A real estate agent is a licensed professional authorized to conduct real estate business in a given state. Real estate agents are educated in real estate matters and have passed a state board exam to obtain their credentials.
Some real estate agents may be dual-licensed and can practice law. Others are licensed notaries. As real estate agents are licensed professionals, they have a duty of care and are held to a standard of care that is reasonable for real estate agents.
Agents have access to the Multiple Listing Service, or MLS, which allows them to locate residential properties the very day they are listed on the market. Real estate agents are knowledgeable about the housing market in their specific area. Real estate agents know what homes in the area are selling for, and they know everything required throughout the home buying or selling process.
Real estate agents may perform some of the following duties:
- Handle standard client forms and questionnaires;
- Review real estate contracts;
- Negotiate pricing, up to the closing of a deal; or
- Showcase properties and guide clients through walk-throughs and open houses.
Can I Sell My Residence Without an Agent?
The law does not require home buyers or sellers to use a real estate agent. However, different states may have laws that 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 lot of rules and requirements involved in real estate transactions that may be better handled by a licensed professional. Real estate agents will generally be knowledgeable about the ins and outs of the process, which could make it easier for homebuyers or sellers, especially those buying or selling for the first time.
If you choose to work with a real estate agent, you must sign a listing agreement. A listing agreement is a contract between you and the agent that determines the business agreement’s obligations and rights. A listing agreement will generally detail:
- The amount of commission the agent expects as compensation;
- When the broker will receive the commission, or whether they will receive a flat fee;
- The beginning and end dates for the relationship between the agent and the buyer or seller;
- The amount of time that the property will be listed; and
- The list price.
What Should I Know About a Property Before Attempting to Purchase It?
Before pursuing a property, you will need to learn about any disclosures on the property. Disclosures refer to any problems with the property. Although states’ requirements vary, the property’s seller must reveal these disclosures to the buyer. Generally, the seller will complete a checklist of all major, typical disclosures.
These disclosures could include flood damage, cracks in the foundation, termites, property line disputes, etc. Sellers are legally required to disclose any significant defects that they know of. The active concealment of a known defect is illegal.
In addition to the seller’s disclosure, prudent buyers should hire an inspector to conduct an independent survey of the property to uncover any defects. The inspector may find problems that the seller was unaware of or did not disclose. Buyers have the right to place a clause in the purchase contract stating that the sale of the property is contingent upon completing a property inspection. The clause may also state that the inspection must be completed by a qualified engineer or construction expert and at the buyer’s expense.
Additionally, you should ensure that there is no encumbrance on the property. An encumbrance on the property could prevent buyers from obtaining legal title to the property or even possession of the property. Encumbrances may include easements, encroachments, and other kinds of boundary and title disputes. Most encumbrances will be recorded and can be located at the county recorder’s office. Related to encumbrances are mortgages and liens.
A piece of property may be sold subject to a mortgage or some other type of financial lien. Buyers should check whether a piece of property has a lien or mortgage by doing a title search through the county recorder’s office. Alternatively, a title insurance company can check instead and provide information regarding any such encumbrances on the property.
What Should I Do If I Don’t Use a Real Estate Agent?
Suppose you decide against using a real estate agent. In that case, you’ll need to do your research on recently sold properties in your area and properties currently on the market to determine an average selling price. Most home prices have an agent’s commission factored in, so you may have to discount your price as a result.
Without a real estate agent, you’ll be responsible for your own marketing. Make sure to get your home on the multiple listing service (MLS) in your area to reach the widest number of potential buyers. Because you have no agent, you’ll be responsible for showing the house and negotiating the sale with the buyer’s agent.
If you choose to forgo an agent, consider hiring a real estate attorney to help you during the transaction and the escrow process. Even with attorney’s fees, selling a home yourself can save you thousands. However, if the buyer has an agent, they’ll expect to be compensated. The seller typically covers this cost, so you’ll still need to pay 1% to 3% of the home’s sale price to the buyer’s agent.
Do I Need Proper Insurance?
Your lender may require you to acquire a homeowners insurance policy. Even if your lender doesn’t require you to maintain a homeowners insurance policy, you’ll want to be insured if a viewer has an accident on the premises and tries to sue you for damages.
Make sure there are no hazards at the property. If there are, take steps to mitigate them. Keep children of potential buyers away from a pool. Keep your dog out of the house during showings.
Can I Sell a House With a Mortgage?
You can sell a house with a mortgage. During the escrow process, you will get a mortgage payoff statement from the lender holding your mortgage that lists the remaining balance on your mortgage.
When your loan closes, the escrow agent will send your mortgage balance to your lender, paying off your mortgage.
Do I Need an Attorney for the Purchase and Sale of a Residence?
It is possible to buy or sell a residence without the assistance of an attorney. However, it is in your best interests to consult with an attorney before signing any legal document or contract, such as a listing agreement.
Learning how to buy and sell a house is a complicated process. Make sure you are prepared financially for less-than-ideal situations. Your house may sit on the market longer than expected, especially in a declining market. Hiring a real estate attorney is one of the best ways to avoid costly mistakes. A skilled and knowledgeable real estate attorney can help you navigate the home buying or selling process, as well as help negotiate a fair price while protecting your interests. Finally, they can represent you in court as needed.