Real Estate Agents are Critical for Successful Transactions

A couple meeting with their real estate agent

What this article is all about:


Background on this Article

You’ve come upon that time in your life when you need, or want, to make a move. Whether you’re buying your first home, upgrading from your starter home, or downsizing now that all the kids are out of the house, working with a real estate agent is likely the best move you can make.

There are two sides to any real estate transaction: the buyer and the seller. Your relationship with your agent is going to differ slightly depending on which side you’re on. Further complicating matters is the likely scenario in which you are both selling and buying a home, usually represented in both transactions by the same agent.

This situation can get murky really fast, so we’ve put together this article on everything important you’ll want to know about real estate agents before making the move.

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How Can a Real Estate Agent Help You

There’s a good reason for that statistic; a real estate professional is going to be intimately familiar with the home buying and selling process.

They will be experienced in what it takes to market a home, as well as what you need to successfully negotiate a purchase. More importantly it’s their full-time occupation, allowing you to live your life while they handle all of the tedious particulars.

Benefits to buyers

Understand home financing better. One of the most valuable benefits of working with an agent is their help with understanding how much you can afford for a new home. Aside from recommending trusted lenders, real estate agents are spectacular resources for insights into neighborhood specific information and trends.

Your real estate agent might have great information on HOA obligations for a specific building or development, and could save you huge headaches from upcoming fees or special assessments. For first-time homebuyers, agents can be invaluable in helping you understand all of the added costs of owning a home, such as: taxes, insurance, maintenance, and the like.

Get the most up-to-date property listings, comparisons, and benchmarks. There are dozens of resources to search for homes, but the most up-to-date and reliable data is always going to come from the MLS or directly from the broker. While you, and millions of others, can lean on all of the resources available publicly online to get an idea of the market, your real estate agent is going to be able to keep you updated to-the-minute on the status of properties.

They will be your best resource for information on how long a home has been on the market, if it’s been listed more than once, how it compares to neighboring properties, and any insights from previous inspections.

Benefits to sellers

Get marketing & guidance from a seller’s perspective. The agent will provide comparative market analysis that will be a strong estimate of the home’s value for pricing based on comparable sales in the area, condition of the property, and state of the market.

Skilled agents will also provide valuable exposure to court prospective buyers. Only licensed agents and brokers can add your listing to the local Multiple Listing Service (MLS) for syndication to other agents and even web portals.

Ultimately, your representative will help guide you through the complex selling process. They will verify that any buyers you are working with are pre-screened, pre-qualified, and generally capable of completing the transaction. The agent will work with the buyer to negotiate the final price, as well as any adjustments that are requested based on inspection results (with your direction being the final say). They will also handle any earnest money deposits from buyers and prepare certain documentation within their domain such as purchase contracts.

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Types of Real Estate Agents

In most states, the relationship you create and have with the real estate agent is called “agency”.

How agency develops between a homebuyer and their agent varies widely and you should understand how this relationship is created in your area. In some cases it can be the simple act of walking through a potential home with your agent; in others it is only created when you sign a purchase contract and the agent is listed as your representative.

Buyer’s agent

This agent represents the buyer in the real estate transaction. Compensation for this type of agency is usually commission based and happens after the transaction has closed. Often times the seller’s broker will split the commission with the buyer’s broker. Before you agree to a relationship, know how the compensation structure will work.

Seller’s agent

This type of agency represents the seller in a transaction. Also known commonly as the "Listing Agent", this agent holds the listing and has a responsibility to the seller to secure the best price and terms possible in the sale.

Dual agency

This is uncommon, but happens when an agent represents both the seller and the buyer in a real estate transaction. Laws in most states severely restrict what a dual agent can do. In most situations, it’s not a good idea to have a dual agent because of the conflicting responsibilities to each party.


These are agents that understand sustainable real estate, commonly known as "green" living. These agents will know how to make improvements in indoor air quality, what types of eco-friendly retrofits will be the most cost-effective, and how to piece together the state and local tax credits or grants for green projects.

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Picking the Right Agent for You

The agent plays such an important role in the home buying process; don’t just go with the first one you meet. Open houses are a great place to start; as you begin exploring what you want in a new home you’ll also get the opportunity to meet and interview agents that likely specialize in that area.

There’s nothing more valuable than someone who is willing to share from personal experience with an agent. Ask family, friends, and co-workers about agents they have worked with. Recommendations are going to be invaluable, but ultimately your needs are unique so be prepared to vet any referrals.

Your agent has certain obligations to you in the real estate transaction. He should work in your best interest and typically have a fiduciary responsibility to you. The agent should consult with you before delivering counteroffers in negotiations and contract-related communications. While an agent is your representative, he should obey your requests.

Here are some considerations when qualifying an agent to represent you:

Interview the agent and ask how many homes the agent has listed and sold in the past few months. If you can, get references from past clients and follow up to get a better understanding of how the agent works.

Make sure the agent can take care of your needs with questions you have or things you don’t understand about the home buying process. For instance, you may have questions about mortgage insurance, which is required for many first-time homebuyers. If they can’t explain concepts in easy to understand terms or put you in touch with someone who can, they may not be the best choice.

The way an agent communicates is another important consideration, especially when you prefer to exchange information with him in various ways, such as by email, telephone, and text messaging.

Be clear that the agent is representing you and that you are working with a buyer’s agent if you’re a buyer, or a seller’s agent if you’re a seller. Also, ask about the agent’s commission and any requirements of buyers or sellers agreements. Some agents will want exclusivity, meaning that you will be working only with them. In this case be very aware of the term of the agreement and details that could lock you in to a relationship that isn’t working.

