A real estate broker is in the business of brokering real estate transactions; that 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 person is required to have a license in order to be remunerated for services rendered as a real estate broker. In particular, any of the following descriptions could refer to a real estate broker in the USA:

• 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. The brokerage is the firm or business of the broker which can also be called a real estate agency.

• 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

In the United States, there are commonly two levels of real estate professionals licensed by the individual states, not by the federal government:

1. 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. Many states also have reciprocal agreements with specific other states, allowing a licensed individual from a qualified other state to take the second state's exam without completing the course requirements.
2. 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 in a similar capacity as before (often referred to as a broker associate), become a real estate office branch manager, or become in charge of his/her own brokerage and be able to hire other salesperson (or broker) licensees.

Typically, a real estate license is needed to perform a "real estate act" (such as showing properties for sale) for compensation, but principals (sellers or buyers) can perform these acts themselves without a license.

A REALTOR is a real estate agent or broker who is a member of the National Association of Realtors and adheres to the association's Code of Ethics. All REALTORS are brokers/salespersons, but not all brokers/salespersons are REALTORS.

A La Carte Real Estate Services are professional real estate services that are given one transaction at a time instead of the conventional full-service, commission-based brokerage relationship. Some services are listed below.

• Comparative Market Analysis
• Facilitating a Purchase
• Facilitating a Sale
• FSBO Document Preparation
• Full Residential Appraisal
• Full Service Agent
• Home Selling Kits
• Hourly Consulting
• MLS Marketing Service

Estate agent is the term used in the United Kingdom to describe a person or organization whose business is to market real estate on behalf of clients.

Listing contract and commission

Although there can be other possible ways of doing business, a real estate brokerage usually earns its commission (fee) 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. In the United States a 6% commission is considered "standard" for residential real estate and is typically paid by the seller. This is generally split 50/50 between the listing agent and the selling agent. However some brokers charge as much as 10% while others will offer services for 1%. Fee-for-service real estate brokerages are also increasing in popularity. This is not, however, the norm throughout the world. In Australia, for example, listing agents are paid 1% and very few buyers use an agent. If they do, they pay out of pocket.

Real estate commissions are becoming a point of controversy. Home values in many areas have quadrupled over the past 20 years and yet the actual work, local knowledge, and expertise required by real estate agents has decreased due mostly to technological improvements and the internet. This may be contributing to the increased number of licensed agents. Another controversy exists for the commissions of real estate agents. If a listing agent sells a property for an additional $100,000, he in turn will make an additional $3000. In theory this will motivate him or her to get top dollar price for his buyer. The controversy is even more heated, however with regards to the selling agent. If a buyer attempts to get a lower sales price by $100,000, then his agent would actually make $3000 less. It's in the agent's best interest to advise his client to purchase the property at a higher price. Hence a conflict of interest for myopic agents, as an agent is likely to make much more money through satisfied clients and their subsequent referrals than foul play on a transaction.

Services provided by real estate agents to customers

The customers of real estate brokers are the sellers and buyers of the real estate to be sold. The sellers and buyers themselves are the principals (definition 2 in the Principal article) in the sale and real estate agents are their agents (law). However, although a real estate agent commonly fills out the real estate contract form, typically real estate agents are not given power of attorney to sign the real estate contract or the deed; the principals and seller sign these documents, respectively. The respective real estate agents put themselves down on the contract as the agents for each principal so that they may be able to collect their commission(s). The use of a real estate broker is not a requirement for the sale or conveyance of real estate or for getting a mortgage loan from a lender; although once a broker is used, the lender or its attorney will require that they be paid. Lenders typically have other requirements, though, for a loan: see Closing cost.

1. A buyers agent represents the buyer during the transaction and has fiduciary duty to the buyer.
2. A sellers agent represents the seller during the transaction and has fiduciary duty to the seller.
3. An agent is usually both the buying and selling agent at different times in their career, there are certain agents who will choose to work as a buyers or sellers agent exclusively.

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 the 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:

• Find buyer(s) for the real estate the 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 prescreened 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 payment cheque in escrow 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.

Lockbox

A situation which may need the use of a broker to sell a house is when the seller does not live in or near the real estate to be sold or has already moved out and may be living too far away to show the real estate to prospective buyers, who will surely want to see the inside before considering buying it. A real estate brokerage can be hired to help arrange showing of the property by various real estate agents. Since there will be nobody living there to allow customers/agents inside, a lockbox can be placed on the door handle (or otherwise attached to the door or the building) which can only be removed by the listing brokerage. Locked inside the lockbox is the key(s) to the building. The lockbox can only be opened by licensed real estate agents, and often only with authorization from the listing brokerage, usually by the use of some secret combination provided by the brokerage. A lockbox is also placed on homes that are occupied and with the approval from the home owner they can be shown, usually by appointment.

Services provided to buyer

• A 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 their purchase.

See also

• Real estate
• Realtor
• Estate agent (United Kingdom)

Real estate brokers who work with lenders may not receive any compensation from the lender for referring a client to a specific lender. To do so would be a violation of (US) Federal RESPA laws. All compensation to a broker must be disclosed to all parties.

External links

• Tips from US Department of Housing and Urban Development
• The Wall Street Journal’s Guide to Property, Real Estate Journal