What A Real Estate Agent Does and Why You Need One

What a Real Estate Agent Does and Why You Need One

Real Estate Agent, Real Estate Salesperson, Realtor, Broker, Agent, Buyer Agent, Seller’s Agent, Listing Agent and Associate Broker are some of the names that Real Estate Representatives are known as. Throughout this piece we will use Real Estate Agent in place of Real Estate Representative to stay current with local verbiage. We’re going to detail:

• Why you need a Real Estate Agent & what they actually do for you
• The different types of agents you can expect to interact with
• How Real Estate Agents are paid
• How to find one
• The types of teams you’ll work with

There is a lot of confusion around what your Real Estate Agent actually does in the real estate transaction. We are going to explain in detail what exactly the responsibilities are for a  Real Estate Agent in the DMV and how they are here to support you in your goals. 

For this piece we are directing our attention to Residential Real Estate Agents vs Commercial Real Estate Agents and Brokers. 

Notes: 

• Residential Real Estate Agents originated towards Home Buyers and Sellers with properties ranging from single family homes, multifamily properties up to 4 units, condos and cooperatives. 
• Commercial real estate Agents and Brokers are focused on retail space, industrial space, residential rental buildings over 5 units and mixed use buildings. 

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Why You Need a Real Estate Agent

Most people have heard, buying and selling real estate is one of the biggest transactions that most Americans make in their lifetime. In Washington, DC the median sales price for a home is well over $500,000 and all forecasts point to that number increasing. There are five primary areas/reasons on why you want to have a Real Estate Agent.

1. Access to information and Exclusive Properties
2. Subject Matter Experts
3. Transaction Management Expert
4. Time Saving
5. Unbiased Support and Guidance

Access to information and Properties

Most home buyers and home sellers do not work in real estate on a day-to-day basis. The advancement of information resources like Zillow and other online platforms have allowed consumers to access more information on-demand. Unfortunately, the majority of those tools are oriented at creating confusion to develop more leads for the site to sell back to real estate agents.

Real Estate Agents have the tools and resources to advise clients on a much deeper level compared to what sites like Zillow and Redfin can offer. Real Estate Agents have access to that go far beyond the simple search portals offered. The tools range from:

• Comparative Market Analysis Software
• NAR National Housing Data Reports
• Real Estate Development Pipelines
• Off-Market Databases
• Professional Relationships
  • Home Inspectors
  • Title Companies
  • Lenders
  • Contractors
  • Real Estate Attorneys

Subject Matter Experts 

Full time Real Estate Agents, dedicate a substantial amount of time studying the market to gain insights that benefit their clients. Beyond knowing things like average sale price and days on market averages.

A Real Estate Agent that is a subject matter expert will be able to discuss micro factors like traffic patterns, development trends and other insightful information that can have a huge impact on the value of homes. 

Note: Beware of part-time Real Estate Agents because it can often be difficult for them to dedicate the time to studying the industry and market compared to full time agents. 

Transaction Management Experts

Great Real Estate Agents are also masterful transaction managers for their clients. The majority of people buying and selling real estate are not in the real estate industry itself. With that said, trying to learn all the required documents and forms can be incredibly overwhelming without having a Real Estate Agent to manage that process.

Many real estate teams or groups are now creating departments that are dedicated to handling the transaction management and ensure that everything meets the highest compliance standards in the real estate transaction process.

Time- Savers

Real Estate Agents handle the majority of the time intensive work for their clients. From market research, preparing a home for sale, transaction management and much more.

Having an agent allows clients to focus on family, work requirements and other demands you might have in your busy life. 

Unbiased Support and Guidance

A licensed Real Estate Agent has a fiduciary responsibility to protect their clients best interest in the real estate purchase and sale process. 

Real Estate Agents are there to listen to your goals and help build a plan revolving around real estate. Then they will help you reach those goals for example by helping you build your search criteria or deciding what renovations would bring the highest ROI for your home. 

From there, one of the most important factors yet, is one of the hardest factors to quantify; Having a Real Estate Agent as an emotional sounding board and barrier between you and the other side of the transaction.

Buying and selling homes can be a very emotional experience for both sides. Tensions flare and boil over and can ruin potentially great opportunities for both sides. Having experienced real estate agents will allow you to be more objective and navigate these emotional trials and tribulations that you might experience during the sale or purchase of a home. 

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What are the different types and names for Real Estate Agents?

As we had mentioned before, Real Estate Agents go by a lot of names. Below we will break down and explain what each title means and what is required to get the title or certification.

We will start with focus on the three most common titles in our jurisdiction. 

• Real Estate Salesperson
• Real Estate Broker
• Realtor

Note: All three of these are commonly referred to as Real Estate Agents. Each jurisdiction has its own licensing requirements for example Maryland, Washington, DC and Virginia all have different real estate licensing requirements. There are some slight variations in naming conventions based on what jurisdiction you are coming from.

Real Estate Salesperson

In Washington DC, the entry level into real estate representation is as a real estate salesperson.

