There are three main types of agency in real estate you must know for your licensing exam. However, initially, you must understand what an agent is. An agent is someone who represents someone else (principal) while working with third parties. In a real estate transaction, a principal is also referred to as the
client. The relationship between an agent and the principal is known as agency. The agent is the broker who is hired by a buyer or seller (principal) to help them sell or buy real estate. A real estate broker who is engaging in the act of bringing parties together for the rent, purchase, or exchange of real estate
in return for a fee is said to be engaging in brokerage. In performing this service the broker and the party they represent (principal) will create an agency relationship. Check out our article on how an agency is created here. The level of agency that a principal grants an agent determines what type of agency agreement they have in place. The principal can allow the agent to act in a very broad manner on their behalf, or very minimal. You must know the following types of agency to be prepared to pass your real estate exam: 1 – Special agent – This is when an agent is granted the authority to represent a principal or client
in a specific task or transaction. You always wanted to be a special agent right? Well 007, here is your chance. This is the type of agency usually created when a broker represents 2 – General agent – A property manager is an excellent example of a general agent. A general agent represents the principal in a range of activities or a particular business. A general power of attorney can create this type of agency. 3 – Universal agent – An agent who represents the principal in all of their legal matters is a universal agent. Makes sense, right? A power of
attorney is always necessary to create this type of agency. A power of attorney is a document authorizing someone else (referred to as an attorney-in-fact) to act as an agent for another person. You can learn how an agency can be terminated by reading our article here. Under a real estate agency, what agent responsibilities does the agent owe the client?Learn everything you need to know about this topic in our real estate exam prep article here. Here is a sample real estate exam question based upon types of agency:Here you go: Under the law of agency, which of the following would be working as a general agent: A. A broker authorized to lease a property for a dentist Answer: B If you want to see more FREE sample real estate licensing exam questions click here. What else can help me prepare to pass my real estate licensing exam on my first attempt?Other tips to help you pass your real estate licensing exam on your first attempt: Real Estate Test Taking Tips How to Pass the Real Estate Exam Real Estate Exam Math Made Simple Also, check out our question of the day videos on our YouTube channel: PassMasters Real Estate Exam Prep YouTube Channel What Is a Real Estate Agent?A real estate agent is a licensed professional who arranges real estate transactions, putting buyers and sellers together and acting as their representative in negotiations. Real estate agents usually are compensated completely by a commission—a percentage of the property’s purchase price—so their income depends on their ability to close a deal. In almost every state a real estate agent must work for or be affiliated with a real estate broker (an individual or a brokerage firm), who is more experienced and licensed to a higher degree. 6 Steps to Become a Real Estate AgentKey Takeaways
How a Real Estate Agent WorksReal estate agents usually specialize in either commercial or residential real estate. Either way, they perform different duties, depending on whether they work for the buyer or the seller. Agents who work for the seller, also known as listing agents, advise clients on how to price the property and prepare it for a sale, including providing tips on last-minute improvements that can boost the price or encourage speedy offers. Seller agents market the property through listing services, networking, and advertisements. Agents who work for the buyer search for available properties that match the buyer’s price range and wish list. These agents often look at past sales data on comparable properties to help prospective buyers come up with a fair bid. Agents act as go-betweens for the principal parties, carrying offers and counteroffers and other questions back and forth. Once a bid is accepted, agents on both sides often continue to work, helping their clients through the paperwork, conveying communications, advising on inspections and moving, and generally shepherding the deal through to closing. It’s important for consumers to understand whether a real estate agent represents the buyer, the seller, or both parties; obviously, the agent’s loyalty can greatly affect several details of the transaction, including the final price. State laws regulate whether an agent can represent both parties in a real estate transaction, technically known as “dual agency.” Agents must disclose their representation, so that buyers and sellers are aware of any conflicts of interest. Dual agency, in which one person represents both the buyer and seller in a real estate transaction, is illegal in eight states: Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, and Vermont. Real Estate Agents’ CompensationTraditionally, an agent is paid a commission that is a percentage of the property’s sale price. The more the house sells for, the more money an agent makes. However, with online listings allowing consumers to do much of the shopping on their own without help from an agent, the traditional payment structure is changing. Some brokerages charge a lower commission for more expensive houses, and some handle the entire transaction for a flat fee that’s much less than a regular commission. Other companies offer a fee-for-service pricing structure that lets sellers pay only for certain parts of the sale process, such as adding the property to a multiple listing service (MLS). You may have heard people use the terms “real estate agent,” “real estate broker,” and “realtor” interchangeably. While overlap among the three definitely exists, there are key differences. Real Estate Agent vs. Real Estate BrokerThe exact definitions of and distinctions between a real estate agent and a real estate broker vary among states. Generally, however, anyone who earns a basic real estate license (which involves taking a certain number of accredited courses and passing an exam) can be called a real estate agent. A real estate agent is essentially a salesperson, qualified to help consumers buy or sell a property. A real estate broker is a step up the professional food chain. Brokers have additional training and education that have qualified them to pass a higher licensing exam; most states also require them to have a certain amount of recent experience as an active real estate agent. Brokers handle the technical aspects of the real estate transaction. A client signs a contract with a brokerage, not the individual agent. In many states brokers' additional certification authorizes them to handle other legal and financial aspects of a deal, such as handling the earnest money deposit and establishing the escrow account. Brokers typically own a firm or a franchise. They can be solo practitioners, but they must attain another higher-level license if they want to hire agents or other brokers to work under them. As mentioned earlier, a real estate agent usually cannot work alone but instead must operate through a real estate broker; the exception is in states such as Colorado and New Mexico, which mandate that every real estate professional be licensed as a broker. Usually, though, agents work for brokers and split commissions with them. Real Estate Agent vs. RealtorSo every real estate broker is a real estate agent (or has been), but not every real estate agent is a broker. How do realtors fit into the equation? A realtor is a member of the National Association of Realtors (NAR), a trade association. Both agents and brokers can be realtors, along with property managers, appraisers, and other real estate industry professionals. Realtors are expected to be experts in their field and must follow the NAR’s code of ethics, which requires agents to uphold specific duties to clients and customers, the public, and other realtors. In addition to NAR, realtors must belong to a state or local real estate association or board. All realtors are real estate agents or brokers (or something related), but not all agents or brokers are realtors. As of July 2020, NAR reported that it had nearly 1.4 million members. Roughly two-thirds of them held real estate agent licenses. Which is the best example of a general agent?2 – General agent – A property manager is an excellent example of a general agent. A general agent represents the principal in a range of activities or a particular business. A general power of attorney can create this type of agency.
What are 3 types of agents?In general, there are three types of agents: universal agents, general agents, and special agents.
What are the 4 types of agents?The Four Main Types of Agent. Artists' agents. An artist's agent handles the business side of an artist's life. ... . Sales agents. ... . Distributors. ... . Licensing agents.. Which of these is an example of a universal agent?An example of a universal agent is a court-appointed guardian.
|
