Listing agent, selling agent, seller's agent, buyer's agent. Two of these things are just like the others, and two of these things just sound the same.
It's a real estate riddle.
The listing agent vs. selling agent issue is the first hurdle homeowners and prospective buyers have to leap over in their real estate journey. But, what's the difference between these two types of agents, and which one do you need?
What is a Listing Agent in Real Estate?
In real estate, the listing agent lists a property for sale. They help the homeowner sell their house, which is why they're also sometimes called a seller's agent.
Who Does the Seller's Agent Represent?
Listing real estate agents represent the homeowner's interests in the transaction, but that's not the only person they represent. Seller's agents represent the broker they work for, as well.
Licensed real estate agents can't accept commissions directly. They work under brokers, who have a more advanced real estate license type that allows them to establish a firm and supervise regular real estate agents. Brokers bear a lot of liability and financial responsibility.
What Does a Listing Real Estate Agent Do?
A listing agent in real estate will:
- Prepare the homeowner on what to expect from each step of the sales process
- Set the asking price of the property based on square footage, age, features, and location
- Add the house to the Multiple Listing Service (MLS) – thereby "listing" the house
- Make recommendations to make the house appealing
- Hire a photographer (and even a videographer) to showcase the house
- Recommend other professionals in the industry the seller may need (like stagers)
- Market the house, schedule showings, and host an open house
- Communicate with buyers and their agents
- Negotiate the selling price and terms of sale with the seller's interests in mind
- Represent the seller during a home inspection and appraisal
- Facilitate a smooth closing from the seller's perspective
What is a Selling Agent in Real Estate?
Yeah, here's where it gets a little confusing. A seller's agent should not be confused with a selling agent.
A real estate selling agent is better (and less confusingly) known as a buyer's agent. They represent the prospective buyer's interests – their goal is not to sell a particular house but to help a buyer find the right property and make the best deal.
Like the seller's agent, the buyer's agent has a broker they work for and represent.
What Does a Real Estate Selling Agent Do?
A buyer's agent will:
- Prepare a prospective buyer for every step of the purchasing process
- Learn the buyer's needs and goals
- Suggest properties that meet the buyer's criteria
- Walk buyers through the strengths and weaknesses of a property during the viewing
- Advise the buyer on fair market value
- Prepare a purchase offer
- Recommend a home inspector (and other professionals, as needed)
- Negotiate purchase price and contractual terms
- Ensure a smooth closing from the buyer's perspective
How Are Listing and Selling Agents Paid?
Both listing and selling agents are only paid at purchase as a percentage of the final sale price (a commission). The commission ultimately goes to four individuals:
- The listing agent
- The listing broker
- The buyer's agent
- The buyer's broker
The proportions each individual takes home will depend on the terms agreed upon during a few separate negotiations:
- The commission, negotiated between the seller and their listing agent before the seller signs a listing contract
- The commission split negotiated between listing and selling agents at sale (i.e., how much of the commission the buyer's side and seller's side each get)
- The terms of the employment contract between the agents and their brokers.
The commission on a residential sale is typically 5-6%, and it's often split down the middle between the buyer's and seller's representatives.
The brokers accept payment and distribute a commission to the relevant agent according to the terms of their employment contract. Many agents have a commission split of 70/30 or 80/20 with their broker, but some agents keep 100% of their commissions but pay a flat monthly desk fee. There are also hybrid agreements that involve both a desk fee and a commission split.
Do Listing Agents and Selling Agents Need to Be Separate People?
Not all buyers engage a real estate agent to represent them, and in some states, it's legal for listing agents to negotiate directly with prospective buyers. This is called "dual agency."
The upside is that, since fewer people are involved, the agent and their broker get to keep the entire commission, not just half. The transaction also tends to move faster, since there are fewer parties involved in negotiating the terms.
But if you think about who a listing agent and selling agent are supposed to represent, you'll quickly realize that it's difficult for one person to fulfill both roles ethically.
Buyers and sellers have opposing interests when it comes to the price and terms. Even if the agent were able to split "the difference" between buyer and seller right down the middle, you wouldn't be able to say the agent had represented each to the best of their ability. And since the listing agent has an incentive to please the party that signed a listing contract, dual agency transactions almost always favor the seller.
That's why dual agency is illegal in several states, including Colorado, Florida, and Kansas.
Real Estate Education is Ongoing
Whether it's a listing agent or a selling agent, every real estate professional needs pre-licensing and continuing education to help them maintain the legal, contractual, and financial knowledge they need to advise their clients well. Most states also require training in ethics and consumer protections to help agents navigate the complexities of representing someone else's interests in a huge financial transaction.
Are you ready to begin your real estate journey?
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Written and Published by: VanEd