Real Estate Agent
Quick Definition
A real estate agent is a state-licensed professional authorized to assist buyers, sellers, landlords, and tenants in real estate transactions. Agents earn their income through commissions, typically a percentage of the property's closing costs. All real estate agents must be licensed by their state; those who join the National Association of Realtors (NAR) and adhere to its Code of Ethics may call themselves Realtors (a trademark). All Realtors are agents, but not all agents are Realtors.
What It Means
Buying or selling a home is the largest financial transaction most Americans ever make. Real estate agents add value by bringing expertise in local market pricing, transaction process knowledge, negotiation skills, access to the Multiple Listing Service (MLS), and an established network of inspectors, attorneys, title companies, and mortgage lenders.
The real estate agent landscape changed significantly following the NAR settlement in March 2024, which fundamentally altered how buyer's agent commissions are paid. Under the new rules (effective August 2024):
- Sellers are no longer required to offer buyer's agent compensation on the MLS
- Buyers must sign a written buyer representation agreement before touring homes, specifying what the buyer's agent will be paid
- Buyers may now negotiate directly with their agent on compensation, independent of what the seller offers
Nearly two years later, the data shows commissions have been stickier than many predicted. According to a Cotality and ResiClub survey conducted in February-March 2026, roughly two-thirds of agents reported no significant shift in commission levels since the settlement. Redfin data shows buyer's agent commissions actually rebounded from 2.36% in Q3 2024 to 2.42% in Q3 2025. Sellers have become more likely, not less, to cover the buyer-side fee as a marketing tool.
In April 2026, NAR reached a second settlement ($52.25 million) in a case called Tuccori v. At World Properties, which resolves claims brought by homebuyers. A final court hearing was scheduled for July 28, 2026. This settlement introduces no new rules; it simply requires ongoing compliance with the August 2024 practice changes and provides legal coverage for most NAR-affiliated brokerages.
Types of Real Estate Agents
| Type | Who They Represent | Duties | Compensation |
|---|---|---|---|
| Listing agent (seller's agent) | The seller | Pricing, marketing, negotiating for seller | Paid by seller from proceeds |
| Buyer's agent | The buyer | Finding homes, advising buyer, negotiating for buyer | Paid per buyer representation agreement (may be offset by seller concession) |
| Dual agent | Both buyer and seller | Legally complex; limited advocacy for either side | Split of total commission |
| Transaction broker | Neither (facilitates) | Some states allow this neutral role | Fee for transaction facilitation |
| Rental agent | Landlord or tenant | Finding rental properties | Typically one month's rent |
Post-August 2024 reality: buyers now sign compensation agreements with their agents upfront. Sellers may or may not offer to cover the buyer's agent fee. This means buyers need to understand upfront what their agent will earn and whether the seller will contribute to that cost.
What a Listing Agent Does
When you hire a listing agent to sell your home, their services typically include:
- Comparative Market Analysis (CMA): Analyzing recent comparable sales to recommend a listing price
- Pre-listing consultation: Advising on staging, repairs, and improvements before listing
- Professional photography: Coordinating high-quality photos (and sometimes video/3D tours)
- MLS listing: Entering the property into the Multiple Listing Service with full details
- Marketing: Syndicating to Zillow, Realtor.com, Redfin; social media; open houses
- Showing coordination: Scheduling and facilitating buyer showings
- Offer review: Presenting and analyzing all offers; advising on terms
- Negotiation: Negotiating price, contingencies, closing timeline, and repairs
- Transaction management: Coordinating inspection, appraisal, title, escrow through closing
- Problem-solving: Resolving issues that arise (appraisal gaps, inspection findings, financing delays)
What a Buyer's Agent Does
- Needs assessment: Understanding your budget, timeline, and property requirements
- Property search: Identifying listings that match your criteria; often before they hit public sites
- Showing properties: Scheduling and attending showings; providing professional observations
- Market analysis: Advising on fair market value before you make an offer
- Offer strategy: Advising on offer price, contingencies, and terms to be competitive
- Negotiation: Negotiating with the listing agent on price and terms
- Inspection coordination: Recommending inspectors; reviewing inspection reports; negotiating repairs
- Transaction oversight: Monitoring deadlines (financing, inspection, appraisal contingencies)
- Closing preparation: Reviewing closing documents; final walkthrough coordination
Real Estate Agent Licensing Requirements
Requirements vary by state, but generally include:
| Step | Typical Requirement |
|---|---|
| Pre-license education | 40-150+ hours of coursework (varies widely by state) |
| State licensing exam | Written exam covering real estate law, principles, and practice |
| Background check | Criminal history review |
| Sponsorship | New agents must work under a licensed broker |
| Continuing education | 10-30+ hours every 1-2 years for license renewal |
Key distinction: a real estate agent holds a salesperson license and must work under a broker. A real estate broker has additional education and testing, can operate independently, and can supervise agents. Most transactions involve agents working under brokers.
