As a prerequisite for selling real estate, real estate professionals must be licensed by the state in which they work, either as an agent/salesperson or as a broker. Before a license is issued, minimum standards for education, examinations and experience, which are determined on a state-by-state basis, must be met. After receiving a real estate license, most agents join their local board or association of REALTORS® and the National Association of REALTORS® (NAR), the world’s largest professional trade association. They can then call themselves REALTORS®.
The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of NAR and who adheres to its strict Code of Ethics (which in most cases goes beyond state law). In most areas, it is the REALTOR® who shares information on the homes they are marketing, through a Multiple Listing Service (MLS). Working with a REALTOR® who belongs to an MLS will give you access to the greatest number of homes.
What Are an Agent’s Obligations to You?
A real estate agent is bound by certain legal obligations. Traditionally, these common-law obligations are to:
- put the client’s interests above anyone else’s
- keep the client’s information confidential
- obey the client’s lawful instructions
- report to the client anything that would be useful
- account to the client for any money involved
A REALTOR® is held to an even higher standard of conduct under the NAR’s Code of Ethics.
In recent years, state laws have been passed setting up various duties for different types of agents. When you first start working with a REALTOR®, ask for a clear explanation of your state’s current regulations, so that you will know where you stand on these important matters.
Seller’s Agents and Buyer’s Agents
Suppose you sign an offer to buy a home for $150,000. You really want the property and there’s a chance other offers are coming in, so you tell the agent that “We’ll go up to $160,000 if we have to. But of course don’t tell that to the seller.”
If you’re dealing with a seller’s agent, he or she may be duty-bound to tell the seller that important fact. In most states, the seller’s agent doesn’t have any duty of confidentiality towards you. Honest treatment might require that the agent warn you that “I must convey to the seller anything that would be useful so don’t tell me anything you wouldn’t tell the seller.”
If you’re dealing with seller’s agents, it’s a good idea to keep confidential information to yourself.
These days many home buyers prefer to hire a buyer’s agent, one who owes the full range of duties, including confidentiality and obedience, to the buyer. A buyer’s agent is often paid by the seller, regardless of the agency relationship.
Evaluating a Real Estate Agent
In making your decision to work with an agent, there are certain questions you should ask when evaluating a potential agent. The first question you should ask is whether the agent is a REALTOR®. Here are other questions you should then ask the agent:
- Do you have an active real estate license in good standing? To find this information, you can check with your state’s governing agency.
- Do you belong to the MLS and/or a reliable online home buyer’s search service? Multiple Listing Services are cooperative information networks of REALTORS® that provide descriptions of most of the houses for sale in a particular region.
- Is real estate your full-time career?
- What real estate designations do you hold?
- Which party do you represent – the buyer or the seller? This discussion is supposed to occur early on, at “first serious contact” with you. The agent should discuss your state’s particular definitions of agency, so you’ll know where you stand.
- When I commit to working with you, how will you help me accomplish my goals? Will the agent show you homes that meet your requirements and will he or she provide you with a list of the properties you’ve been shown?