A real estate salesperson is responsible for completing the following requirements in order to get their license provided by the Department of Consumer and Regulatory Affairs.

Endorsement 

• Meet or exceed the District’s 60-hour pre-licensing education requirements in the jurisdictions from which you are applying.
• Complete a 3-hour DC Real Estate Commission (DCREC) approved Fair Housing course.
• All endorsement applicants are required to pass the state (DC) portion of the Salesperson exam with minimum 75 percent passing score. For additional information on the exam, refer to the “Real Estate License Examination Candidate Information Bulletin” on the DREC website. 
• Original letter of license certification from your licensing jurisdiction. The certification letter has to be dated within 90 days and contain the official seal. Pocket cards and license copies are not accepted.

Examination

• Complete 60-hour salesperson pre-licensing education from a DC Real Estate Commission-approved educational provider. 
• Passing scores on both the national & state (DC) portions of the Salesperson exam. For additional information on the exam, refer to the “Real Estate License Examination Candidate Information Bulletin” on the DREC website.  
• An applicant for a salesperson’s license who has passed the required examination shall submit an application for a license to the Commission with the required fees within six (6) months of passing the examination

Once they fulfill these requirements they are allowed to assume the title of real estate salesperson. From there the Real Estate Salesperson has to serve under a Broker who carries the liability and job of mentoring salespeople. 

Real estate salesperson are commonly referred to as:

• Real Estate Agent
• Agent
• Buyers Agent 
• Seller or Listing Agent
• Realtor (If they are a member of the National Association of Realtors)
• Salesperson

Real Estate Broker (Manager)

A Real Estate Broker in Washington, DC is a real estate salesperson that has fulfilled all the obligations of a real estate salesperson for a specified period of time.

In addition to taking additional education requirements. The majority of the additional education Brokers receive are focused on the operations of a Brokerage and the liability mitigation.

Here is a full breakdown of the requirements from DCRA.

Endorsement

• Meet or exceed the District’s 135-hour pre-licensing education requirements in the jurisdictions from which you are applying
• Two (2) years’ experience as a licensed salesperson. The active license must immediately precede the application date. 
• Complete a 3-hour DC Real Estate Commission (DCREC) approved Fair Housing course.
• Passing score on the state (DC) portion of the Broker exam. For additional information on the exam, refer to the “Real Estate License Examination Candidate Information Bulletin” on the DREC website.
• An applicant for an Independent Broker’s license who has passed the required examination shall submit an application for a license to the Commission with the required fees within six (6) months of passing the examination.
• Original letter of license certification from your original jurisdiction. The certification letter has to be dated within 90 days and contain the official seal. Pocket cards and license copies are not accepted.

Examination

• Two (2) years’ experience as a licensed salesperson. The active license must immediately precede the application date. 
• Complete 135-hour pre-licensing educations.
• Passing scores on both the national & state (DC) portions of the Broker exam. For additional information on the exam, refer to the “Real Estate License Examination Candidate Information Bulletin” on the DREC website.
• An applicant for an Independent Broker’s license who has passed the required examination shall submit an application for a license to the Commission with the required fees within six (6) months of passing the examination.

Once they fulfill all the jurisdictional requirements they can go with two routes.

• Managing Broker: Owns or manages the brokerage and is available to support and grow the real estate business as a whole. 
• Associate Real Estate Broker serves under a brokerage but does not manage the day to day operations of Real Estate Agents. 

Real Brokers are commonly referred to as:

• Broker
• Associate Broker
• Real Estate Agent
• Agent
• Buyers Agent 
• Seller or Listing Agent
• Realtor (If they are a member of the National Association of Realtors)
• Salesperson
• Sales Broker

Realtor

Every real estate agent is not a Realtor but the majority of full time agents are. A Realtor is a licensed real estate salesperson or broker who belongs to the national Association of Realtors which is the largest trade organization in the country.

Realtors are held to higher ethical standards than other licensed real estate professionals they have to follow a detail code of ethics that contain 17 Articles that can be found here.

Realtors are commonly referred to as:

• Broker
• Associate Broker
• Real Estate Agent
• Agent
• Buyers Agent 
• Seller or Listing Agent
• Realtor (If they are a member of the National Association of Realtors)
• Salesperson
• Sales Broker

Note: Just having a real estate license does not mean you are a Realtor. Here is more information on The National Association of Realtors.

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Real Estate Agent Compensation

Real estate agent compensation can seem extremely complicated. In reality there are three primary ways real estate agents are compensated.

1. Commissions 
2. Broker & Agent Fees
3. Flat Fee

Based on what Real Estate Agent or Brokerage you decide to work with will dictate what type of compensation they will receive. Fortunately before you are obligated to make any payments, that agent will have to present you with a Buyer Agency Agreement that will define your relationship with the Agent/Brokerage and all the costs associated with working with that Real Estate Agent. 

Commissions:

The most common way Real Estate Agents are paid is through commissions from the sale of property. Typically, Commissions are figured as a percent of the property’s net sales price to the seller. A common commission percentage in the Washington DC region for residential real estate is approximately 6% of the net sales price. 

