and so on). An agent tells you about available houses in your price range and takes you on tours of homes that interest you. Much of an agent’s day is taken up by phone calls, meetings, and home tours.
For sellers, a listing (seller’s) agent:
- Researches recent sales of comparable homes to help determine an asking price
- Helps sellers prepare their homes for sale
- Lists the home with the Multiple Listing Service (known in the trade as the MLS, a searchable list of homes for sale within a particular region)
- Advertises the home through various channels, which may include the Internet, classified ads, real estate magazines, and on-site advertising (the latter usually comprising a “For Sale” sign on the lawn and takeaway information sheets about the home)
- Takes other real estate agents on a walkthrough so they can tell their clients about the home
- Hosts open houses
- Presents offers from interested buyers
- Negotiates the terms of the sale
As a buyer, you can expect a real estate agent (either the seller’s agent or your own) to work with you in these ways:
- Listens to your priorities in looking for a home, including your price range
- Contacts listing agents to check availability and schedule showings
- Shows you suitable properties
- Notifies you as new properties appear on the market
- Suggests sources of financing. Tip: You’re not bound to work with any lender recommended by an agent. Section 8.2 has tips for finding the best mortgage.
- Helps you write a purchase offer and present that offer to the seller
- Negotiates with the seller on your behalf
- Writes a purchase-and-sale agreement
- Sets up and attends the home’s appraisal and inspection
- Reviews disclosure statements and lets you know about problems with a property. Tip: Agents know what to look for in disclosure statements and other documents. Although it’s important to find an agent you like, the most important quality an agent has to offer is his expertise.
- Deals with contingencies
- Provides information to your mortgage officer, real estate attorney, and escrow officer
- Coordinates with other parties to schedule the closing
- Attends the closing
Note: There are some things a real estate can’t tell you by law. If you have questions about a neighborhood’s character, diversity, crime rate, or schools, you have to look elsewhere for the answers. Federal fair housing laws prevent real estate agents from “steering” clients toward one neighborhood or away from another one. The idea behind the law was to prevent discrimination—to prevent real estate agents from deciding whether a client is a good or bad fit for a particular neighborhood. Despite the law’s good intentions, it can be frustrating to have basic demographic questions go unanswered.
Where do I find an agent?
Here are some common ways buyers find agents:
- Friends & Family: Maybe you have a friend or relative who happens to be a real estate agent. But just because you know the person well, doesn’t mean she would be the best agent for you. Does she know the neighborhoods where you want to buy? Is she a tough negotiator? Will you be comfortable expressing your dissatisfaction, or even firing her if she can’t get the job done? Hold a friend or relative to the same high standards you’d expect from any agent.
- Referral: Friends and family who recently bought a home can be a good way to find your own agent. Make sure that the agent is familiar with your favorite areas and can handle any special requirements you may have, such as a willingness to tackle short sales or bank-owned homes.
- Internet: Many agents and brokerages have their own websites. In addition, review sites such as Yelp.com can show you what other customers have to say about agents in your area.
- Open Houses: Any time you sign a guest registry for an open house, you’re putting yourself on the showing agent’s call list. We don’t recommend this method for “finding” an agent, but if you do want to work with an agent you meet this way, do your homework (see Important Questions to Ask an Agent, below).
How to Research an Agent
A generation ago, it was hard to find information on an agent without first-hand experience. Aside from personal references and a call to the Better Business Bureau, there wasn’t much you could do to get the real scoop on an agent’s performance.
Today, you have plenty of ways to research an agent before you even meet her. Here are a few online resources we recommend:
- Yelp.com: Yelp.com lets customers submit reviews and ratings for businesses, such as real estate agents.
- Google: Just enter an agent’s name into the Google search engine, and see what the internet has to say.
- LinkedIn: LinkedIn is a networking site for professionals. An agent’s LinkedIn profile can give you an idea of their connections to other people in their profession, and may also include testimonials from colleagues or customers.
- State Licensing Board: You can learn about an agent from the licensing board in the state in which they operate. The information displayed may vary by location, but should include the agent’s license status and number, as well as the name of their real estate agency. Some boards may also display disciplinary action and continuing education credits associated with the agent.