Top Things to Know About Working with a REALTOR® in the USA
Real estate laws and customs in the USA vary slightly from one state to another but overall, while there might be nuances to each market, the country has strict real estate laws designed to protect buyers and sellers. Following is a guide for why to work with a real estate agent, what they do, and what to expect as an international prospective buyer.
REALTORS®, Real Estate Agents, Brokers, Brokerages – What does each mean?
All real estate agents (Estate Agents) must be licensed by the state in which they practice and then take mandatory continuing education every year or two in order to renew the license (this varies by State). It is illegal to practice real estate or receive commissions without having an active real estate license and most successful agents will do this as a profession rather than a side job.
All real estate agents must work under the supervision of a Broker, another level of licensure that designates a supervisory position over licensed real estate agents and one who is responsible for the operation of a Brokerage, the company under which both work and that is also licensed and overseen by local real estate regulations.
So what is a REALTOR®? It is a licensed real estate agent or broker who belongs to the National Association of Realtors (NAR) through dues paid to the local and state chapters of the Association. According to NAR, ‘the meaning of REALTOR® is a federally registered collective membership mark which identifies a real estate professional who is member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics.’
Therefore all REALTORS® are licensed real estate agents or brokers but not all real estate agents and brokers carry the designation of REALTOR®. This is only relevant in residential real estate as most commercial specialists may not be REALTORS®.
For the purpose of the rest of the article, we will collectively refer to all licenses as real estate agents or agents moving forward.
How are real estate agents paid?
Generally speaking, real estate agents are paid commission only and usually paid by the seller of a property and not by the buyer. Usually, there are both buyers and sellers agents within each transaction and even though the buyer’s agent is paid by the seller, they only represent the buyer.
As an illustration (based on a Florida scenario), a seller decides to list his home and chooses an agent. The total commission will usually be somewhere around 5-6%. The listing agent will list the home in a collective database called the Multi Listing Service (MLS). The listing is then available to all agents who subscribe to the MLS. More often than not, the listing agent will not sell the home to his own buyer but rather will cooperate with another agent who has a matching buyer (although it is certainly allowable for one agent to conduct both sides of the transaction). This way, agents work in a cooperative fashion and all have access to the same properties. Let’s say the total commission is 6%. This is then divided between the listing agent and his broker (splitting the 3%), and the buyer’s agent and his broker, according to whatever agreements they have in place.
The role of a real estate agent
The job of a real estate agent depends slightly based on whether they are representing a buyer or seller and many prefer one side of the transaction to the other although often will end up working both from time to time. A buyers’ agent who works with international buyers has quite a comprehensive role and needs to be well connected in the city or region in which they work as their job begins often before the buyer arrives in person. They will need to evaluate the criteria important to the prospective buyer, help to educate buyers on the local market and customs, make introductions to other professionals such a mortgage broker who also specializes in international borrowers, pre-qualify properties, and remain in close contact with the prospective buyers before often having met them in person.
The buyers agent will assist with completing the offer (always a written contract) on a home, arrange all inspections on the property and act on behalf of the buyer through completion or closing.
Working with multiple agents?
In the UK and in some other markets, it is widely accepted that a buyer will work with more than one agent. In the US, as illustrated from the above description of the agent’s role in a transaction, we would advise that spending time to find one agent to work with and then committing to them is more advantageous as you will need them working for you as your eyes and ears. The following are points to consider when seeking an agent to work with:
- Good communication – As a buyer you will need an agent who is quick and responsive
- Specializes in the area – Having a Miami based agent show Orlando properties means that the buyer can miss out on local knowledge. Find someone local
- International expertise – A buyer new the market shouldn’t work with an inexperienced agent as the devil is in the details. A seasoned agent will guide the buyer through the process
- Choose a REALTOR® – After all, opting to adhere to a higher code of ethics and belonging to professional associations is a good way to judge professionalism and dedication.
- Choose someone that makes you feel comfortable and that you like – riding around to tour properties with someone that you don’t like makes for a long day!
- Ask for referrals and check out reviews online
Once you have decided upon your agent, work closely with them and have realistic expectations, don’t have multiple agents working to show you the same properties as you want them committed to you and they do not get paid unless and until a transaction closes, additionally there is simply no benefit to you. The real estate agent, if chosen well, becomes your eyes and ears and watches out for you on this and possibly future deals. Often they become friends that you can count on as an absentee home owner. As a buyer, you are not usually paying the agent and the property will not be less expensive if you go straight to the listing agent.
Real estate laws are in place in the USA and within each state and all are designed to protect buyers and sellers so our advice, don’t go it alone and interview until you find someone that you feel comfortable with.
Our thanks to AIPP Member, Justine Assal, CEO of About Global for this article – scroll down for more details about Justine
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