Real estate terms and roles can confuse experienced home buyers or sellers. So, it is not surprising that some people do not know the difference between a buyer agent vs. seller agent or what each agent handles in a real estate transaction. On each real estate transaction, there are at least a dozen people who work together to get the file prepared, approved, and scheduled to close.
Most professionals work behind the scenes, so you never even know they are working on your file. You need to read this guide if you have questions about who is responsible for each step in the process. It explains the roles of both agents, who pays realtor commissions, why you should hire a realtor, and other critical details about the roles of each in your transaction.
All realtors can list and sell properties through their real estate license. However, sometimes, a broker may require their agents to work strictly with buyers or sellers at the beginning of their career. After the agent shows proficiency in representing that side of the transaction, the broker may have them switch the party they represent to learn the other side.
However, that happens rarely. Instead, agents routinely represent buyers and sellers, just rarely on the same transaction.
A real estate agent's role is to represent your best interest in the transaction regardless of whether you are buying or selling. They also communicate with the other professionals processing your loan and clearing title for closing to ensure they have everything they need to prepare the file to close.
Your realtor may need to negotiate contract terms, sales price, repair allowances, and other aspects of the deal with the other party's agent. That process can be lengthy and involved, but it is the realtor's responsibility, and a good realtor makes it look effortless.
A realtor's business is built on honesty and trust. They go through extensive testing and criminal background checks because they have access to clients' homes and personal information and are in a position meant to assist their clients in getting a fair deal.
So, realtors promise to uphold these ethics:
A realtor can't represent the buyer and seller in a real estate transaction. Representing both parties is a conflict of interest and would likely lead to one or both parties receiving a less desirable outcome. The practice of representing two parties in the same transaction is dual-representation.
The realtor's role as a representative for the buyer or seller and an advocate for the party they represent makes working for both a conflict of interest. Furthermore, realtors should not put their personal or financial interests above the clients.
A realtor can represent the same party in the sale of their home and the subsequent purchase of a new home. They are not restricted to working strictly as a listing or selling agent. They just can't be both in the same transaction.
A listing agent's work begins as soon as they receive a call or referral for a seller. To ensure the property sells quickly, all parties involved have properly been disclosed as required by law, and the closing happens on time, the seller's agent must be organized and dedicated.
In the initial phone call, the seller's agent will likely gather some preliminary information to pull comps and determine a competitive sales price based on similar properties in the area. During the initial meeting, the realtor will view the property and take detailed photos of each room.
During the meeting with the seller, the agent will assess the property's condition. If the property needs new flooring, paint, or other upgrades to make the property ready to show, the listing agent will discuss that with the seller.
They will also gather information about the property's history and have the seller complete any required disclosures, as well as a representation contract that gives the agent the right to work on your behalf during the sale of your home.
A seller agent may ask questions to gather more information, like:
After the seller's agent gathers all the information they need and any necessary repairs are complete, they will add the property to the MLS. While it sounds simple enough to list a property for sale, the process for adding a property to the MLS is pretty complex.
The listing agent has to be detailed and ensure that all of the information they submit to the MLS is accurate. Inaccurate listings can result in fines for the agent, and if the realtor intentionally adds false or misleading information, there can be legal ramifications.
After the property is live on the MLS site, the agent's focus shifts to marketing the home. They will likely send the listing to any buyers in the area interested in properties like the one you are selling. They may also host open houses and networking mixers to raise awareness about the property.
The listing agent may have to get creative with and remain diligent with their marketing efforts to sell the property, especially if there is an oversupply of real estate inventory.
As the seller agent receives offers for the property, they must promptly review them with the seller. It is critical that the listing agent promptly present the seller with reasonable offers. Otherwise, a potential buyer could lose interest or find another property to purchase.
If the buyer and seller are close to an agreeable asking price and sales terms, the seller may want to send a counteroffer. The seller's realtor is responsible for drafting the counteroffer and sending it to the buyer for approval.
If the seller accepts one of the offers, the agent has to contact the other party's realtor to notify them. The listing agent will also notify agents representing offers that are not accepted of the seller's decision to reject the offer.
After the buyer and seller execute a sales contract, the buyer's agent collects checks from the client for earnest money and the option fee, if applicable. The executed contract and checks are then given to the title company, which effectively opens the escrow processing file.
From the time the title company pulls the chain of title on a file until the closing day, the listing agent focuses on communicating to the seller about any documents they need to provide for the escrow officer to clear the property title and gives the seller regular updates about where the file stands in terms of escrow and loan approval.
The buyer agent's role is similar in terms of their role as a representative for their client. However, the tasks they must complete to get a home closed are quite different.
Upon receipt of a referral to represent a buyer, the agent will call the person and talk to them about what they desire in a new home. They ask a series of questions to ensure they know exactly what the client wants and advise them of the limitations or requirements they must meet to purchase the desired home.
If the buyer plans to finance and has not applied for a loan, they may give the buyer referrals to a few lenders so the client can obtain a pre-approval letter. Obtaining approval before submitting offers is customary in today's real estate market and necessary because most sellers will not even consider an offer without one.
During the initial call with the potential client, the agent will pull listings that fit the buyer's specifications. The agent will ask the buyer to look at the property and let them know if they want to see any of the properties. If the homes the agent sends do not interest the client, the agent will ask more questions until they can locate properties the buyer likes.
