Real estate broker
A real estate broker is in the business of brokering real estate transactions; this is, finding sellers for those who want to buy real estate and finding buyers for those trying to sell real estate. Real estate brokers and their salespersons assist sellers in marketing their property and selling it for the highest possible price under the best terms and assist buyers by helping them purchase property for the best possible price under the best terms. In many jurisdictions, particularly in the United States, a license is required to be a real estate broker. In particular, any of the following could refer to a real estate broker in America:
- A person owning, managing, or being in charge of a real estate brokerage firm, even if the broker just works for him- or herself.
- The real estate brokerage itself.
- A licensed real estate professional who has obtained a broker's license (which entitles them to operate a real estate brokerage). By default, a real estate broker of this kind has already met the requirements of "salesperson" or "agent" licensure. A real estate broker can still be designated as such without owning a real estate brokerage.
- Some people may refer to any licensed real estate agent as a real estate broker. A licensed real estate agent is a professional who has obtained either a real estate salesperson's license or a real estate broker's license.
Real estate licensees and realtors
- When a person first becomes licensed to become a real estate agent, the person obtains a real estate saleperson's license from the state in which the person will practice. To become a real estate salesperson, the candidate must pass some specific coursework and then pass a state exam on real estate sales. Then in order to work legally, these salespersons must be associated with (and act under the authority of) a real estate broker as described above.
- Then, usually after getting some experience in real estate sales, a salesperson may decide to become licensed as a real estate broker. Commonly more coursework and a broker's state exam on real estate must be passed. Upon obtaining a broker's license, a real estate agent may continue to work for another broker as before, become a real estate office branch manager, or become in charge of his/her own brokerage and hire other salesperson (or broker) licensees.
A realtor is a real estate agent who is a member of the National Association of Realtors and adheres to the association's Code of Ethics. (The NAR insists that the word be written "REALTORĀ®," typeset in all capitals with an accompanying Ā® symbol. However, most print publications ignore this and revert to their own style guide.) All realtors are brokers/salespersons, but not all brokers/salespersons are realtors.
Listing contract and commission
Although there can be other possible ways of doing business, a real estate brokerage usually earns its commission as follows. A real estate broker and a seller who decides to sell his/her real estate through that broker sign a listing contract. The seller's real estate is then listed for sale. In consideration of the brokerage successfully finding a satisfactory buyer for the property, a real estate broker anticipates receiving a commission for the service the brokerage provided. Usually, the payment of a commission to the brokerage is contingent upon finding a satisfactory buyer for the real estate for sale. The details are typically determined by the listing contract.
Services provided by real estate agents to customers
The actual practices of real estate agencies depend on the state or other location. However, services provided by real estate agencies are commonly as follows:
Services provided to seller
Upon signing a listing contract with party wanting to sell the real estate (seller), the real estate brokerage (agency) attempts to earn a commission by doing the following for the seller:
buyer(s) for the real estate seller wants to sell, especially financially qualified
buyers who are willing to pay the listing price or close to it. In the United
States, the law requires the real estate agent to forward all offers to the seller
for consideration or review. To help accomplish this goal of finding buyers, a
real estate agency commonly does the following:
- The real estate property is listed for sale to the public, often on a Multiple Listing Service in addition to any other ways of listing the property.
- Preparation of papers describing the property for advertising, pamphlets, open houses, etc.
- Often a "For Sale" sign is placed on the property indicating how to contact the real estate agent.
- Advertising the property. Advertising is often the biggest outside expense in listing a property.
- In some cases, holding an Open house to show the property
- Being a contact person available to answer any questions about the property and to schedule showing appointments
- Ensuring buyers are pre-screened so that they are financially qualified to buy the property; the more highly financially qualified the buyer is, the more likely the closing will succeed.
- In some cases, provide the seller with a real property disclosure form and other forms which may need to be filled out
- Negotiates price on behalf of the sellers. The seller's agent acts as a fiduciary for the seller. This may involve preparing a standard real estate purchase contract by filling in the blanks in the contract form.
- In some cases, holds an earnest money check from the buyer(s) until the closing. The closing is the buyer/seller meeting where the real estate property is actually bought/sold and the title is conveyed by a deed.
Services provided to buyer
real estate brokerage (agency) attempts to do the following for the for buyers
of real estate:
- Finding real estate in accordance with the buyers needs, specifications, and affordability
- Taking buyers to and showing them properties available for them to buy
- When deemed appropriate, prescreening the buyers to ensure they are financially qualified to buy the properties shown
- Negotiates price on behalf of the buyers and prepares standard real estate purchase contract by filling in the blanks in the contract form. The buyer's agent acts as a fiduciary for the buyer.
For both buyers and/or sellers
- If the same agent represents both the buyer and the seller, the agent is typically considered a dual agent. Special laws/rules often apply to dual agents, especially in negotiating price.
- Additionally, some real estate agents coordinate various aspects of the closing
Real estate agent typically do not provide title service such as title search or title insurance, do not conduct surveys or formal appraisals of the property such as those required by lenders, and do not act as lawyers for the parties, although they may "coordinate" these activities with the appropriate specialists.
Regardless of whether a real estate agent assists sellers or buyers of real estate, negotiation and financing skills are important.
Some real estate brokers may be associated with loan officers who may help to finance buyers to make make their purchase.