Realtor. Real estate agent. Real estate broker. If you’re planning on buying a house you’ll probably hear all of these and maybe more. Trying to understand who everyone involved in the home buying process is and what they do can be confusing. But in this case, there’s not that much to figure out: they’re all basically doing the same things in the home buying process.
Some of this can vary state by state but a real estate agent is someone who is licensed to represent buyers and sellers in real estate negotiations and sales. A real estate broker is more heavily licensed and experienced than an agent, and real estate agents almost always work for a real estate broker. A realtor is someone who belongs to the professional association, National Association of Realtors, and can be an agent or a broker.
For the remainder of this article, we’ll be using the term “real estate agent” but remember that person could also be a broker and/or a realtor. A real estate agent is your representative during the home buying (or selling) process. People interested in buying a home will have an agent (the “buyer’s agent”) and people selling their home will have one too (the “seller’s agent” or “listing agent”). You can find an agent any number of ways. You’ve probably had friends or family buy or sell a home; ask them if they liked their real estate agent. Check yard signs in neighborhoods you’re interested in. Lots of agents put their picture and contact information front and center when they’re selling a home. If you want an agent who is a realtor, check the National Association of Realtors for realtors near you.
Once you’ve found your real estate agent, you may be asked to sign an agreement that indicates they represent you and commits you to working exclusively with them for a period of time. A buyer’s agent doesn’t get paid until the sale is final, so it’s understandable the agent will want to make sure you’re working with them all the way through the process. Speaking of getting paid, the agent’s fee is typically from 1% to 6% of the sales price and is paid by the seller. That means you most likely won’t ever write a check directly to your agent, but you’ll pay for it in the purchase price of the home. You pay the seller; the seller pays the agents involved (buyer’s and seller’s agents).
Your real estate agent can help you figure out what neighborhoods to look in and what your price range translates to in terms of square footage and number of bedrooms and bathrooms. They can recommend homes as they come on the market and set up and accompany you on tours of available homes. Once you find a home you want to make an offer on they will help you come up with that offer and negotiate with the seller’s agent on your behalf. They can recommend mortgage providers to you (but should disclose if they are associated with them, i.e. have a financial relationship that means they make money if you use the mortgage lender they recommend). They can also recommend professionals to do the inspection, title agents, and more (the list of what you’ll need to do to close varies by state but there is always plenty of paperwork and your real estate agent can usually help you find what you need).
After closing your real estate agent will be paid (a percentage of the sale price via the seller, as mentioned above) and that’s usually the end of the relationship. But buyer’s agents almost always represent sellers as well so if you change jobs, outgrow your house, or just are ready for a change, keep them in mind when you start thinking about selling. (And when you’re selling, it can be worth trying to negotiate the fee percentage since as the seller you’ll be the one paying it out of the sales price.)
You don’t have to use a real estate agent. In situations where a home is “For Sale By Owner,” meaning there is no seller’s agent, you may be tempted to forego a buyer’s agent as well. That’s a viable option and does save you money. But remember that you will have to do everything the agent usually does, including but not limited to setting up viewings, scheduling inspections, negotiating price, and working with attorneys.