When a home is on the market, the buyer purchases the house from the seller. Sounds simple, right? But behind the scenes, there are many people involved in a home transaction, including real estate agents, brokers and more.
With all of these insider players, it can be difficult to keep everyone straight. Here are some insights you can use as you navigate the world of buying or selling a home — and the real estate professionals who will guide you along the way.
- What is a real estate agent vs. broker vs. REALTOR®
- Types of agents: What is a listing agent? What is a buyer’s agent?
- What is a mortgage broker? How are they different from a loan officer?
- What does a real estate attorney do? Do I need to hire one?
What is a real estate agent vs. broker vs. REALTOR®?
Here, we’ll define what it means to be a real estate agent, REALTOR® and a real estate broker. All of these real estate professionals have important, yet unique, roles in the journey of buying or selling a home.
Real estate agent. This professional helps facilitate home sales for both buyers and sellers and coordinates all aspects of the house transaction. Real estate agents are qualified to conduct home sales because they’ve completed the following:
- Passed the real estate exam
- Completed licensing classes
- Obtained a license from the state regulatory authority
- Dedicated time to continuing education courses
Realtor. A REALTOR® has all of the same qualifications as a real estate agent, and then some. One major benefit to hiring a Realtor is that they have pledged to follow a code of ethics from the National Association of REALTORS®.
The Realtor’s pledge is a strict commitment to put the needs of the client before the financial or personal interests of the Realtor — and when selling your house, it’s extremely important to trust that your Realtor will represent your best interests.
Not all real estate agents are Realtors — but Edina Realty requires all its agents to be Realtors and to work according to the Code of Ethics.
Real estate broker. These real estate specialists are required to pass a broker licensing exam, which is an intense test that is even more complicated than the examination required for real estate licensing.
Since brokers have extensive real estate knowledge and experience, they can act as a supervisor to agents and oversee the transactions of the agents who work under them. When questions arise about oddities, legalities or protocols that agents haven’t run into before, a real estate broker is usually able to answer — or help them find the answer from someone even more qualified.
Every real estate company has at least one broker, because in order to run your own real estate company, you are required to pass a broker licensing exam. At Edina Realty, each local office has a broker-in-charge. This sales manager is an expert who supervises all agents in their office and advises them on their businesses and clients. We pride ourselves on the structure we’ve created between our brokers and agents, which promotes outstanding client service and endorses homebuyer and home seller advocacy.
Type of agents: What is a listing agent? What is a buyer’s agent?
Whether you’re selling or buying a home, you can hire an agent to represent you throughout the process.
- Listing agent: Represents the seller in a home sale
- Buyer’s agent: Represents the buyer throughout the house transaction
When you hire a real estate listing agent to represent you as you sell your home, they can also help you to buy another. In that case, they will be your buyer’s agent, as well.
However, you don’t have to hire the same professional to represent you on both ends of the transaction — and you aren’t required to hire a real estate agent at all.
Listing agents and buyer’s agents are also paid quite differently. When you sell your home, you’ll pay your Realtor (also known as your listing agent) a commission based on the the total sale price of the home at closing. You’ll negotiate the commission rate before you hire the listing agent to represent you.
When you buy a house, though, you typically pay a relatively small part of your agent’s total commission. Instead, most of the commission is usually paid by the listing broker of the home you purchase. The seller pays them a larger commission, and they pay a portion of their commission to the buyer’s brokerage.
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What is a mortgage broker? How are they different from a loan officer?
During the loan application process, a loan officer assesses your mortgage pre-approval or loan application, and determines which loan program and rate (if any) best suits you.
A loan officer is tied to one entity — the lender (or bank) that employs them. Because of this, home loan officers aren’t able to help you shop around with other lenders to help you find a different or better rate on your home mortgage loan. However, they will offer you the best rate and program that you qualify for under their company’s regulations.
Contrarily, a mortgage broker is an independent consultant. Because a home mortgage broker isn’t connected to one specific bank or lender, they act as a middleman, helping you to shop around for the most advantageous loan program and the best interest rate. Mortgage brokers are typically paid a commission by the lender who services the final loan.
You might be wondering, is it better to hire a mortgage broker or a loan officer for the purchase of your home? There’s no one answer. It really depends on what is most important to you.
Pros and cons of hiring a mortgage broker
- Pro: A mortgage broker is not attached to any specific lender or bank, so they can help you shop around.
- Con: Because they most likely won’t have the reputation of a trusted lender behind them, you’ll have to decide for yourself if they’re trustworthy.
Pros and cons of hiring a loan officer
- Pro: When you work with a single lender, you’ll know that they’re offering you the very best program available from their reputable bank.
- Con: Typically, to “shop around” for the best rate, you’ll have to get quotes from different lenders on your own.
Edina Realty Mortgage offers the best of both worlds. By working with different investors, they can do the shopping for you to get the best rate and product.
Want to be sure you’re getting the best deal?? Edina Realty Mortgage’s Second Opinion program allows you to get their best rate and program and lets you ensure that you aren’t missing a better offer from a competing lender. Best of all? You get a $100 gift card, as a reward for doing your due diligence.
What does a real estate attorney do? Do I need to hire one?
A real estate attorney provides guidance to those involved in real estate transactions. In some states — but not Minnesota or Wisconsin — only a real estate attorney can draw up the necessary paperwork for a home transaction. In certain states, a closing agent is necessary in any home transaction.
In our Midwest market, however, many buyers and sellers will never have to retain a real estate lawyer. Rather, your Realtor will help you navigate the many aspects of a home sale, including:
- Final offer acceptance
- Additional paperwork
So, when would you use a real estate attorney in Minnesota or Wisconsin? Although it is not particularly common, a real estate attorney can assist you in putting your purchase agreement together. If something goes south during or after the home transaction, you may need to retain a real estate attorney to help you settle matters related to:
- The home title
- Issues in the contract
- Complications that were not included in the disclosures
Use of a real estate attorney may also be a good idea if you are considering a more complicated transaction, like a commercial real estate investment.
Edina Realty has a team of lawyers who work every day for the brokerage to support our nearly 2,500 agents who work across Minnesota and western Wisconsin. They help resolve disputes and legal issues so that we can better assist the buyers and sellers who trust our agents with their home sales.
Key insights and next steps
If you’re ready to sell your home, it’s time to start connecting with housing experts. Whether you want to get in touch with a real estate agent or a real estate broker, reach out to Edina Realty. We’re able to connect you with a home selling specialist seven days a week.
Additional resources to consider
Edina Realty Mortgage. NMLS ID# 490683 (www.nmlsconsumeraccess.org/)