Agents are all the same?
Most consumers believe there are virtually no differences among real estate agents - and in some respects, that perspective is very understandable. After all, because real estate companies experience high turnover, where nearly 90% of new agents are out of business within just five years so, most of the real estate agents in the field today are relative newcomers - many with very similar skill sets.
Of course, there are those agents and brokers who are long-term professionals in the business - individuals who have the skills necessary, through extensive experience, to execute their responsibilities in a highly professional manner.
If you have worked with one of these top 10% of agents before, you probably know it. If you have not, you probably know that, too.
Aside from experience and skill level, there are other big differences among agents. Agents perform functions depending upon the relationships that they have established with their customers or clients. South Carolina has established very specific guidelines as to how these relationships are established and conducted.
Are there differences among real estate agents? If you're like most people looking for a home, you've never given very much thought to the type of real estate agent you might hire to help you. Whether or not you do need a real estate agent to help you buy a home may be a question you've never considered.
All real estate agents in a given state have to meet the same standards in order to become licensed and to retain their licensed status. For the most part, the requirements to become a real estate agent are straightforward and are achievable by most people who are interested in becoming real estate agents.
Once an agent has joined the company and is in the field, that agent is available to assist the general public. The level of experience required before you meet your first client is essentially zero. The amount of experience that a veteran real estate agent has can be immense and extremely useful to you as a buyer or as a seller.
On the surface real estate seems very simple. Appearances, in this case, are deceiving. A simple real estate transaction, without any unusual intervening circumstances, where all of the stars lineup and things move along smoothly to the successful closing - exactly as planned, almost never happens. If it did, then indeed, real estate would be a simple business.
In the best of times, 50% of new agents leave the business within the first year. In the best of times, 90% of licensed agents have quit practicing real estate after their fifth year. That means that after the fifth year, only 10% become the agents that I consider to be true veterans.
If you were considering selecting an attorney, a surgeon, or even an accountant, most people would give quite a bit of consideration to their experience. The complexity and potential pitfalls that lie around the corner of every real estate transaction will be met with either experience or inexperience. Which quality do you want in your agent?
Choosing your real estate agent is indeed an important decision. Agents are not all the same. Agents specialize in many areas. Some agents specialize in selling single-family homes within a given price range. Some agents specialize in certain geographic areas. Agents also specialize in choosing to work with buyers or sellers.
Designations are also important although they are not definitive. Some of the best agents have no designations at all other than Realtor. The first designation I suggest that you look for is the designation of Realtor. Someone who is a Realtor has met specific educational and ethics requirements and is a member of the National Association of Realtors as well as their local Association of Realtors. If you're a buyer, the most important designation that you should consider is Accredited Buyers Representative or ABR. An ABR is someone who has specialized training for assisting buyers and is usually someone who works principally with buyers.
In South Carolina, you can choose to be represented by an agent (you become a client) or just work with an agent as a customer (many fewer duties are owed to you). Understanding agency relationships is key to grasping why, for whom, and to what extent agents can advocate. In other words, who's interets are being protected.
In South Carolina your agent must represent someone in order to be paid. They can represent you (the buyer) or they can represent the person who is selling the home or they can represent both. What you cannot do as a real estate agent in South Carolina is receive a commission if the agent represents no one.
This is an important nuance that is especially important to your agent. No one wants to work hard and not get paid. What it means to you as a buyer or seller is that you will be asked to enter into a contractual relationship with your agent.
If you are selling your home that contractual relationship is a listing agreement. If you are buying a home, that contractual relationship is a "buyers agency agreement".
When your agent is representing you as a buyer, and asks you to sign a buyers agency agreement, it should not make you feel nervous. By becoming a client rather than a customer (you have to have an agreement to be a client), the agent is agreeing to provide you with a wide range of additional services. The agent is also agreeing to help you find a home without charging you anything.
That's right - very few agents who represent buyers ever charge their buyers for the help they provide. Buyers agents are paid by the agent representing the seller through the commission that their client (the seller) has agreed to pay them. In other words, buyers agents split the commission of the listing agent. To you as a buyer, it is a free ride - a great deal for you as a buyer.
Here is an outline summary of the various types of client representation in South Carolina:
Seller's Agent
A seller's agent under a listing agreement with the seller acts solely on behalf of the seller. Seller's agents will disclose to the seller known information about the buyer which may be used to the benefit of the seller. A seller‘s agent should:
- Promote the best interest of the seller
- Fully disclose to the seller all facts that might affect or influence the seller's decision to accept an offer to purchase
- Keep confidential the seller's motivations for selling.
- Present all offers to the seller.
- Disclosing the identities of all buyers and all information about the willingness of those buyers to complete the sale or to offer a higher price.
Buyer's Agent
A buyer's agent, under a buyer's agency agreement with the buyer, acts solely on behalf of the buyer. Buyer's Agents will disclose to the buyer known information about the seller which may be used to benefit the buyer. A Buyer’s Agent should:
- Promote the best interest of the buyers.
- Fully disclose to the buyer all facts that might affect or influence the buyer's decision to tender an offer to purchase.
- Keep confidential the buyer's motivations for buying.
- Present all offers on behalf of the buyer.
- Disclose to the buyer all information about the willingness of the seller to complete the sale or to accept a lower price.
Dual Agent
A real estate agent can be the agent of both the seller and the buyer in a transaction but only with the knowledge and informed consent, in writing, of both the seller and the buyer. In such a dual agency situation the agent will not be able to disclose all known information to either the seller or the buyer. As a dual agent, the agent will not be able to provide the full range of fiduciary duties to the seller or the buyer.
Designated Agent
This is a recently added choice in SC where the Broker in Charge designates individual agents to act solely on behalf of each client. The agents must negotiate with each other for the benefit of their respective seller and buyer - even though they are working under the same broker and usually in the very same office. Awkward? Maybe. Plus, the broker now becomes a disclosed dual agent in order to make this 'work out'.
There are many other distinctions one might draw among agents. Suffice it to say that there are dramatic differences within the real estate community both in skill levels and functions of agents - including whether or not an agent is a Realtor.
If you'd like to know more about this subject, e-mail me or call me and I will be glad to discuss this with you directly.
Chris DeLoach 843-388-7027