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One of the most complex and important financial events in peoples’ lives is the purchase or sale of a home or investment property. Because of this complexity and importance, people usually seek the help of real estate brokers and sales agents when buying or selling real estate.
Real estate brokers and sales agents have a thorough knowledge of the real estate market in their community. They know which neighborhoods will best fit clients’ needs and budgets. They are familiar with local laws and know where to obtain financing. Agents and brokers also act as intermediaries in price negotiations between buyers and sellers.
Studies have shown that sales involving a realtor involve a higher sale price than those not utilizing the services of a real estate agent.
Also, real estate agents have more marketing resources than someone who is selling their property by themselves.
Consider these things when deciding whether or not to work with a listing agent to sell your home.
If You Work with an Agent
- You sign a listing contract, which is a legally binding agreement that typically gives the agent the exclusive right to sell your property within a certain period of time (usually 60 to 90 days).
- The agent researches the market in order to determine your home's market value and reach a sales price in consultation with you.
- The agent prepares a written marketing plan that includes a schedule for listing, showing, and advertising your property.
- The agent advises you on how best to prepare your home for sale and helps arrange for pre-sale tasks such as a home inspection.
- The agent transmits any offers to you, negotiates the purchase based on your recommendations, and moves all the paperwork through the transaction.
- You pay for the listing agent's services, either as a percentage commission or a flat fee, as specified in your listing contract. The buyer's agent is paid out of that fee.
If You Work Alone
- You are in charge of the transaction, including marketing your property, negotiating the purchase, and handling the paperwork. Educate yourself on relevant federal laws and state regulations governing real estate sales.
- You do your own market research (including possibly hiring an appraiser) to determine your home's value.
- You create your own marketing plan and decide how you will handle inquiries from prospective buyers or their agents.
- You decide how to prepare your home for sale, including arranging for pre-sale repairs, inspections, or other necessary services.
- You field all buyer inquiries, show the house yourself, handle all negotiations, and move the paperwork through the transaction.
- You pay for the buyer's agent's services, unless the buyer is also working alone or has hired the agent for a set fee. You may also pay for services you require during the transaction, such as legal advice or help negotiating the contract. Discount brokers offer individual services for flat rates.
Real estate agents usually are independent sales workers who provide their services to a licensed real estate broker on a contract basis. In return, the broker pays the agent a portion of the commission earned from the agent’s sale of the property. Brokers are independent businesspeople who sell real estate owned by others; they also may rent or manage properties for a fee. When selling real estate, brokers arrange for title searches and for meetings between buyers and sellers wherein details of the transactions are agreed upon and the new owners take possession of the property. A broker may help to arrange favorable financing from a lender for the prospective buyer; often, this makes the difference between success and failure in closing a sale. In some cases, brokers and agents assume primary responsibility for closing sales; in others, lawyers or lenders do so. Brokers supervise agents who may have many of the same job duties. Brokers also manage their own offices, advertise properties, and handle other business matters.
Besides making sales, agents and brokers must have properties to sell. Consequently, they spend a significant amount of time obtaining listings —agreements by owners to place properties for sale with the firm. When listing a property for sale, agents and brokers compare the listed property with similar properties that on the market and have recently sold, in order to determine a competitive market price for the property. Once the property is sold, the agent who sold it and the agent who obtained the listing both receive a portion of the commission. Thus, agents who sell a property that they themselves have listed can increase their commission.
Most real estate brokers and sales agents sell residential property. A small number, usually employed in large or specialized firms, sell commercial, industrial, agricultural, or other types of real estate. Every specialty requires knowledge of that particular type of property and clientele. Selling or leasing business property requires an understanding of leasing practices, business trends, and the location of the property. Agents who sell or lease industrial properties must know about the region’s transportation, utilities, and labor supply. Whatever the type of property, the agent or broker must know how to meet the client’s particular requirements.
Before showing residential properties to potential buyers, agents meet with them to get a feeling for the type of home the buyers would like. In this prequalifying phase, the agent determines how much the buyers can afford to spend. In addition, the agent and the buyer may sign a contract which states the agent will be the only one to show houses to the buyers. An agent or broker uses a computer to generate lists of properties for sale, their location and description, and available sources of financing. In some cases, agents and brokers use computers to give buyers a virtual tour of properties in which they are interested. With a computer, buyers can view interior and exterior images or floor plans without leaving the real estate office.
Agents may meet several times with prospective buyers to discuss and visit available properties. Agents identify and emphasize the most pertinent selling points. To a family looking for a house, they may emphasize the convenient floor plan, the area’s low crime rate, and the proximity to schools and shopping centers. To a potential investor, they may point out the tax advantages of owning a rental property and the ease of finding a renter. If bargaining over price becomes necessary, agents must follow their client’s instructions carefully and may have to present counteroffers in order to get the best possible price.
Once both parties have signed the contract, the real estate broker or agent must make sure that all special terms of the contract are met before the closing date. There are many details involved in the sale. For example, the agent must make sure that the mandated and agreed-upon inspections, including that of the home and termite inspections, take place. Also, if the seller agrees to any repairs, the broker or agent will oversee that they are made. Increasingly, brokers and agents are handling environmental problems as well, by making sure that the properties they sell meet environmental regulations. While loan officers, attorneys, or other persons handle many details, the agent must ensure that they are completed.
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