Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.
What's the difference between a real estate agent and a Realtor?
For the most part, anyone who has their real estate license can help people buy or sell real estate. However, not all real estate agents are Realtors. To be a Realtor, you need to be a part of the National Association of Realtors (NAR). Additionally, not all NAR members are real estate agents. Real estate brokers, appraisers, property managers, and real estate counselors are also eligible to join.
To be part of the NAR, Realtors must meet certain membership requirements. For one, they have to follow an official code of ethics and standards of practice. For another, they must take a certain amount of continuing education classes every few years. These requirements are what separates Realtors from other agents.
We'll use the term real estate agent for the purposes of this article, since it applies to agents who are Realtors as well as those who are not.
What does a real estate agent do?
A real estate agent is equal parts a coordinator, a negotiator, and an advocate. Depending on whether you are buying or selling your home, your real estate agent will take on different roles throughout the transaction. However, what stays true regardless of what side of the table you are on is that they are always going to be working in your best interest.
Think of your real estate agent as your guide through the homebuying or selling process. He or she will:
- Walk you through all the important steps of the transaction.
- Answer any questions you may have about the process along the way.
- Communicate with other people on your behalf.
- Do all they can to keep the transaction running as smoothly as possible.
What do real estate agents do for homebuyers?
Now that you know the general role a real estate agent plays, it's time to get into specifics. Here we'll explore the most important things agent's take care of when working with buyers. Take a look so you can get a sense of what you can expect once you're ready to buy a house of your own.
Assist with getting a preapproval
Believe it or not, the first step to buying a home is not looking at listings online. It's actually getting preapproval. A preapproval is a letter from a lender stating the amount up to which you've been approved for a loan. It shows the seller and the seller agent that you're serious about -- and capable of -- buying the home.
While you won't work with a real estate agent directly for your preapproval, if you don't have a lender already in mind, he or she will likely be able to give you some recommendations. If needed, your agent can also help facilitate communication between you and the lender so that everyone is on the same page when it comes to your finances.
Accompany you on showings
Once you're ready to buy a home, your agent will start sending you potential listings from his or her local multiple listing service (MLS). After you've landed on a few you like, the agent will set up times to take you on tours of the properties.
Even though it isn't technically a part of how they earn their commission, a good agent will also do their best to guide you through any properties you see. They'll point out things that you should be aware of, both good and bad, so that if you decide to make an offer, you can go into it with eyes wide open.
Write up any offers
Eventually, after seeing a few properties, you'll land on a home that you can see yourself buying. At that point, your agent will help you write up an offer. Although you're the one who ultimately has to decide how much to offer, the real estate agent is responsible for helping you understand the various pieces of an offer package and helping you put your best offer together.
In the event that the seller is willing to negotiate with you, your agent will then negotiate on your behalf. During a transaction, buyers and sellers don't actually communicate with each other directly. Instead, each of your agents will do the communicating for you so that it all stays aboveboard.
Attend your inspections
If you've elected to do any inspections on the property, your real estate agent will attend them. Remember, your agent is there to be your advocate. During the inspection, your agent will likely follow the inspector's lead but may ask relevant questions and make note of any potential problems with the home.
Once the inspections are over, you'll be given inspection reports to read over. A good agent will be sure to read over these reports as well and make any notes of questionable findings that should be addressed when you're ready to negotiate inspection repairs.
Negotiate inspection repairs
Whenever someone buys or sells real estate, negotiations don't stop as soon as an offer has been accepted. Rather, a second round of negotiations occurs once the inspections have been completed. In this case, as the buyer, you will read over the inspection reports and ask the seller to either make any relevant repairs or give you a credit toward the repairs at closing.
Again, your real estate agent will be your point person for this. First, he or she will help you write up your requests in an addendum. Then, they will also handle the back-and-forth of negotiations between you and the seller.
Monitor any necessary paperwork
There is a lot of paperwork involved in a real estate transaction. On the buying end, it's mostly focused around the inspections and making sure your financing is in order. Once you're under contract, a large part of your agent's day-to-day responsibility is making sure all the necessary paperwork falls into place.
To that end, your real estate agent will connect with your lender to ensure that you have all the necessary paperwork in order to meet the underwriting requirements on your loan. He or she will also follow up about the appraisal and, if needed, handle those negotiations. Lastly, your agent will make sure you have a firm loan commitment in place when it's time to close.
Communicate with the other parties in the transaction
In addition to handling the paperwork, your agent is in charge of communicating with everyone else involved in the deal. Between you and the seller, the listing agent, your lender, the inspectors, the appraiser, and the title person, there are a lot of moving parts and a lot of people who need to be kept in the loop. Your agent will do most of that communicating on your behalf and make sure that you stay informed throughout the process.
Facilitate the final walk-through
Shortly before closing on the home, your agent will lead you through your final walk-through. This is your chance to:
- Ensure that the home is still in the same condition it was in when you originally made your offer.
- Verify that any negotiated repairs have been made.