After the buyer discloses which properties they want to view, the agent will schedule appointments to show the properties. Selling agents may have to show between five and ten houses to a potential buyer before they find a home they want to buy.
If the buyer wants to submit an offer, their agent will first check the MLS to see if the seller's agent uploaded any disclosures for the property. Seller disclosures will include recent upgrades, known defects, and other pertinent information necessary for the buyer to decide on an offer amount.
When the buyer decides on a home they want to purchase, the realtor has to draft an offer via a sales contract. The agent will help the buyer determine an offer price they are comfortable with and that they think has a reasonable chance of acceptance. They also collect checks for earnest money and the option fee (typically $100) if the buyer chooses an option period.
The option period is typically between 7 and 14 days, giving the buyer the right to cancel the sale without losing their earnest money during that time if they change their mind or receive an adverse inspection report.
If the buyer chooses an option period, their agent must help them order an inspection report as soon as the offer is accepted. Otherwise, the inspection may not be completed in time for the buyer to exercise their option to cancel.
The selling agent must also communicate with the title company while the property is in escrow to ensure that they have all of the necessary documentation and that the file is progressing on schedule. If there are any hold-ups, the agent should convey that to the buyer.
If the title company needs additional information, the agent will speak to their client, explain what they need to provide, and assist them if required.
As the closing date nears, the agent will check to see if the purchase loan received approval. If the lender needs additional documents, information, or verifications from the buyer, the agent will assist the client in gathering those items and sending them to their loan officer.
As you can tell from the extensive list of tasks agents on both sides of the transaction must complete getting a file to closing, hiring a realtor is advantageous to both parties.
Hiring an agent may be more critical for sellers because you can not list a property in the MLS without a real estate license and a sponsoring broker. Homes listed on MLS sites sell faster and for higher prices than similar homes listed in papers, for sale by owner, and on home sites.
So, if the seller wants the property sold promptly and wants to receive a top-notch offer or multiple offers, they need to list it with an agent.
Realtors do a lot for their purchasing clients, as well. They help them locate listings, they can show active properties that are on a lockbox, and they give advice on submitting offers and the rest of the purchase process.
Furthermore, the seller pays for the seller and buyer agents. So, it is beneficial to take advantage of that and use an experienced real estate agent.
Traditionally, the total realtor commission is six percent of the sale price paid by the seller. The six percent commission is split evenly in most transactions. So, each agent receives a three percent commission on the total sale price.
There are some situations where the commission splits are a bit different. But, for the most part, commissions are handled the same on every transaction.
Below are the most frequently asked questions about the buyer agent vs the seller agent. Due to the extensive part, the agents play in real estate transactions, it can be challenging to understand the full scope of each's role. These answers might help to make things a bit more clear.
Essentially, a buying agent and a selling agent are the same things. The buyer's agent helps their client locate properties and schedules viewing appointments. If the buyer falls in love with one of the listings, the agent drafts an offer and sends it to the listing agent.
If the seller accepts the offer, the buyer's agent is referred to as the selling agent. The buyer agent is called the selling agent because they showed the property to the buyer and submitted the accepted offer.
So, for the realtor being a selling agent is better than being a buyer's agent. When the realtor works as a buying agent, they are just shopping with the client. When the property is under contract, and they become the selling agent, they represent their client in the sale.
The agent representing the purchaser is called a buyer or buying agent until they submit an accepted contract. After, they are referred to as the selling agent because they sold the house.
The seller's agent represents the seller in the transaction. They are responsible for listing and marketing the property until their client receives an acceptable purchase offer.
Their work does not end there, though. The listing agent has to work with their client, the title company, and the selling agent (buyer's agent) to ensure that the transaction closes.
Both brokers and real estate agents hold licenses necessary to represent a listed property on behalf of a seller. However, the realtor can't work on their own. They have to work under a broker.
The broker has a specialized license that has more stringent requirements and requires more testing. In Texas, realtors must have 270 qualifying real estate credit hours before qualifying for the real estate exam.
A broker has to have an additional 630 credit hours of acceptable courses or a bachelor's degree in specific fields of study. They have to undergo additional background checks and take the broker license test.
The broker must also have four years of experience working under a broker as an agent. The four years of experience have to be within the previous 60 months. So, a realtor who left the profession 15 years ago and returned would not qualify to take the broker exam for four years after being relicensed as a realtor.
A broker has more education and experience than a real estate agent. They possess a license that gives them the right to own a real estate firm and work independently of a broker. Essentially, in real estate transactions, any broker or agent can represent you in selling or purchasing a property.
While an agent can typically meet all of their client's expectations, a broker is likely a better choice for more substantial transactions requiring in-depth negotiations and valuations. If you are working with an agent, they work under a broker.
So, if you have questions your agent can't answer, the realtor's broker should be able to assist you.
Understanding the differences between buyer agent vs. seller agent can be confusing. Especially when the industry refers to a buyer agent as the selling agent and seller agents as listing agents.
An easy way to remember is that the listing agent is the one who lists and markets the property for the seller. While the selling agent sells the seller agent's (listing agent) listing to their buyer.
After a few transactions, you will have a firm grasp of real estate terms and each person's role in the real estate closing process. Until then, bookmark this page and come back if you need a refresher.
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