How Real Estate Agents Work

There’s often a lot of confusion about what an agent does, who they work for, and how they get paid. So let’s talk about that for a minute.
A real estate agent is someone licensed to help people buy and sell real estate. An agent has Fiduciary Duties to their clients, which include:

  • Confidentiality
  • Accounting for money and documents
  • Reasonable Skill and Care
  • Loyalty
  • Obedience
  • Disclosure

It means an agent should be putting their client’s best interests above all others.

In Arizona, and in Tucson, a home seller can be represented in one of two ways – either with a single or dual agent.

A single agent for a seller represents the seller only, and does everything within legal and ethical limits to promote that Seller’s interests. This is the highest form of representation that an agent can give to their client.

A dual agent represents more than one party in a transaction. This can happen in one of two ways: the same person can represent both the Buyer and Seller, or two agents who work for the same brokerage represent the Buyer and Seller.

When the same agent represents both the Buyer and Seller, there can be conflicts of duty. The agent must be very careful to not favor one side of the transaction over the other. As a home seller, if the person you hired as your agent is also showing the property to potential buyers, then you should discuss with that agent how they will handle a dual agency situation, and if you will be comfortable with that.

The other form of dual agency is when the Buyer and Seller are represented by different agents that work for the same brokerage. This form of dual agency is usually a little more comfortable for all parties, as each party has a different person to talk to, and potential conflicts of interest can be minimized as one agent doesn’t know about the other’s client, and vice-versa.

Agents are paid on commission, usually a percentage of the sale amount. When an agent takes a listing, the Seller agrees to pay the listing agent some amount. When the listing agent puts the home into the MLS system, they offer out a portion of that money to any other agent who can find a Buyer for the home. When a sale closes, escrow distributes that money accordingly to the brokers, who then filter the money down to the individual agents.

There are some arguments that since the Seller pays the commission, that agents are paid by the Seller. The other side of that argument is that the Buyer is the one who brings all the money to the table, so any money that goes to the agent comes from the Buyer. As a home seller, the amount your agent will be paid is stated in your listing agreement, but you should also confirm how much of that will be shared out to an agent that finds a Buyer, which can have a big impact on the sale and marketing of your home.

Equal Housing Opportunity Realtor
Applied Real Estate Technology