Consumers are often confused by the different terms used to describe real estate agents and real estate companies. In this post we will define the different types and terms used to describe real estate agents. In another post we will cover terms used to describe real estate brokers and agencies.
What is the difference between salesperson, agent, realtor, listing agent, buyer agent, designated agent, dual agent, seller agent, cooperating agents, designated agents, non-agents, and real estate fiduciaries? What do these terms mean? Knowing what they mean and hiring the right agent can make all the difference when buying or selling your home.
Salesperson – obtains a real estate license by taking a 40 hour course and passing a national and state exam that allows you to purchase a license that is good for two years in Massachusetts. 12 hours of continuing education is required prior to renewing your license two years later. A license is required in each state you do business in.
Realtors® – are members of the National, State, and Local REALTOR® Associations. Realtors® must belong to all three and differ from other licensees in that they must submit to the Realtor® Code of Ethics and they agree to arbitrate internally rather than litigate all financial disputes. Most, but not all, real estate licensees are Realtors® and if the Broker is a Realtor® all the licensees in that firm must also be Realtors® and must belong to the national, state, and local associations.
The various letters behind a Realtor’s® name represent additional education they have taken to be certified and better trained to do their job. Some include ABR, CBA, CBR, CIPS, CRB, CRE, CRS, e-Pro, GRI, MRP, RENE, SRES, with the CCIM for commercial real estate. Even though it looks like alphabet soup, each of these and other designations cost time, effort, and money for real estate agents to improve their skills.
Agents – are salespeople or broker-associates that work for a managing broker of record, they are the agents of that broker. They speak and act on behalf of the broker of the firm and represent anyone whom that broker represents as subagents. An agent of another agent is called a subagent. Agents of a broker are subagents of that broker’s clients. When one brokerage firm extends cooperation to another brokerage, that also is subagency.
Listing Agents (Seller’s Agents) – are brokers who represent sellers of real estate list properties in a shared common database, the Multiple Listing Service (MLS) to market the property for the sellers they represent. That means all agents (salespeople and broker associates) who work for that managing broker are also agents of the seller who owns the property. Actually, the agent who lists a property and works for that seller is a subagent of the seller whose primary agency relationship is with the managing broker of the firm. But for purposes of simplicity, they are called listing agents rather than listing subagents. Both the managing brokers and their associates, all represent the sellers whose property they have listed making each of them Seller’s Agents.
Buyer Agents – are relatively new to residential real estate. After a Federal Trade Commission (FTC) survey in the mid 1980’s a lot of confusion arose over who represents whom in a real estate transaction. Sellers, buyers, and real estate licensees were all confused. The FTC survey heightened awareness that buyers were being sold properties while sellers were the only ones being represented. This gave rise to companies like Buyers Choice Realty starting to represent buyers instead of sellers of real estate. When a licensee is actually representing the buyer rather than the seller that person is a Buyer’s Agent. That means all the agents as well as the managing broker of the firm owe allegiance to the buyer of real estate.
At first the industry gave a lot of push back to buyer representation since the industry had been built on seller representation only. As the idea of buyer representation began to take root, large real estate companies said “we can do that too” but there is an inherent conflict when the same company is purporting to represent both the buyer and the seller at the same time. There are so many questions to consider in this relationship. How can you give both confidentiality and full disclosure to both sides of a transaction? How can you promise to seek the highest prices for the seller and at the same time claim to be working to get the lowest price for the buyer? How can you give undivided loyalty to both sides of the transaction? You can’t and that gave rise to the Dual Agency.
Exclusive Buyer Agents – only represent buyers and to avoid any conflict of interest, never list property or work for sellers. These agents do not see themselves as salespeople, but rather as advocates, counselors, and negotiators for home buyers. There is typically no additional cost to use an Exclusive Buyer Agent since the cooperating commission fee is built into the sales price of the home. Since the law states that all real estate commissions are negotiable and may not be fixed, buyers should agree with their Exclusive Buyer Agent what the actual financial arrangement will be. The farther distance you can get from an agent or agency representing the seller, the better your chances of getting the proper support, protection, and advocacy your deserve.
Facilitator – is a Massachusetts licensee/consumer relationship called Facilitator. In this relationship the real estate licensee does not work for either the buyer of the seller. There is no responsibility on the part of a facilitator to maintain confidentiality. The role of the facilitator is simply to help bring a buyer and seller together and collect the commission.
It is important to note that at the first personal meeting with a consumer to discuss a specific property, all real estate agents are obligated to present the state-mandated Licensee/Consumer Relationship Disclosure. This document clearly explains you should not assume that a real estate licensee is working solely for you unless you have an agreement for that relationship. The only way that this can be done without any conflict of interest is if sellers use an Exclusive Seller Agency and buyers use an Exclusive Buyer Agency.
There are very few Exclusive Buyer Agencies in Boston and on the North Shore. Buyer’s Choice Realty is one of them. Give us a call and we’ll put you into the hands of a true Buyer’s Agent 800-25-BUYER (800-252-8937).
