Newbie Question re: Agent/Broker

Buying & Selling Real Estate
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Newbie Question re: Agent/Broker

Stefanie Pittman
Member since 2011 · 2 posts · 0 votes

Greetings,

Could someone help me with the following:

I'm taking a home study short sale course and I have never bought a home before so I don't know anything about the buying process. I started a little backwards. Anyhow, I was doing some research online and I just wanted to make sure I read this correctly. It seems like there is no difference between a real estate agent, sales agent, and a listing agent? Is this correct?

Next, If you’re working with an agent, would like to sell your home, and has found a buyer purchase the house, where does the closing process take place. Could you go to your own preferred title company or do you have to use the office where the agent is located? If you have to use the office where the agent is located; is there a 6% commission instead of 3% (split 3% to broker & 3% to agent)?


Last, what does the broker do the reason why he/she has to share their commission with them? Do they work together in the buying and selling process of homes?

Thanks,

Stefanie

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Stefanie Pittman:
    It seems like there is no difference between a real estate agent, sales agent, and a listing agent? Is this correct?

    They are pretty much the same, with the exception that "real estate agent" or "sales agent" could be referring to the person representing the buyer or the seller. But, in the case of "listing agent," that specifically refers to the person representing the seller.

    Likewise, "buyers agent" solely refers to the person representing the buyer.


    Next, If you’re working with an agent, would like to sell your home, and has found a buyer purchase the house, where does the closing process take place....If you have to use the office where the agent is located; is there a 6% commission instead of 3% (split 3% to broker & 3% to agent)?

    Generally speaking, the buyer has the legal right to choose who will do the title work and the closing. There may be some nuances/exceptions that I'm not thinking of, but in general, as the buyer, you can choose who will close your deals.

    The commission split is independent of who closes the deals. The commission is paid by the seller (out of the seller's proceeds) and the amount that goes to each agent is generally set when the house is listed for.


    Last, what does the broker do the reason why he/she has to share their commission with them? Do they work together in the buying and selling process of homes?

    You can think of the Broker as the "boss" of the agent. This isn't technically correct (often agents are independent contractors, not employees), but in essence, the Broker is the one legally responsible for representing the buyer and/or the seller.

    Technically, the agent is just acting on behalf of the broker, though in practice, the agent does most of the work.

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  • Michael Stole
    Real Estate Investor · Ottawa, Ontario · Member since 2011 · 217 posts · 14 votes
    15y
    Originally posted by J Scott:
    Generally speaking, the buyer has the legal right to choose who will do the title work and the closing. There may be some nuances/exceptions that I'm not thinking of, but in general, as the buyer, you can choose who will close your deals.

    Good answers, J. But for bank-owned REOs, the buyer does not have the right to choose the closing office, does him? At least for the two transactions I had with banks, the closing offices are chosen by the bank.

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  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    15y
    Originally posted by Michael Stole:
    But for bank-owned REOs, the buyer does not have the right to choose the closing office, does him? At least for the two transactions I had with banks, the closing offices are chosen by the bank.

    I would agree, yes, most of the time, especially if the bank is contributing towards selling costs. However, the latest REO we just closed on did not contain ANY seller paid items, so we were free to choose our own closing agent, which we did.

    In fact, I believe there is a federal law (or maybe it's just California) that states the seller cannot dictate which agents the buyer must use if the costs are completely borne by the buyer.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y
    Originally posted by Michael Stole:

    Good answers, J. But for bank-owned REOs, the buyer does not have the right to choose the closing office, does him? At least for the two transactions I had with banks, the closing offices are chosen by the bank.

    Maybe it's just my state, but REO sellers are NOT allowed to dictate the title or closing company that the buyer uses. They try, and they will even offer to pay for Owners Title Insurance Policy if the buyer closes with the seller's attorney, but ultimately it's up to the buyer.

    Btw, while the seller can still close their end of the deal with their preferred attorney regardless of who the buyer chooses.

    For our REO purchases, I close with my closing attorney, the bank closes with theirs, and the two attorneys coordinate all the paperwork...I've done this on my last dozen or so REO closings...

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  • Stefanie Pittman
    OP
    Member since 2011 · 2 posts · 0 votes
    15y

    Thanks everyone for your response, I'm getting an understanding now. I'll have more questions to come. :D

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