What is the difference between a REALTOR® and a real estate broker?
Every state has its own laws governing real estate licensing. There is no national license. In Indiana, brokers are required to complete 90 hours of instruction at an accredited school and pass a licensing exam. They must also complete 12 hours of continuing education each year to maintain their licenses.
In Indiana, a licensed broker who has joined the National Association of Realtors (NAR) and has pledged to adhere to the NAR code of ethics and professional standards is considered a REALTOR®.
The Mills Team has met and exceeded all of these standards.
Who Do REALTORS® Represent?
The answer to this question used to be somewhat complex, but in recent years, the laws have been simplified. Now, brokers working with a buyer represent the interests of the buyer and those working with a seller represent the interests of the seller. In practical terms, this means that whether you are a buyer or seller, your broker is now required to:
- Exercise reasonable skill and care in performing their duties
- Deal with you as a client honestly and fairly
- Disclose all facts which are known to the broker (or may be reasonably discovered) that affect the value or desirability of any property you are considering.
The only exception to this law is when a buyer wants to buy a home listed by his/her own broker. In this situation, the broker becomes a “limited agent,” representing the interests of both parties. This limited agency must be disclosed, and both the buyer and the seller must give their consent in writing in order for the broker to act in this capacity. Acting as a limited agent does not release the broker from his/her obligation to uphold the standards mentioned above. However, the broker cannot disclose confidential information of each party, such as a buyer’s credit score or a seller’s mortgage loan balance, unless authorized to do so. The Mills Team has successfully represented many clients in limited agency transactions, and we have the skills and integrity necessary to do so.
How Are REALTORS® Paid?
Real estate brokers are paid on commission, generally a percentage of the selling price of the home. The commissions and the amount shared with the buyer’s brokers for a particular transaction are established in the listing agreement between the seller and his/her broker.
The total commission is paid at closing to the listing broker. The listing broker then shares a portion of the commission with the buyer’s broker. The listing broker and the buyer’s broker then usually split the commissions they receive with their real estate company.
Why Should You Work With a REALTOR® When You Buy?
There are many compelling reasons to use a real estate broker when you buy a home:
- They have access to the Broker’s Listing Cooperating (BLC) which allows them to search for available homes that meet your criteria.
- They will handle the administrative details of scheduling showings for the homes you would like to see.
- They save you time by providing you with information about schools, neighborhoods, etc.
- When you find a home you think you might be interested in, they can use the BLC to find out the list prices of other homes for sale in the area as well as the sales prices of those that have recently sold. This can help you determine the fair market value of the home before you make an offer.
- They will guide you through the maze of offers and counteroffers, inspections and amendments-always looking out for your best interests. Their advice and insight in these areas can help you avoid potential pitfalls and may save you from costly errors. Your broker will know, for example, which items in the home need to be included in the purchase agreement; some items can be assumed to stay with the house while others must be specifically stipulated. If the inspection uncovers problems, your broker will help you negotiate changes with the seller. Most real estate brokers will not tell you what to do, but their training, previous experiences, and professional contacts can help you make better, more informed decisions.
- They can help you find a reputable mortgage company.
- They will explain the closing process and all of the paperwork involved.