How Real Estate Agents Work
How it Works
This page is for those people who are unfamiliar with how the process works when selling and buying a house using a Utah real estate agent. First, I have to make something clear. I have had many customers write me and ask; " Are you a Utah Relator? " or " Are you a Salt Lake City Relator? " Some spell it Relator and others spell it realator, but either way it is wrong. The proper spelling is " Realtor " and it is pronounced, " Real-tor ". I bring this up because it happens quite often, and if you want to talk intelligently about Realtors, you should know how to spell it and say it correctly.
Selling Your Home Using a Real Estate Agent
Okay, enough said. When you hire a real estate agent or a Realtor (I'm pretty sure it's the same in other states, but for our purposes, we are talking about Utah), to sell your house, you will be required a sign a contract basically stating a couple of items (this list is not all-inclusive, so when you list with an agent, ask all the questions you need to):
- You are allowing the brokerage and the real estate agent of the brokerage the exclusive right (in most cases) to represent you in the transaction of selling your house for a specific length of time.
- You agree to pay the brokerage a fee which is usually around 5% - 6% of the selling price of the home, but could be anything you agree to in the contract. It's important to understand that you are paying the brokerage to represent you, and not the Realtor or the Realtor's brokerage who brings you a buyer. The broker that represents you is the one that pays the buyer's Realtor. More and more, there are many brokers who only charge a flat fee for their services, which will save you thousands of dollars in commissions. Make sure you select a full-service flat fee brokerage like Utah Home Central, if you go that route.
- You agree to a protection period. A protection period protects the agent from unscrupulous sellers and buyers who may agree to a transaction once the contract is up so they don't have to pay the Realtor a commission. Real estate agents spend a lot of their time and money getting a house listed and then marketing it. It would be unfair if a buyer was found as a result of the agent's marketing efforts, and then didn't get paid for it.
- You warrant that you are authorized to sell the house.
- You authorize the brokerage's agent to put a sign in the yard, advertise your home, put a lockbox on your door, hold open houses on your behalf, and several other items which you can read about in the contract.
There are a few other clauses, but these are the main items. Once you sign the agreement, the agent will then put a sign in your yard and list your house or property on the local MLS or Multiple Listing Service. The MLS is the system all Realtors use to list their clients' homes and to search for homes if they are representing a buyer. Your home also gets listed on Realtor.com and UtahRealEstate.com automatically.
Depending on your agreement with your Realtor, if another agent wants to show your home, they will normally call your agent who will then work with you to set up the appointment.
If a buyer likes your home well enough to put in an offer, the buyer's real estate agent will write up the contract and send the contract to your agent. Your agent will then present the offer to you. At this point, you can either agree to accept the terms of the contract or counteroffer with modified terms. Your agent should be a valuable asset in helping you know how much you can or should negotiate. In the end, you and the buyers will either come to some sort of agreement and a contract will be born or you or the buyer will decline the offer and you will continue to look for a buyer who will bring you more agreeable terms.
Once you find a buyer and have a contract, there are a number of deadlines that have to be met per the terms of the contract in order to close on your house and get your money. I won't go into all these, but your real estate agent will explain them to you and, if he or she is a good agent, will make sure the deadlines are met.
One more thing that's important to understand. You will hear the term, "closing" a lot. Sometimes agents and title companies will tell you to show up on a certain date for your closing (i.e. when you show up at the title company to sign away your deed, etc.) What they really mean is "Settlement". Settlement is when you sign all the papers at the title company. Closing doesn't occur until settlement has been completed, proceeds of any new loan have been delivered by the Lender to Seller or to the escrow/closing office, and the applicable closing documents have been recorded in the office of the county recorder.
As a buyer and seller, it's really important to understand this, because many times the contract says possession of the house you will be given to the buyer "Upon Closing". When the buyer shows up to the "Closing" as their Realtor called it, they expect to get the keys to the house after they have signed the papers, but this is not the case, because Closing hasn't occured yet, only settlement has. The buyer will get the keys upon closing, but only as per the definition in the contract.
What does it cost to use a real estate agent and how does the buying process work?
This is much simpler. When you use a real estate agent to help find a home, it will cost you nothing. As mentioned above, the seller's brokerage will pay your agent for helping you find a home. Therefore, as a buyer, there really is no reason to not use the services of a professional real estate agent to help you find a home in Utah.
When you find a home you like, your agent will fill out all the paperwork for your offer per your instructions and, submit the offer to the listing agent. Your agent will also help you negotiate any terms of the contract.
If the real estate contract is accepted, your agent will help you meet all the deadlines expected of you, process any further addendums necessary or help you cancel the contract if things don't go as expected.
If you have any further questions about how real estate agents work with sellers and buyers, please feel free to call Utah Home Central at 801-414-5790.