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Real Estate Agency 101

real estate agency

I work for Keller Williams real estate agency in Palmdale, CA at the Antelope Valley Mall. Our entire office of many agents work under one real estate broker. A real estate agent such as myself, is a person who acts as an intermediary between buyers and sellers of real estate. I essentially find people (clients) who want to sell their real estate Property, and help them market that property in order to connect those sellers to potential buyers of the property. It sounds simple from the explanation, but there is a real need for real estate agents such as myself to facilitate what is a fairly complicated marketing effort and legal transaction. When I represent a buyer or seller, I have a fiduciary relationship with them meaning I owe them the utmost care in our dealings, which is loyalty beyond fair and honest dealing. The agency situation becomes complicated when I have a dual agency, meaning I am representing both the buyer and the seller in the same transaction. I often avoid this situation by bringing another Realtor in on the deal to represent one of the parties so I can give my best efforts in deal making to just one party. It is a rule of agency that I disclose who I am working for to everyone involved and get their consent. It is legal for me to represent both parties in a transaction (dual agency) but I am required to disclose the agency relationship to both parties in writing and have them sign off on it. This does rarely happen, almost only in transactions where there will be minimal negotiating.

As required by law, in order for me (or any real estate agent) to receive monetary consideration for facilitating a real property transaction the agent must have a proper license. In California only licensed real estate agents or brokers (or lawyers – but they don’t have a lot of knowledge that I do of the market conditions) may be paid for real estate transaction services.

It is my goal as a real estate agent to help my clients sell their property for the highest price and terms most beneficial to them. When I am working as an agent for a buyer I of course want to have my client pay as little as possible for the property and get any concessions from the seller that might benefit my buyer client in any way possible, sometimes that is not only dollars and cents.

In order to become a real estate agent I had to obtain a real estate license which involved taking three college level courses (and I thought I was done with college after by B.A.) and pass a background check and a state examination. I now have to work under a real estate broker who is essentially liable for anything I screw up (which isn’t likely). In order to keep a valid real estate license I must continue education so I can remain up-to-date on any changes in the real estate laws nationally or in the state. Laws are different in every state, but here in California the only difference in what a real estate broker can do and a real estate agent can do, is property management (brokers can manage property). I can become a broker myself and still work under the Keller Williams name, all I have to do is pass a test, because a college degree counts as experience. I believe that we have a great real estate team here in Palmdale, CA and I don’t see much benefit to going out on my own.

The term Realtor is a trademark of the National Association of Realtors. Many people think that all real estate salespersons and brokers are Realtor’s but that’s not the case. Only about half of the licensed salespersons are actually members of this trade organization (I am a Realtor).

Sellers and Buyers in a real estate transaction are called “principals” and while I as a real estate agent can fill out forms and help with the process of transferring real property, you the principle must be the one to actually sign the contract or deed to the home. I help my buyer and seller clients by coordinating services such as title insurance binders, surveys, formal appraisals, and help arrange financing.

Palmdale, CA Real Estate Agents can provide buyer representation, seller representation, and sometimes dual agency representation which I have discussed above. My knowledge of financing options for your particular situation, and my negotiation skills will help to make your transaction go smoothly.

Usually the only type of listing agreement that I offer as a Realtor is what is called an exclusive right to sell listing agreement. This means that as your real estate agent I owe to you my best efforts to produce a buyer who is ready, willing and able to purchase your property, and I am entitled to payment of commission whether another real estate agent or I sell the property. There are other types of listing agreements that are available for use between the seller and broker. We do not use these as a general rule because we have your best interests in mind and want to facilitate a good quick sale for you whether we as your agency are the ones who produce the buyer or not. The exclusive agency listing contract would allow, for example, only us – Keller Williams to sell your property and not someone from say Century 21. The agent from the other brokerage would not have any offer of commission and therefore wouldn’t want to produce a buyer for us. It takes much longer to sell a property under this type of listing agreement because the property would not be entered into the MLS (Multiple Listing Service) which has in depth housing information, so there would be limited exposure of the property. Only agents from the listing broker, in this case Keller Williams would be allowed to show the property. An open listing is yet another type of listing agreement available for use between seller and broker. Under this arrangement, any real estate agent who advertises the property and produces a ready, willing and able buyer under acceptable terms to the seller is entitled to a commission. The last type of listing arrangement I can think of is called a net listing. This means that the real estate agent only earns a commission if they get the seller in excess of what the seller wanted to “net” from the deal. I am not sure if these are still even permitted in California because it is likely to give rise to fraudulent behavior on part of the real estate agent.

Commissions in a standard real estate transaction are usually split evenly between the cooperating agencies. Beyond that each agency usually splits the commission between the broker and the salesperson or real estate agent. Just when you think people are making too much money on the transaction, you have to realize that your Realtor gets only a small fraction of the total commission. What starts off as six percent, becomes three percent to each of the cooperating agencies (if there are two), then the brokerage gets about half of the half and your agent gets the other half of the half (which is about 1.5%). This is of course average because real estate commissions are negotiable. There are discount brokers who generally provide service on par with their pay, and there are real estate agencies that charge more than the six percent average. Raw or undeveloped land is usually harder to sell and requires much more time and effort on the part of the Realtor so commissions on raw land average ten percent.

Once I’ve squared away the details of agency representation, if I’m representing the seller then I place a lock box with a key on the front door so that other agents or I can show the home to potential buyers conveniently. This is of course with the sellers permission and if the seller is still occupying the property then we would make appointment arrangements to show the house. If need be, as your selling real estate agent I would be at the house to meet buyers and give them a proper presentation of the property and help “sell” the area or whatever I can do to make your property desirable.

Homes for Sale in Palmdale, CA by Real Estate Agent Wes Darby

Residential Listings from Lancaster, CA Realtor Wes Darby

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