About Real Estate Brokerages

A real estate brokerage is a business that assists and represents the interests of buyers and sellers in real estate transactions. A brokerage employs both the real estate broker, who manages the brokerage, and the real estate agents who work directly with the clients. This article will explain how a real estate brokerage works, the role of brokers and real estate agents, the services they provide to buyers and sellers and how commissions are paid.

Function of a Real Estate Brokerage

A real estate brokerage is a company that helps people buy and sell real estate. A brokerage is run by a licensed real estate broker. While there may be many offices of a particular real estate brokerage in a state there is only one broker of record. A brokerage may employ associate brokers who have met the same educational and testing requirements as the broker of record to manage each office. The brokerage employs real estate agents that are responsible for managing day-to-day client relationships.

What Is a Real Estate Agent?

A real estate agent is the "business end" of the brokerage that the public, prospective and active clients most often see. An agent is licensed by the state she practices in by meeting the education and testing requirements of that state. She provides most of the services the brokerage offers directly to its clients.

What Services Does a Real Estate Brokerage Provide to Buyers?

A real estate brokerage help buyers determine which properties best fit their needs and price range. This is accomplished by searches using the Multiple Listing Service (MLS) in their area. This service includes real estate listings from a wide range of brokers in the area. Next a real estate agent will arrange for showings of the listings that interest the buyers most. Once the buyers have found a property that fits their needs, the real estate agent will help them determine what price would be best to offer. Often this is facilitated by a competitive market analysis (CMA) that takes comparable recently sold properties in the area and compares them with the property the clients are interested in. Then the real estate agent will assist in preparing an offer for the client and submitting the offer to the seller's real estate agent. If the negotiation is successful, the brokerage will assist the client through the closing on the new property.

What Services Does a Real Estate Brokerage Provide to Sellers?

A brokerage first will aid sellers in determining the market value of their property, commonly with CMA that will show what comparable properties in their area have sold for recently. Once the seller sets a price the broker will establish the terms of the listing agreement including the commission and what marketing the brokerage will be responsible for. The brokerage will list the property for sale in the local Multiple Listing Service (MLS) and will advertise the new listing through a variety of means. These commonly include a for sale sign on the property, open houses, local newspaper ads, web based ads on the brokerage site, and mailings to potential clients. When an offer is received, the listing real estate agent will present it to the seller and work with the seller throughout the negotiation process through the closing of the deal.

What Is Dual Agency?

Dual agency exists when both the buyer and the seller are working with the same real estate brokerage. State laws vary on how these situations are addressed. If dual agency is allowed both the buyer and seller must agree to be represented by the same brokerage or one may change brokerages to avoid the conflict of interest. Dual agency does not necessarily imply that the same real estate agent represents both parties.

How Are Commissions Paid?

Commissions are generally paid by the seller to the seller's listing broker as defined in their listing agreement. Typically the commission is a percentage of the sale and part of that commission will be shared with the brokerage representing the buyer in the transaction. If the buyer is not represented by a real estate agent the listing brokerage may receive the entire commission depending on the wording of the agreement.