Your agent should take the time to ensure that all the home's systems are working properly and ask you if you have any last-minute questions about the home. In the event that something is amiss, it's also your agent's job to take steps toward rectifying the situation before closing.
Tie up loose ends at closing
Once you reach the settlement table, your agent will be there to:
- Bring along all the paperwork from your side of the transaction.
- Ensure that the money changes hands correctly.
- Verify that you understand everything you're signing.
It is only once you've been handed the keys that the commission checks will be disbursed.
What does a real estate agent do for home sellers?
On the other side of the spectrum, here are the duties that real estate agents take on for those who are selling a home. Again, you'll want to read these over so that you have an idea of what to expect once you're ready to put your home on the market (unless you're selling without a real estate agent).
Price the home correctly
The first thing a real estate agent will do before putting a property up for sale is help you price the home correctly. This is a particularly crucial step because pricing a home right is one of the best things you can do to sell your home quickly.
While a well-priced home is bound to pique buyers' interest and encourage them to schedule a showing, an overpriced one is more likely to get passed over in favor of other properties that offer more for the money.
To help decide on the right price for your home, your listing agent will use a tool called a comparative market analysis (CMA). A comparative market analysis looks at similar properties that have recently sold in your area in order to give you a realistic price range for your property. Together, you can then look at factors that are unique to your home, such as its current condition or any recent upgrades, to decide where your home fits within that range.
Market the property
Once the home has been priced properly, your agent will then begin to market the property. Usually, this process starts with bringing someone in to stage your home and to take some high-quality photos before officially putting the property on the multiple listing service (MLS).
After the property has been listed, your real estate agent will keep track of any showings and collect feedback on those showings from buyer agents. If needed, he or she will also host an open house or broker's open -- where the real estate agent invites other industry professionals to come to tour the home -- to generate more traffic.
Finally, if necessary, your agent will also be the one to have the hard discussions with you when it's time to change up your marketing strategy. Topics could include making a price reduction or adding an incentive like a home warranty to make your home more attractive to buyers.
Negotiate any offers
Once an offer does come in, it's time for your agent to put their negotiation skills to good use. Though you're the one who will ultimately have the final say in whether to accept an offer, it's the agent's job to walk you through each purchase agreement you've received and make sure you understand the terms of each contract.
If you decide to negotiate with a buyer, your agent will also become your point person. All the communication between you and the buyer will go through your agents from this point forward. He or she will negotiate in your best interest in the hopes that an agreement can be reached.
Stay on top of the necessary paperwork
After you're under contract, it's your agent's job to stay on top of all the paperwork necessary to bring the property to closing. Between inspection negotiations, clearing the title, and managing any necessary repairs, there are many moving parts in a real estate transaction. Your agent is there to ensure that they're all coming together smoothly and to handle any problems that may arise during that process.
Attend the appraisal
If the buyer is getting a mortgage, you'll most likely need to have an appraisal done on the home. An appraisal is done to assure the lender that the home is being sold for its fair market value. This is to ensure that the bank -- and the buyer -- don't end up unfairly overpaying for the home.
From your side of the table, it's your agent's responsibility to ensure that the appraiser thinks the home is worth at least as much as what was offered for it. Agents and brokers will often attend the appraisal for this reason and may even bring their own sets of comparables in order to try and justify the sale price.
In the unlikely event that the home does not appraise at the sale price, you'll probably need to renegotiate with the buyer. At this point, your agent will be negotiating in your best interest once again. He or she will help you either work out a new sale price that still serves your best interest or exit the transaction and find a new buyer.
Communicate with the other parties in the transaction
During the course of the transaction, a lot of different people will be working to bring the sale of your home together. Usually, there's you, the buyer, your respective agents, the lender, the inspectors, the appraiser, the title person, and sometimes real estate attorneys. Each and every one of those people needs to be on the same page about what's going on.
Again, your real estate agent will handle all the communication from your prospective. He or she will make sure all the parties are informed of any progress that's been made and any potential problems that may crop up.
Tie up loose ends at closing
When it's time to sit down at the closing table, your agent will be the one to bring all the appropriate paperwork that's needed from your side of the transaction. He or she will also walk you through any paperwork you're signing to ensure that you understand the terms of the agreement. Then, your agent will also ensure that you receive any funds due to you at closing.
What happens if you buy and sell with the same agent?
Put simply, if you buy one property and sell another with the same agent, they will fill all of these roles. Most of it will be a process of juggling multiple duties at the same time. They will work in one transaction as the buyer's agent and in the other transaction as the seller's. This is a common arrangement, and most agents don't have a problem with taking on this level of responsibility.
Notably, what's described above is not the same as dual agency, where an agent works on both sides of the same transaction. Most agents prefer not to do this because they run the risk of creating a conflict of interest. Whenever possible, it's best to have your own agent, who serves your interests alone.
The bottom line
Real estate agents will wear many different hats during the course of a transaction. Their duties will also vary depending on which side of the closing table their clients are sitting on, and in many cases they will need to balance multiple transactions at once. However, regardless of how busy they get, their first priority should always be keeping their clients’ best interest in mind.