To become a Realtor, agents join the NAR and their local/state associations, paying annual dues and agreeing to the NAR Code of Ethics.
Commission Structure and the 2024-2026 Changes
Traditional Structure (Pre-August 2024)
| Party | Pays | Receives |
|---|---|---|
| Seller | 5-6% of sale price | Property sold |
| Listing agent | Gets 2.5-3% | Commission |
| Buyer's agent | Gets 2.5-3% (from seller's total) | Commission |
| Buyer | Paid nothing directly to agents | Acquired property |
New Structure (Post-August 2024)
| Party | Pays | Receives |
|---|---|---|
| Seller | Listing agent commission (negotiable; often 2-3%) | Property sold |
| Seller | May or may not offer buyer's agent compensation (now optional) | More flexible |
| Buyer | Signs buyer agent compensation agreement upfront | Clarity on costs |
| Buyer's agent | Paid per agreement: by buyer, seller concession, or combination | Commission |
What the Data Shows in 2026
The National Real Estate Consumer Alliance reports average buyer agent rates fell from approximately 2.6% to 2.3% in the first year after the settlement, a roughly 12% reduction. But Redfin data shows a rebound to 2.42% by Q3 2025. About 34% of agents reported that buyer-side compensation is where they felt the most strain, more than any other category, according to the Cotality/ResiClub survey.
The practical impact: sellers frequently offer to cover buyer agent costs as a marketing incentive, particularly for properties that need maximum buyer traffic. The structure is now more transparent and negotiable, but commissions have not collapsed.
Agent attrition has accelerated, particularly among newer entrants who joined during the pandemic boom years. But the shakeout appears to be stabilizing: 92% of agents surveyed said they expect to remain active in the industry for at least three more years, and 83% said five years or more.
How to Choose a Real Estate Agent
Questions to Ask
For a listing agent:
- What is your list-to-sale price ratio? (How close to listing price do your homes actually sell?)
- What is your average days on market?
- How many listings are you currently managing? (Too many means less attention for you)
- Can you provide references from recent seller clients?
- What does your marketing plan include beyond MLS?
For a buyer's agent:
- How familiar are you with the neighborhoods I am targeting?
- How quickly can you get me showings when a new listing hits the market?
- What is your offer acceptance rate? (Win rate in competitive markets)
- How do you approach negotiation on price and contingencies?
- What is your buyer representation agreement fee?
Red Flags
- Pressures you to list higher than comps support (to win the listing; "buying" your business)
- Cannot provide references from recent clients
- Does not return calls or emails promptly during the evaluation process
- Has very few closed transactions in the past 12 months
- Does not use a buyer representation agreement (post-August 2024 this is required)
Real Estate Agent vs. FSBO (For Sale By Owner)
| Factor | With Agent | FSBO |
|---|---|---|
| Commission cost | 2-5% of sale price | Minimal |
| Time to sell | Faster (median 20-30% less time) | Often slower |
| Sale price | Higher (NAR data: 6-16% more on average) | Often lower |
| MLS access | Full MLS listing | Limited (flat-fee MLS services available) |
| Negotiation expertise | Professional | Owner's own skills |
| Legal/paperwork | Agent manages | Owner responsible |
| Transaction complexity | Agent handles | Owner must navigate |
NAR data on FSBO vs. agent-assisted sales has been criticized as biased. Independent academic research suggests the price premium from using an agent may be smaller than NAR claims, and in well-informed seller's markets, FSBO can be competitive. Consider your local market conditions and personal capacity before deciding.
