If you’re looking to buy, sell or rent a home, you might be thinking about enlisting some help. But, before you make your choice, it’s important to understand the nuances among real estate professionals. While it is quite common for the words “realtor” and” real estate agent” to be used interchangeably, they are some distinctions between the two to be aware of. A real estate agent is a licensed professional who acts as an intermediary for people looking to buy, sell or rent a home. A realtor (pronounced ré-al-tor) is a designation of real estate agents who, along with the companies they work for, are members of the National Association of Realtors. Virtually all top agents are realtors. Here, we’ll discuss how to find a good realtor and how to find a good real estate agent.

What Is a Realtor?

As we mentioned earlier, a realtor is a real estate agent who is a member of the National Association of Realtors (NAR). NAR is a trade association that, per its website, represents 1.1 million members, including brokers, salespersons, property managers, appraisers, counselors and others real estate professionals. NAR members pay dues and must abide by the association’s Code of Ethics. They must participate in ethics training every four years to maintain membership. You can find NAR’s Code of Ethics here.   

Why Should I Consider a Realtor?

Buying a home is a huge financial commitment, and the difference between various choices can be significant. It doesn’t help that homebuying is foreign territory to most people, even if they have done it before. Practices, procedures, and terminology are well-known to real estate professionals but baffling to those outside of the industry. Here are some of the reasons why using a good realtor is so important in the homebuying process:

• Realtors often know of properties that are not advertised and that you would have no way of knowing about unless you knew the owner.
• Realtors can be “the voice of reason” when you are overcome by your emotions (which is easy to do when house-hunting). If you fall in love with a property, a realtor can be there to help you recognize the property’s flaws. Conversely, a realtor can help you to see the positive side of a property with which you might not be immediately impressed. In addition, realtors can provide information about the neighborhood, schools, comparative sales in the area, and other important homebuying factors. This objectivity and information is critical when you are making such a major decision.
• Realtors are skilled, experienced negotiators. When conducting a sale, there are many angles through which to negotiate beyond the asking price, such as financing, condition of the house when you move in or out, etc.
• Realtors can help you navigate the homebuying process in general, making sure you are not rushed into making a decision, that you have time for inspections and appraisal, etc.

How Can I Find a Top Realtor or Real Estate Agent?

Remember, the above describes top realtors, not all real estate agents. Read on to learn how to discern between less than ideal agents and top realtors.

1. Get Referrals & Then Check References

There is simply no substitute for getting referrals from friends. But once you’ve gotten referrals, check references. Referrals can be flawed: A friend might refer you to a family member, regardless of their experience. They may refer you to someone who was great 15 years ago, but hasn’t had much experience since or to someone they’ve only heard is great, but whom they have no personal experience with themselves. Bottom line: you are leaving a lot to chance if you don’t check out the past behavior of real estate agents. You should get references from an agent’s three most recent clients and call them to verify that the agent is being truthful about his or her accomplishments.

2. Look for Agents Who Are Selling the Type of Home You’re Interested In

You should check the “For Sale” signs in the area that interests you. Typically, you’ll find one or two agents who are doing more business than the others in a certain neighborhood, who probably have significant experience and knowledge in that area.

3. Beware of Common Traps.

There are plenty of pitfalls that many home buyers/sellers succumb to. Here’s how to work around them:

Avoid seller’s agents.

if you are buying a home, work with a buyer’s agent who is not also representing the seller.

An agent working simultaneously for the buyer and the seller has the best interests of both parties in mind, as opposed to an agent who is exclusively working for the buyer and only has the buyer’s best interests in mind. If an agent is representing both you and the seller, they will be trying to make money for both you and the seller when it’s time to negotiate. Your goal is to find someone who is in your corner exclusively.

Let’s say you tell the person you think to be your agent, “Let’s offer $250,000 but I’m willing to go as high as $265,000.” If the agent were acting as sub-agent of the seller, s/he would be obligated to present the offer like this: “Their offer is $250,000 but they are willing to go as high as $265,000.” That pretty well destroys your negotiating power.

Be careful at “Open Houses.” Oftentimes, the agent working for the seller will try to pick up homebuyers at these events, so that they can represent both the buyer and the seller for that house (and thereby make a 6% commission).

You have the right to be represented by someone who will be your agent without giving you cause to worry about it. There are companies that work only with buyers. If you can’t seem to find one locally, go to the webpage of the National Association of Exclusive Buyer Agents. You can also check with your local real estate companies for agents who work only with buyers. In many states the real estate industry has created a Buyer’s Broker Representation Agreement that you can use with an agent.

Regardless, you should understand that you ought to have someone in your corner, someone who will help you understand the process, help you understand values, help you develop a negotiating strategy, and help you execute it just as if s/he were dealing with a member of the family. That person is out there and it is really important that you make an effort to find him/her.

Avoid the agent who works only for him or herself.

We just explained why it is important to work with a Buyer’s Agent who represents your interests exclusively. But there is another common kind of agent: one who works primarily for him or herself. There are many ethical real estate agents, but there are also agents who look out only for their best interests. Their primary concern is how much money they can make on the transaction and how hard they have to work to earn it. Getting referrals and references, and conducting interviews is the best way to avoid these agents.

Make sure your agent will show you ALL properties you might be interested in (not just the ones they’ll make the most money from).

Real estate agents get paid a commission, but it is almost invariably a portion (usually half) of the traditional 6% commission that is paid by the sellers. While one survey indicated that the average commission paid by sellers has actually dropped to little more than 5%, the buyer’s agents still retain the 3% they always have, with the rest going to the listing agent.

