A real estate broker can act as an agent for both the buyer and seller of real property. Generally speaking, the seller is the party who retains the broker and works with the buyer. In this way, the broker works for the seller in order to solicit potential buyers. The seller then considers the proposed offers in order to determine if a sale is in their best interest. It is important to note that a broker must be licensed by a state regulatory agency.
What Is A Real Estate Agent?
A real estate agent is a licensed professional, authorized to conduct real estate business in a given state. These agents are educated in all real estate matters, and have passed a state board exam in order to obtain their credentials. Some real estate agents may be dual licensed and can practice law, while still others are also licensed notaries. Because real estate agents are licensed professionals, they have a duty of care and are held to a standard of care that would be considered reasonable for real estate agents.
Real estate agents have access to the Multiple Listing Service, or MLS, which allows them to locate residential properties the same day that they are listed on the market. Additionally, they are generally knowledgeable about the housing market in their specific area. What this means is that real estate agents frequently know what homes in the area are selling for, as well as everything required throughout the homebuying or selling process.
Real estate agents may perform some of the following duties:
- Handling standard client forms and questionnaires;
- Reviewing real estate contracts;
- Negotiating pricing, up to the closing of a deal; and/or
- Showcase properties while guiding clients through walk-throughs and open houses.
What Are The Differences Between Real Estate Brokers And Real Estate Agents?
Real estate terms like “broker” and “real estate agent” are commonly used interchangeably, as most people refer to any person who does real estate work as a “real estate agent.” However, there is a significant difference between these two terms, and understanding these differences can help when collaborating with such people during real estate transactions.
Simply put, the defining difference is that real estate brokers have been formally licensed to provide real estate services, while an agent essentially acts as an assistant to the broker. It is not uncommon for an agent to carry less legal responsibility in comparison to the broker. A helpful analogy is that the relationship between a broker and an agent is similar to that of a doctor and a nurse, or a lawyer and a paralegal.
Another difference between the two is that brokers and agents perform many different types of tasks. As previously mentioned, brokers have a specific background, education, and licensing that real estate agents do not always have. Because of these qualifications, brokers may:
- Legally open and operate a real estate brokerage firm;
- Maintain a specific degree of knowledge and competence which is verified through exams;
- Address most or all of the main issues associated with a real estate transaction; and
- Be responsible for overseeing issues associated with insurance and real estate contracts.
Alternatively, agents act on behalf of the broker, and as such may be entitled to some sales commissions. Real estate agents may handle tasks such as:
- Sorting and reviewing documents;
- Acting as a point of contact between the broker and the client;
- Addressing administrative and light planning duties; and/or
- Executing specific steps and plans according to the broker’s decisions.
It is important to note that listings are always completed under the name of a licensed broker.
Can Real Estate Brokers And Agents Be Held Liable For Violating Real Estate Laws?
Because real estate agents generally have less responsibility compared to brokers, this frequently means that they would be held liable for lesser aspects of a violation. A formal agency relationship generally exists between the broker and the agent; as such, a broker can sometimes be held liable for actions that are committed by an agent. This is especially when the agent is acting according to the broker’s specific instructions.
Alternatively, real estate agents are frequently the subject of lawsuits simply because many people do not have direct access to their broker. Agents may also be held liable in cases where they have acted outside of the broker’s guidelines. An example of this would be if they engage in foreclosure scams or other such violations.
To further expand upon a formal agency relationship, an agent is someone who agrees to represent another person, who is referred to as a principal. An agent can only act on behalf of a principal for specific issues, depending on each specific agreement. An agent essentially acts as an employee, with the difference being the agent works with the principal by representing the principal in specific transactions and situations. Additionally, the agent is given different types of power and authority to act on behalf of another person or a group of people, especially in a business setting.
Principal-agent relationships are largely important because agents can enter into binding contracts on behalf of the principal. However, even when a principal-agent relationship exists, the agent must have authority to enter into such contracts for the principal. In order for an agent’s contract to be binding on the principal, the agent must be acting within the scope of their authority as an agent.
Can I Sell My Residence Without A Real Estate Agent?
Legally, homebuyers or sellers are not required to use a real estate agent. However, different states may have laws which require a real estate agent’s involvement with the closing paperwork process. Additionally, agents do take a commission; meaning, that part of the sale of the residence will be given to the agent.
While some people choose to buy or sell a home without the help of a real estate agent, there are a considerable amount of rules and requirements associated with real estate transactions that may be better handled by a licensed professional. Generally, real estate agents will be knowledgeable about the finer details of the process, which could make it easier on homebuyers or sellers.
When working with a real estate agent, you will need to sign a listing agreement. This is a contract between you and the agent which outlines the obligations and rights of the business agreement. A listing agreement will generally detail the following information:
- The amount of commission the agent expects to receive as compensation;
- When the broker will receive their commission, or whether they will receive a flat fee;
- The approximate beginning and ending dates for the relationship between the agent and the buyer or seller;
- The amount of time in which the property will be listed; and
- The list price of the property.
Do I Need An Attorney For Issues Associated With A Real Estate Agent Or Broker?
If you are entering into a transactional relationship with a real estate agent and/or broker, or are experiencing issues with either of those parties, you should consult with an experienced and local real estate lawyer. An attorney will be most knowledgeable in terms of your state’s specific real estate laws, and may be able to refer you to a qualified and trustworthy broker or agent. Additionally, your real estate attorney will also be able to represent you in court, as needed.