The responsibilities of real estate agents can vary widely from state to state, and also depend on the particular contractual arrangements allowed in each state. There are differences depending on whether you are the client or a customer. Agents owe more to their clients than to their customers.
Whether you are a client or customer depends on state variations in agency law, real estate licensing law, and your own contract or lack thereof. Be sure to ask about these specific issues before entering into a relationship and divulging any confidential information.
As a general rule, a real estate agent is like any other professional. Real estate agents are able to help you work more efficiently because of their superior access to specialized training and information, his or her insider status in the marketplace, their willingness to do the time-consuming chores, and their negotiation skills. However, you cannot just check out and let your agent do everything. You are a team, and every team must have a clear understanding regarding goals, who will do what to reach the goals, how they will do it, and when the parties will get together to discuss progress.
Discount real estate brokers unbundle the features previously listed. The most common type of discount broker will sell you some of his or her insider status in the marketplace by listing your property on the local Multiple Listing Service (MLS) or a nationwide commercial website such as LoopNet. You usually either pay a flat fee for this service, or you pay a reduced commission.
Other services, such as advice, marketing materials, checklists, forms, and screening interested parties might be available for a separate fee. Generally speaking, the discount broker will not show your property to anyone or negotiate on your behalf. Before entering into any relationship with a discount broker, you should have a clear agreement regarding what services are - and what services are not - included. The agent should provide this to you in writing, along with an explanation of how he or she will be compensated.
This is going to depend on your experience and your personality. Beginning investors with any qualms at all about their knowledge of the market should usually employ an agent. I once represented a buyer who was looking for land on which to build a commercial stable. She called me one day, raving about something she had found. It was perfect, according to her. I drove up to investigate and found a beautiful piece of land, ideal for the high-end clientele she was seeking. Unfortunately, the farm next door raised swine. My client did not notice because the wind was blowing from the other direction that day. Because of my prior real estate experience, I was sensitive to these types of issues regarding neighbors and knew to investigate.
Eventually, you will reach the point at which you will have equal or superior knowledge regarding your type of investments. Even when that day comes, though, you still might choose to employ a real estate agent for his or her contacts, legwork, assistance, and distance. Distance is sometimes important when negotiating. By distance, I mean the ability of an agent to say, "I think that is a good counteroffer and can recommend it, but my client is another matter. I will have to get back to you." In face-to-face negotiations between parties, you sometimes find yourself agreeing to things and then later changing your mind when you have time to think more carefully about them. Having an agent avoids this problem.
Remember that the real estate agent does this for a living. If you are buying, the agent will not show you For Sale By Owner (FSBO) properties because the owner of a FSBO property will usually not pay a commission to the agent. This is unfortunate because many agents probably know about many bargains in the FSBO market.You might want to discuss your willingness to pay a 3% or so commission to your agent if he or she finds a FSBO that you decide to purchase, if the seller will not pay a commission. Three percent is usually about what your real estate agent would make if you bought property listed by another agent.
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