Buyer’s agents will often ignore listings that would provide them with a reduced commission. They think they deserve 3%, and won’t show you a home on which they would earn 2.5%. You need to let your agent know that you will be shown ALL the properties you might be interested in, regardless of the commission structure.

Avoid inexperienced agents.

Experience counts in the real estate field – ideally, you want to use an agent with at least 5 years of experience. A word of warning: the newest agents are likely to be the ones who take the “Up Desk,” meaning they’re the ones who answer the phone when you call a particular real estate office. They do it because they are trying to convert phone-in callers into clients. Frankly, you may not do as well being represented by one of these people.

3. Interview Potential Agents

You’ll want to ask potential agents questions about how long they’ve been in the business, how many deals they are currently processing, and other questions designed to tell you their level of competence. There are five basic questions you should ask a prospective real estate agent before you start to shop for a home. When interviewing potential agents, remember that it’s important not only that you know what questions to ask, but also what answers to expect. Here are some questions to ask:

1. How long have you been licensed as an agent? Check that the real estate agent currently has a license in good standing and ask him or her about their professional experience. Look for a real estate agent who has been in the business for at least five years. Ask the agent about his or her work schedule and how s/he wants to be contacted. Ideally, your agent is a full-time realtor who is easily accessible by email, cell phone, and in person.
2. How many homes did you sell last year and for what average price? Ask your agent about his or her recent experience helping people in your area buy and sell homes. See if s/he will provide you with the contact information of former customers as references.
3. How many clients are you currently working with? Look for an agent that works with a few clients at a time, but not so many that s/he won’t have enough time for you. Ask if the realtor will be acting as a “dual agent”, i.e., representing both the borrower and the seller. (As mentioned above, this is not ideal). If the agent will be representing you exclusively, ask whether s/he expects you to pay the commission instead of the seller.
4. What are your fee and commission structures? Will you be willing to show me ALL properties I might be interested in, despite your commission structure? Most real estate agents work purely on commissions from the sale. When a homeowner sells a home, they pay a real estate agent a commission and closing fee. This listing agent’s commission is usually about 6% of the sale price. The listing agent then shares his or her commission with the buyer’s agent. For helping you buy a home, your agent will receive about 3-4% of the sale price. Some agents offer discounted commissions, rebates, or flat-fees for their services. Cheaper may not be better: a discounted real estate agent may not work as hard to help you find the best home.
5. How can you help me afford the home I want? Your agent should be knowledgeable about the financing process and mortgage loan options available to you. You should ask him or her about tax and insurance policies that may impact your purchase. Also ask about the agent’s experience in making tough negotiations. Is your agent going to work hard to get you the best price on a home?

During the interviews, it is important to use all of your senses. Don’t just listen to what an agent says because some agents use a highly developed sales presentation. What you want to identify are more subtle factors, using skills you have been using all of your life in evaluating people. Remember that your goal is to find someone trustworthy and with whom you communicate effectively, and these qualities have nothing to do with a canned sales presentation.

4. Use Your Common Sense & Be a Skeptic

A word of warning: There are many salespeople who may not have your best interests in mind, but are adept at charming you into doing business with them. They can do a good job of appearing to be nice when, in fact, all they are thinking about is how much money they can make off of you.

Here’s another sad-but-true aspect of the home-buying situation: Although great numbers of real estate agents are honest, hard-working people with whom you can place your trust, there are also great numbers who are unethical and will try to manipulate you into doing something that makes them a big commission but puts you into a situation which can be damaging.

Many families are facing foreclosure now and in the near future. And many got into this situation because they let some smooth-talking real estate agent tell them juicy tales. They let some smooth-talking mortgage lender stuff them into a toxic sub-prime loan that they said they could refinance out of.

There are some real estate people who seem to be unable to talk with a client without launching into a sales presentation. They get so used to using superlatives that they can’t have a simple give-and-take conversation about the facts of a particular neighborhood or home. Every house isn’t the cutest one in town, and not every house is a terrific buy. Indeed, half are cuter than average and half of them are better buys than the other half. But you wouldn’t know that from talking to some agents. These people are so intent on making a sale that they overlook their primary mission: listening to what the client wants and helping him or her get it.

Obviously, when selecting a real estate agent, you want to avoid this type of person if you ever want to get a straight answer. But even if you think that you’re working with a person you think is right for you, it is important to review and summarize what has happened and been said after a day of looking at homes with an agent. Once you’ve done that, ask yourself this simple question about each point, “Does that make sense?”

5. It’s OK to Hold Back (Even if You Trust Your Agent)

Finally, even though you have chosen an agent you hope you can trust, you may not want to disclose certain information until you have to. You should be honest, but you don’t have to tell him or her everything about your intentions.

For example, when making an offer, you should go through a process to decide what a property is worth, which is likely less than the listing price. So you and the agent try to come up with an offering price. It would be quite natural to say, “It’s listed for $250,000, probably worth about $240,000. Let’s offer $230,000, but I’d be willing to pay $240,000 for it.” You may not want to do that.

Think about what is going on in the mind of your agent when s/he presents the offer. If s/he knows you are willing to come up to $240,000 he will probably not be as tough a negotiator as if he really believes that $230,000 is your BAFO, your Best and Final Offer. He will work harder to close the deal at your offering price.

Your agent’s job is to communicate your intention and if s/he is portraying you as having reached your limit – that there won’t be any counter-offers – you stand a better chance of buying that home for $235,000 instead of $240,000.

6. Go Online

You can shop and compare realtors in your area online with no obligation. Don’t be afraid to ask an agent hard-hitting questions about her services. A good agent will understand your concerns and will help you find the best deal. Good luck and be careful out there!

This article has been updated. It was originally published on August 8, 2013.