Real estate is a service business that has transformed in recent years with the advent of technology. The role of a real estate professional is crucial in facilitating the buying and selling of property. Brokers are the most common type of real estate professionals in the United States, and they play a significant role in the industry.
In this article, we will tackle different aspects of the real estate profession in the United States, including real estate broker, agent, and realtor. We will also discuss the real estate brokerage fee, the specialisation categories, and the different designations and certifications that real estate professionals can obtain. Lastly, we will explore how specialisation can affect outcomes.
Clarifying Terms: Real Estate Broker, Agent, and REALTOR
Real estate can be a complex industry, especially for individuals who are new to the market. If you are planning to buy or sell a home in the United States, you are likely to encounter three terms: real estate broker, agent, and realtor.
A real estate broker is a professional licensed by the state to help people buy and sell real estate. They are paid a commission when a deal is completed. A broker is licensed to work independently and may employ agents. Brokers are also paid on commission but get a percentage of the commissions of agents who work for them.
On the other hand, a real estate agent performs the same job as a broker but works under a broker’s supervision. Agents are also licensed by the state to help people buy and sell real estate, but they cannot work independently. They must be affiliated with a broker team.
The term realtor is less frequently used and is usually reserved for professionals who are members of the National Association of Realtors (NAR). Realtors can be a broker, agent, or any other profession in the industry.
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Reduced Transaction Costs: The Role of Real Estate Agents
Real estate agents play a crucial role in the industry, particularly in reducing transaction costs. The contractual connection between the principal (the house owner) and agent affects the incentives they confront and their impact on selling price and time on the market. With the use of technology in their initial home search, prospective property buyers and sellers routinely use the services of a real estate agent. Only in later stages of the transaction do they meet with a real estate attorney to check on liens, encroachments, and restrictions. Real estate agents can help with this and check municipal records for information.
Despite no immediately apparent problems in a home, most buyers and sellers appreciate the help an agent can give them. For instance, agents attend home inspections, negotiate repairs, and go through documents such as titles, title insurance, and surveys with buyers. For sellers, agents will list a property on the MLS, which is a multiple listing service, conduct open houses, network, and market the property. Thus, real estate agents can simplify the process of property buying and selling, and an expert in a particular area can ease the transaction even more.
Real Estate Brokerage Fee
Traditionally, the cost of most real estate transactions was tied to the value of the home rather than the value of the services provided by the real estate agent, which could be well worth the fee. The real estate broker receives their fee either as a commission or as a flat fee, the latter being a newer concept that has gained considerable ground. Within the traditional commission model, there are the options of full-service brokerage or a discounted commission with a reduced service package.
In a traditional brokerage model, the standard listing fee is 2.5–3%, which brokers typically charge to sell a home. The buyer’s agent commission is of similar value, bringing a property’s expected expenses up to 5-6%. For instance, when you list with a traditional real estate agent that has a commission based on the value of your home, you can expect to pay your listing agent at least $15,000.00 in commission and the buyer‘s agent at the other end of the transaction, bringing your total to $30,000.00.
Each agent pays about half of the 3% fee to their firm, and the selling agent keeps just 1.5% of the final sale price. It’s necessary to note that in situations where a real estate agent is utilised in a real estate transaction, the role it has to play is that of an agent, thereby facilitating the conduct between the buyer and seller. This particular service is what attracts homebuyers when they are purchasing a new home.
The Importance of Real Estate Specialisation
Real estate professionals can specialise in different areas such as green homes, luxury homes, and senior living. These specialisations help real estate agents hone their skills, become experts in a particular field, and market themselves as such. Specialisations create a unique selling proposition for the agent’s business, allowing them to stand out from their competition.
Designations and Certifications
Different designations and certifications can help real estate agents market their businesses. Here are some of the designations and certifications that real estate professionals can obtain:
- NAR’s Green Designation: This designation teaches agents how to gain a competitive edge when marketing green homes. Real estate agents learn how green properties are marketed differently than traditional homes. Green issues, research, and resources taught include how energy-efficient and sustainable features impact real estate.
- Seniors Real Estate Specialist (SRES): This designation is for real estate agents who want to sell homes in age-restricted communities. Professionals study buying, selling, relocating, and refinancing residential and investment properties. They learn how to help seniors prepare for life-changing decisions and issues related to real estate, such as pensions, retirement, and loan fraud.
- At Home With Diversity (AHWD): The AHWD certification concentrates on issues that concern multicultural populations, including diversity sensitivity, U.S. fair housing laws, and developing professional guidelines in a growing multicultural real estate market.
- Luxury Homes Certification (LHC): The Luxury Homes Certification teaches agents how to sharpen their skills and prepare for the evolving luxury home market. The certification covers the luxury niche, pricing strategies, negotiation tactics, and how to distinguish oneself from other professionals.
- Military Relocation Professional (MRP)
Real estate professionals play a significant role in facilitating property buying and selling, and specialisation is crucial in allowing real estate agents to stand out from their competition. We hope that this article has provided readers with a better understanding of real estate brokers, agents and realtors, the real estate brokerage fee, and how specialisation can affect outcomes.