Services provided to the seller as a client
Upon signing a listing contract with the seller wishing to sell the real estate, the brokerage attempts to earn a commission by finding a buyer and writing an offer, a legal document, for the sellers’ property for the highest possible price on the best terms for the seller. In Canada and the United States, most laws require the real estate agent to forward all written offers to the seller for consideration or review.
To help accomplish the goal of finding buyers, a real estate agency commonly does the following:
- Lists the property for sale to the public, often on an MLS, in addition to any other methods.
- Provides the seller with a real property condition disclosure (if required by law) and other necessary forms.
- Keeps the client abreast of the rapid changes in the real estate industry, swings in market conditions, and the availability and demand for property inventory in the area.
- Prepares paperwork describing the property for advertising, pamphlets, open houses, etc.
- Places a “For Sale” sign on the property indicating how to contact the real estate office and agent.
- advertises the property, which may include social media and digital marketing in addition to paper advertising.
- Holds an open house to show the property.
- Serves as a contact available to answer any questions about the property and schedule showing appointments.
- Ensures that buyers are pre-screened and financially qualified to buy the property. (Sellers should be aware that the underwriter for any real estate mortgage loan is the final say.)
- Negotiates the price on behalf of the sellers.
- Prepares legal documentation or a “purchase and sale agreement” on how the transaction will proceed.
- Acts as a fiduciary for the seller, which may include preparing a standard real estate purchase contract.
- Holds an earnest payment cheque in escrow from the buyer(s) until the closing if necessary. In many states, the closing is the meeting between the buyer and seller where the property is transferred and the title is conveyed by a deed. In other states, especially those in the West, closings take place during a defined escrow period when buyers and sellers each sign the appropriate papers transferring title, but do not meet each other.
- Negotiates on their client’s behalf when a property inspection is complete. Often times having to get estimates for repairs.
- Guards the client’s legal interests (along with the attorney) when facing tough negotiations or confusing contracts.
Services provided to buyers
Buyers as clients
With the increase in the practice of buyer brokerages in the United States, agents (acting under their brokers) have been able to represent buyers in the transaction with a written “Buyer Agency Agreement” not unlike the “Listing Agreement” for sellers referred to above. In this case, buyers are clients of the brokerage.
Some brokerages represent buyers only and are known as exclusive buyer agents (EBAs). Consumer Reports states, “You can find a true buyer’s agent only at a firm that does not accept listings.” The advantages of using an Exclusive Buyer Agent is that they avoid conflicts of interest by working in the best interests of the buyer and not the seller, avoid homes and neighborhoods likely to fare poorly in the marketplace, ensure the buyer does not unknowingly overpay for a property, fully inform the buyer of adverse conditions, encourage the buyer to make offers based on true value instead of list price, and work to save the buyer money. A buyer agency firm commissioned a study that found EBA purchased homes were 17 times less likely to go into foreclosure.
A real estate brokerage attempts to do the following for the buyers of real estate only when they represent the buyers with some form of written buyer-brokerage agreement:
- Find real estate in accordance with the buyer’s needs, specifications, and cost.
- Take buyers to and shows them properties available for sale.
- Pre-screen buyers to ensure they are financially qualified to buy the properties shown (or use a mortgage professional, such a bank’s mortgage specialist or alternatively a Mortgage broker, to do that task).
- Negotiate price and terms on behalf of the buyers.
- Prepare standard real estate purchase contract.
- Act as a fiduciary for the buyer.
- Find real estate in accordance with the buyers’ needs, specifications, and affordability.
- Assist the buyer in making an offer for the property.
Buyers as customers
In most states until the 1990s, buyers who worked with an agent of a real estate broker in finding a house were customers of the brokerage since the broker represented only sellers.
Today, state laws differ. Buyers and/or sellers may be represented. Typically, a written “Buyer Brokerage” agreement is required for the buyer to have representation (regardless of which party is paying the commission), although, by his/her actions, an agent can create representation.