Note: commissions are generally only paid if the transaction successfully goes through. Note commissions are generally only paid if the transaction successfully goes through.

When listing a property, the owner of the home will strategize with the listing agent to develop a plan to best market and sell the property. During that discussion is when they will define total compensation offered by the property owner.

Typically, real estate commissions are split between the Listing Agent and the Buyers Agent. For example, if the seller and listing agent agree to a total commission payment of 6%. Then the listing agent would make 3% and the buyer agent would receive 3% upon the transaction closing. 

Pro-Tip: if you are purchasing a home, ensure that in your buyer agency agreement you don’t agree to pay a minimum commission i.e. 3%. If the seller is not offering a full 3% commission to the buyer side then you could be left covering the difference. 

Broker and Agent Fees:

In order to cover rising operating costs more and more brokerages and real estate agents are charging agent and broker fees to offset the expenses.

These charges can range anywhere from a couple hundred dollars to thousands of dollars based on what Real Estate Agent or Brokerage you use. 

In general these fees are only paid upon successful settlement.

Flat fee:

The flat fee model has been growing in popularity recently. Prior to putting the home on the market the seller and listing agent will decide a flat fee.The flat fee will be split and offered to both the buyer’s agent and the listing agent.

Unfortunately, the flat fee model is generally associated with discount brokerages that have bad service. If you are working with an agent that follows a flat model ensure that there is additional language added that only allows compensation upon successful sale of the property.

Real estate compensation for Real Estate Agents can be overwhelming if you are not familiar. By using the framework provided above you will be able to navigate and identify what type of model your agent is working on. We recommend that you always tie compensation to the successful completion of the transaction.

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How to Find a Real Estate Agent

There are multiple ways to meet a real estate agent within your local market. From open houses, mailers and general advertising there is a glut of Real Estate Agents available to you. That being said, not all Real Estate Agents are equal as we had mentioned before. 

We generally recommend two methods for find a great Real Estate Agent. 

Network Referrals: One of the best ways to find a great Real Estate Agent is by talking to your Network and asking them for recommendations. Ask them what they liked and did not like about working with that Real Estate Agent. 

Internet research: We are in a digital age and one of the best places to find a talented Real Estate Agent is on the Internet. As a general rule a Real Estate Agent without a web presence should not be considered a serious option. Focus on the resources that the agent provides on their website and look for reviews if you can find them. 

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What Are Real Estate Brokerages – Teams/Groups – Agents?

Real Estate Brokerages

A real estate brokerage is an organization led by a Real Estate Broker. Real estate brokerages provide a structure for both solo Real Estate Agents and Real Estate Teams. There is a wide range of Brokerages that Real Estate Agents and teams can choose from ranging from Full Service White Glove Firms like Compass and WFP. To discount low service Brokerages Exit Realty and Fairfax Realty. 

The primary purpose of a real estate brokerage is to provide training, coaching, support, technology and compliance resources. For real estate agents and brokers within the brokerages umbrella. 

Individual or solo real estate agent

An individual or solo real estate agent is responsible for essentially everything from start to finish in the transaction process. For many agents being solo or an individual is overwhelming and inefficient.

Real Estate Teams or Real Estate Groups

Real Estate Teams and Groups are essentially the same thing. When we mention Real Estate Teams we are also including Real Estate Groups. Real Estate Teams began to be popularized in the 2010s by Gary Keller of Keller Williams.

Real Estate Teams are designed to benefit the client they serve by leveraging the resources of the overall Brokerage. Then supercharging the unique benefits that Real Estate Team might offer. For example, The Kree Team offers the most First Time Home Buyer Education in DMV. That can only be done through team effort. 

Having a full team behind a Home buyer and home seller can make all the difference in achieving your real estate goals. Real Estate Teams are able to provide substantially more market insights than an individual Real Estate Agent and within the team are able to develop elite specialties. As we had mentioned, more and more Real Estate Teams are developing whole transaction management departments to ensure that everything from a compliance standpoint is handled above the industry standard.

When deciding between a Real Estate Team and Individual Agent we recommend choosing to work with a Real Estate Team. That being said, there are some specific situations when it might be best to work with an individual Real Estate Agent. 

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Buyers Real Estate Agent Vs Listing Real Estate Agents Vs Dual Agents

Listing agents are legally bound to help the home sellers whereas buyer agents are legally bound to help the home buyers. 

A dual agent represents both the home buyer and the home seller. In order to represent both the buyer and the seller the dual agent is required to have both parties involved sign an agreement allowing it. 

In general we don’t recommend Dual Agency as it makes it incredibly difficult to advocate for both sides. 

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Closing Out

After reading this, we hope that you have a greater understanding to the array of value that a Real Estate Agent provides, and how it can ultimately provide a much better experience as you strive toward your goals.

You know have deeper insight into how a Real Estate Agent helps you, how they’re paid, the types of agents out there, and where to find them. With this information in your arsenal, you’ll now be able to make more informed decision when it comes to choosing an agent and getting the most out of them to meet your goals.

Let us know if you need help finding an agent or have any questions.