The vast majority of people who buy and sell homes in the U.S. work through real estate brokers or agents. This is mostly good. Real estate transactions are complex enough to be completely overwhelming to individuals who know nothing about the process. But that notwithstanding, it is not wise to go into it without any knowledge at all.
Real estate brokers are supposed to be advocates for the clients they represent. Buyer’s agents work on behalf of buyers and seller’s agents work on behalf of sellers. In the end though, you are your best advocate. You ultimately have to look out for your own interests.
In light of that, here are four things to remember when working with real estate brokers:
1. Their Services Are Not Mandatory
Believe it or not, buyers and sellers are not legally required to use real estate brokers. According to the National Association of Realtors (NAR) some 11% of real estate transactions completed in 2019 did not involve an agent or broker.
Using a broker or agent is still a very good idea. As previously mentioned, real estate transactions are quite complex. Buyers and sellers can easily find themselves overwhelmed. The point here is to say that experienced buyers and sellers with multiple properties under their belts might not need an agent to guide them.
2. Contracts Protect Brokers First
Real estate brokers and agents are not required to tender contracts to start working with new clients. However, most do – primarily to protect themselves. Agent and broker contracts protect them against unhappy clients who might have reason to show their dissatisfaction in the future.
As just one example, it is typical for a buyer’s contract to contain language stipulating that any verbal statements made by an agent are neither promises nor accurate representations of the property in question. Note that clients have a legal right to have a contract reviewed by an attorney before signing.
3. Agent Commissions Are Not Mandatory
Next up are agent commissions. Did you know they are not mandatory? For example, imagine you were getting ready to list your Salt Lake City luxury home with CityHome Collective, a local real estate brokerage and design company. If you stipulated, in writing, that you had legitimately interested buyers prior to signing the contract, you might not have to pay the commission should one of those buyers end up making an offer.
Another thing to remember is that commissions can always be negotiated. The standard rule of thumb is 6%, with 3% going to each of the two agents. As a seller, you are the one paying the commissions. Thus, you can negotiate the commission rate with your real estate agent. You might propose a lower rate if you are selling an exceptionally expensive home. You might propose a higher rate if you want your agent to work extra hard to get a fast sale.
4. Open Houses Are for Your Agent
Last but not least is a dirty little secret about open houses. Rarely do they result in offers. Most people going through open houses are casual buyers or nosy neighbors. So why hold them? Real estate brokers use open houses to generate new leads. They engage visitors in conversation, pass out their business cards, and pour on the charm in order to secure their business for future purchases or sales.
There is a lot more to know about doing business with real estate brokers. However, the four tips mentioned here have probably opened your eyes. Just remember that there is more to buying or selling a house than appears on the surface.