What Is a Real Estate Agent?
Owning a home is everyone’s dream. But to ensure the process goes smoothly, individuals should always include a mediator to represent the parties involved in the transactions. The mediator who facilitates how property is sold or bought is known as a real estate agent. A real estate agent definition is a skilled person who assists individuals in selling, purchasing, and renting out real estate while following a legal process. In simpler terms, the real estate agent is an individual who connects a seller to a buyer. The transaction process must include both a principal and a client. A principal is a person who assigns a real estate agent to carry out a task. On the other hand, a client refers to an individual who has already signed an agreement with a real estate agent, which eventually creates a fiduciary relationship. When a fiduciary relationship is created, one party places confidence, trust, and reliability on another.
Real Estate Agent vs. Broker vs. Realtor:
Real estate agents, brokers, and realtors are licensed to help individuals buy, sell, and rent properties, but even though the terms are used interchangeably, their meanings differ. The main contrast between a real estate agent and a broker is that real estate agents are professionals employed by a brokerage firm. A real estate agent connects sellers and buyers to sell a property. On the other hand, a broker is an agent with a real estate broker’s license and can own and manage their brokerage.
Realtors are different from agents and brokers. The primary difference between real estate agents, brokers, and realtors is that realtors are active registered members of the National Association of Realtors (NAR) and must follow the NAR’s code of ethics. However, this does not mean that agents and brokers are unethical because they do not follow the NAR protocols. All licensed brokers and agents must adhere to the state’s standards.
Types of Real Estate Agents:
Real estate agents are categorized into universal, unique, and general agents.
- General Agents: General agents can conduct any or all transactions required by the client over some time. A general agent can sign documents, transact business, and act for the principal.
- Universal Agents: Universal agents are real estate agents with broader duties to act on behalf of their clients. A universal agent can become an attorney-in-fact when given a power of attorney by their clients. This means that a universal agent has considerable authority to represent the client in legal proceedings. Universal agents may also be given authority to conduct financial transactions on the client’s behalf.
- Special Agents: Special agents are appointed by clients to achieve a particular trade or commerce within a specified period. The agent hired is only authorized to perform the client’s specific duty. An example of a special agent is a broker. The principal authorizes a broker to act on a particular real estate transaction on the principal’s behalf. However, unlike a universal and general agent, a special agent cannot legally bind the principal.
Power of Attorney in Real Estate:
An attorney-in-fact is an agent appointed explicitly by a power of attorney and authorized by the principal. An attorney-in-fact does not necessarily need legal requirements or special qualifications but is simply anyone chosen to act on an individual’s behalf. This means that when individuals acquire a power of attorney from their client, they acquire legal rights to manage the client’s properties for a specific period. Power of attorney is mainly used by individuals living overseas who want to sell their properties and cannot be present during the sale proceedings. This power comes into action only when two witnesses are present and after the two parties sign the document.
Power of attorney is categorized into:
- General power of attorney: This grants real estate agents the right to sell and manage a property, conduct all business transactions, sign all legal documents, & make decisions on behalf of the principal, including financial decisions on the principal’s behalf.
- Extraordinary power of attorney: This grants a real estate agent authority only to perform the duties and business transactions specified in the document that assigns the power of attorney. As stated in the paper, this power is only durable for a specific time.
Types of Agency Relationships in Real Estate:
A principal-agent relationship is a written arrangement or By contract; a principal appoints a personal agent to act on their behalf & in their best interest. The agency relationship in real estate should have no conflict of interest between the principal and the agent in executing an action. The agency is the relationship between a principal and the agent representing them. There are different types of agencies in a real estate brokerage. The agency’s real estate includes:
- Seller Agency: Seller agency happens when a broker represents the seller in selling their property.
- Buyer Agency: Buyer agency happens when the broker and the broker’s agents represent a buyer in a transaction.
- Dual agency: A dual agency is formed when a single agent is hired to represent purchasers and sellers.
The agent should have a trusting relationship with the seller or buyer, generally called the principal. The relationship created is called a fiduciary relationship. A fiduciary relationship is developed between an agent and a principal, where an agent must act in the principal’s best interest. It also grants the agent the authority to work and make critical decisions on behalf of the principal.
Expressed and Implied Agency in Real Estate:
There are different ways in which various types of agency relationships are created. Some of them include:
- Expressed Agency: A represented agency is created through an oral / written agreement between a principal and the agent. An example of a designated agency is a written listing agreement between a broker and a seller of real estate.
- Implied Agency: An implied agency is created based on the actions and conduct of the principal and an agent. The agreement is not in written form but is based on an activity that has been done. For example, a real estate agent may take up responsibilities given to them by a principal even though the agent does not write an agreement with the principal.
- Ostensible Agency: Ostensible agency real estate refers to a relationship where a third party is made to believe that an individual acted on behalf of another or as an agent.
Frequently Asked Questions (FAQs):
What's the difference between a realtor and a real estate agent?
The main contrast between realtors and real estate agents is their certifications. A real estate agent is a professional who helps clients purchase, sell, and rent real estate property and has obtained the required license to perform the transactions. Realtors are professional real estate agents who adhere to the National Association of Realtor's protocols and are registered members of the firm. Realtors provide guidance and assist sellers and buyers in selling and marketing properties.
What is the meaning of a real estate agency?
A real estate agency is a firm that conducts real estate transactions such as purchasing property, selling property, and renting out property for the owners. The different types of real estate agencies are universal, unique, and general agents.
Read also: Real Estate Agent & Agencies: Definition & Types.