Once you’ve decided with whom you want to work, be open, honest, and fair with your agent. Expect regular contact with your agent, but remember the agent also has other clients. When you tour a home with an agent be sure to tell them what you like and dislike. The agent can use this information to find houses that more closely match what you are looking for.

Be sure to give the agent feedback about why you are unhappy. If you bring up issues with the agent and he doesn’t satisfactorily deal with problems, you can fire him. Check out the terms of any contract you may have signed.

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Qualifying a Real Estate Agent: Checking Credentials & Accreditations

In the same way that you want to vet your agent’s experience and knowledge personally, you will also want to look at nationally recognized professional accreditations. Granted, these aren’t going to tell the whole story, but they will show you how invested the agent is in their craft, and the level of effort and professionalism they are willing to contribute to your real estate needs. Ultimately, it’s also a good way to distinguish between multiple agents that you are considering.

There are two basic types of real estate license levels: Broker and Salesperson. These license types may vary depending on state law, but are typically the two levels of real estate licensure. Like many other licensures, states will require varying levels of continuing education to maintain the license in good standing.

Real Estate Agent – Also commonly referred to as a Salesperson or REALTOR™. In general, this is anyone who completed the minimum education required by the state and passed the test. REALTOR™’s, specifically, can only use that title by joining the National Association of Realtors (NAR) – making them beholden to the organization’s standards and ethics.

Real Estate Broker – Can also be an Associate Broker. These agents have completed additional education beyond that required of agents and have passed the broker’s license exam in your state.

In addition to the basic licensures, homebuyers should be aware of the various professional designations:

Accredited Buyers Representative (ABR)

Awarded by the Real Estate Buyer’s Agent Council (REBAC), this accreditation requires that agents complete several hours of coursework focusing on buyers within real estate transactions, as well as practical experience as a buyers agent.

Certified Residential Specialist (CRS)

The highest credential for residential sales agents, this certification is earned by agents that meet specific educational and professional standards. Awarded by the Council of Residential Specialists, in general it tends to be associated with top performers in the industry.

Graduate REALTOR™ Institute (GRI)

This designation carries with it a nationwide aura for the standard of real estate professionalism and experience. The coursework agents must complete include regulatory issues, real estate transaction competence, and ethics.

“Green” Designation, NAR

As the name implies, this designation issued by NAR requires that agents complete education focused on sustainable real estate buildings and business. These agents will be more educated on “green” living requirements and the associated regulatory and tax implications.

Take the time to select your agent. When you find the right one, he or she will have a profound impact on your home buying experience.

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Real Estate Agent Commission & How to Calculate It

In the United States, real estate agents and brokers work on commission. Typically, total commissions on a transaction range between 4-8 percent, depending on the value of the home and market conditions, among other factors. A percentage of that commission, usually half, goes to the listing agent (the agent who put the house on the market on the seller’s behalf), and the remaining commission goes to the buyer’s agent.

For buyers, using an agent is distinctly to their advantage. In general, the seller pays the commission for the transaction, which is then split between the agents on either side. So the buyer’s agent effectively works for the buyer fee free, as far as the buyer is concerned. Granted, the expected commissions on a sale are usually built into the list price of the home by the seller.

So how does this work?

Calculate how much commission you will owe
Commission $ = Sale Price of Home × Commission %
$15,000 = $250,000 × 6%

It’s worth noting that this is the total commission on the transaction. It will be split between the managing brokers and agents on both sides. In many cases that involves four parties sharing the commission.

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Going Green: Finding the Right Eco-conscious Agent

Increasingly, homebuyers are beginning to favor eco-friendly homes, features, and design. This is not simply a conservationist movement, but rather an exercise in financial prudence. Green homes, eco-friendly design, and efficient appliances save money in the long term. If you’re planning to live in a home for more than a few years, chances are you will benefit by going green.

Eco-brokers are the ideal advisors to help buyers find financially and environmentally conservative properties. Sellers can benefit as well, since an eco-broker will not only be able to advise on potential upgrades that could increase home value, but will have access to buyers with those specific needs in mind.

Regardless of your experience as a homebuyer or seller and your specific needs, there is going to be an advantage to working with an experienced real estate agent or broker.

Ultimately, your agent is someone who will lead you through the purchase process, shelter you from common pitfalls, negotiate on your behalf, and make sure you’re ending up in the house you truly want.

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Resource Center & Glossary

Key terms – in plain English

Agency – Means that a principal has legally given a third party the right to act on their behalf.

Commission – A fee paid to the agents and brokers involved in the transaction, calculated by applying a set percent to the final sale price of the real estate.

HOA – Home Owners Association, common in many neighborhoods and especially in attached home or condominium communities. The property owner is responsible for any fees and dues levied by the association.

MLS – Multiple Listing Service is where agents and brokers post and find properties for sale. This is, usually, the system of record for property information for anything that is on the market.

NAR – National Association of Realtors is an organization that collects memership dues from real estate agents and brokers in exchange for training, accreditation, marketing support, and other services.

Real Estate Agent – Someone who has completed the required education curriculum and successfully passed the state’s agent licensure exam. Agents are not able to operate independently of broker oversight.

Real Estate Broker – Someone who has completed additional education curriculum beyond what is required for agency and successfully passed the state’s broker licensure exam. Brokers are able to work independently, under another broker, or with a team of their own.

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