Key Points to Remember
- Real estate agents are state-licensed professionals who facilitate property transactions and earn commissions
- Realtors are agents who are also members of the NAR and bound by its Code of Ethics
- The NAR settlement (August 2024) requires buyers to sign written representation agreements and gives sellers more flexibility on covering buyer agent costs
- Commissions have been stickier than predicted: buyer agent rates rebounded to 2.42% by Q3 2025 (Redfin)
- NAR's second settlement (April 2026, $52.25 million) introduces no new rules but provides legal coverage for most brokerages
- Listing agents represent sellers; buyer's agents represent buyers, each with fiduciary duties to their respective client
- Agent quality varies enormously; the top 10% of agents in any market do the vast majority of transactions
Common Mistakes to Avoid
- Hiring based on personal relationship alone: A friend or family member who occasionally sells real estate may not have the market expertise of a full-time professional
- Not interviewing multiple agents: Interview at least 2-3 agents before committing; compare approaches, track records, and fees
- Assuming buyer's agents are free: The cost of a buyer's agent was always ultimately borne by someone. Post-2024 changes make this cost more explicit
- Not reading the representation agreement: Know exactly what you are paying your agent and for how long the agreement binds you. In California, AB 2992 extended the written agreement requirement to all real property transactions, and the DRE established a rebuttable presumption that the agreement must be signed before touring a property
- Signing an incomplete buyer representation agreement: If dates or compensation fields are blank, you may not have a valid representation agreement. Escrow will not disburse without an enforceable contract in the file
Related Concepts
- Closing Costs: The fees and expenses paid at closing, including agent commissions
- Multiple Listing Service: The database agents use to list and find properties
- Listing Agent: The agent representing the seller in a transaction
- Escrow: The neutral third party that holds funds and documents during a transaction
- Comparative Market Analysis: The method agents use to recommend listing prices
- Home Equity: The portion of the property value you own outright
For more on the home buying process, see our guide on buying a home versus investing your down payment and use our rent vs buy calculator to compare the financial outcomes.
Frequently Asked Questions
Q: Do I need a real estate agent to buy or sell a home? A: No. FSBO (for sale by owner) selling and unrepresented buying are legal everywhere. Whether it makes sense financially depends on your market knowledge, time, and the specific transaction. In highly competitive markets with complex negotiations, professional representation typically adds more value than it costs. In straightforward transactions where both buyer and seller are sophisticated, direct dealing may be preferable.
Q: What is the difference between a real estate agent and a real estate broker? A: An agent holds a salesperson license and must work under a broker. A broker has additional training, passed a broker's exam, and can operate independently and supervise agents. Most consumer-facing agents are salesperson licensees operating under a brokerage (Keller Williams, RE/MAX, Compass, independent brokerages). The broker behind the agent carries legal responsibility for the agent's conduct.
Q: How has the NAR settlement changed real estate commissions? A: The settlement requires buyers to sign written buyer representation agreements specifying the buyer's agent compensation before touring homes. Sellers are no longer required to offer buyer agent compensation on the MLS. In practice, many sellers continue to offer buyer agent compensation as a marketing tool. The Cotality/ResiClub survey (March 2026) found that roughly two-thirds of agents reported no significant shift in commission levels. Buyer agent commissions rebounded from 2.36% in Q3 2024 to 2.42% in Q3 2025 (Redfin).
Q: What happens if I cancel my buyer representation agreement? A: Most agreements include a protection period clause. If you cancel and then buy a property your agent showed you during the protection period, you may still owe compensation. The protection period only covers properties where there was actual broker involvement (you were shown the property and wrote or presented an offer). Always check the specific terms of your agreement and deliver a written list of shown properties within the required timeframe after cancellation.
