When you buy or sell property, the odds are you’ll deal with a listing agent and a selling agent. While they’re both technically real estate agents, the service they provide their clients and the role they play in a real estate transaction are completely different.
In this article, we’ll explain the difference between a listing agent and selling agent, to help you understand what to expect when you’re buying or selling real estate, and how to get the most from your agent.
Do You Really Need a Real Estate Agent?
Nearly 95% of home buyers use the internet to search for homes, which of course raises the question of why buyers and sellers should use a real estate agent in the first place. After all, a lot of money can be saved by not paying a sales commission and there are plenty of ways to list a property for sale online.
However, unless you have the time to market and show your property, or conduct in-depth market research when you’re buying, it probably makes more sense to have a listing agent or selling agent who has your best interests at heart.
Of the nearly 5.4 million homes that were sold last year, 89% of sellers were assisted by a real estate agent, according to the most recent Quick Real Estate Statistics report by the National Association of Realtors (NAR). Recent sellers sold their home for 99% of the listing price, and the typical home was sold within three weeks of being listed for sale.
What a Listing Agent Does
In addition to getting a home sold fast and for close to the full asking price, a listing agent – also known as the seller’s agent – performs key tasks for the property owner such as:
- Perform a comparative market analysis (CMA)
A CMA is used to determine the likely selling price, assist the seller in setting a listing price (oftentimes leaving a little room for negotiation), and analyzing the strengths and weaknesses of the property compared to other similar homes for sale.
- Launch a strategic marketing plan
List the property for sale on the local MLS, and on public websites such as Zillow, Redfin, and Trulia. For income-producing property such as a single-family rental house or small multifamily building, Roofstock is the perfect way to expose the listing to a vast network of real estate investors in the U.S. and abroad.
Key components of an effective marketing plan include:
- Determining specific measurable objectives such as number of showings the first week on market, or the amount of email and phone call responses
- Creating a marketing budget, broken down by week, with activity “front-loaded” for the first few weeks on the market when the listing is fresh
- Door-knocking in the neighborhood to let the neighbors know the home is for sale since word-of-mouth is the best form of advertising and it’s absolutely free
- Pre-marketing the listing with “coming soon” photos online and on social media websites to create a “buzz” before the property hits the market
- Hiring a professional photographer to take still shots and videos of the property, including drone footage if the property is in a scenic location or a rural area
- Using a professional copywriter to create a detailed description of the property to helps form an emotional connection with potential buyers
- Networking with buyers’ agents by working the phones and holding a pre-listing open house for the top-producing real estate agents in the area
- Prepare the property for showings
For a property that’s currently rented, a listing agent will ensure that the tenant’s rights are respected and proper notice is given before showing the property to prospective investors.
Vacant property can be prepared for showings by staging with rented furnishings, with the listing agent making sure that home is always presentable inside and out.
- Review offers and conduct negotiations
A listing agent will field offers from prospective buyers and their agents, conduct negotiations on behalf of the seller (and with the seller’s input), and assist the seller in selecting the best offer.
After a contract is accepted and escrow opens, the agent oversees the transaction from start to finish. The listing agent will ensure that all contract timelines and contingencies are met, handle all of the paperwork, and act as an intermediary between all parties to the transaction including the buyer’s agent, escrow officer, attorneys, and lender.
What a Selling Agent Does
Also known as a buyer’s agent, selling agents appear to be doing a pretty good job for homebuyers and investors looking for property. According to the same Quick Real Estate Statistics report by the National Association of Realtors (NAR), 90% of the buyers would use their agent again or recommend the agent to others.
A selling agent works exclusively with a buyer and looks out for the buyer’s best interests. One of the biggest reasons for hiring a selling agent is that you have somebody on your side. After all, when you hire an attorney you don’t expect them to represent the other party as well, and hiring a real estate agent is no different.
Key tasks that a selling agent performs for buyers include:
- Selling agents know the market
Provide a deep knowledge of the local market place, including historical market performance and potential future demand for the property being purchased. “Picking the brain” of your selling agent is a key part of the process to help determine if a rental property will be a profitable investment, and why.
- Access the MLS
The multiple listing service (MLS) is a proprietary database that only members of the National Association of Realtors (NAR) can access.
A licensed selling agent can access the local MLS to compile real-time information about property listings, create a CMA, and obtain contact information for property owners of expired or listings that have gone off of the market to see if the owners are still interested in selling.
- Search for listings not on the MLS
Top producing selling agents also have an extensive network of contacts with the most active listing agents, escrow officers and lenders, property managers, and contractors and appraisers.
All of these contacts can be an excellent source for non-public, off-market listings. Sometimes, sellers don’t want to deal with the process of listing their home for sale. But if the price and terms are rights, they may be more than willing to sell to the right buyer.
For agents working with real estate investors, the Roofstock Investment Property Marketplace is another key resource for locating turnkey single-family rental homes and small multifamily property. Roofstock also co-brokes with selling agents (and listing agents, too).
- Coordinate property showings
Selling agents work directly with listing agents – or owners if the property isn’t listed on the MLS – to arrange for showings.
For long-distance real estate investors, a selling agent can act as the eyes and ears of the investor, previewing property, and taking photos and videos to help find the best rental property.
- Negotiate and structure a purchase offer
A selling agent will also assist the buyer in negotiating for the best possible price and terms, submitting the offer, and guiding the buyer through the entire closing process.
The agent also ensures that all contact contingencies are met, and will help to renegotiate contract terms if the property doesn’t pass inspection or repairs need to be made.
Who Pays The Commission?
If a property is listed on the MLS, the seller normally pays an agent commission based on a percentage of the sales price of the property. Then, that fee is split between the listing agent and the selling agent.
So, if the seller agrees to pay a 6% sales commission, half of the commission normally goes to the selling agent and half to the listing agent. Sometimes, real estate agents will mutually agree to a different commission split or agree to a flat fee commission instead of a percentage of the sales price.
That also means that if you’re working with a selling agent who represents you as the buyer, you don’t pay the agent’s fee. But be sure to read the terms of the agreement you sign with a selling agent, because sometimes they will charge the buyer a small fee if you don’t purchase a property within a specified timeframe.
What Dual Agency Is and How it Works
Some states allow a real estate agent to be a dual agent, acting as both the listing agent and the selling agent.
For the agent and the seller, dual agency can sometimes be a good deal. That’s because the agent doesn’t have to share the commission fee with a seller’s agent, and the property owner may be able to negotiate a lower sales fee since the dual agent keeps all of the commission.
Buyers purchasing in a strong housing market, or when a deal is too good to pass up, may also be motivated to use the listing agent instead of their own agent. If the agent and the seller are making more money, agreeing to dual agency may swing the deal in favor of the buyer.
However, there are also some serious potential drawbacks to dual agency too.
Because a dual agent can’t act as a fiduciary by representing the best interests of both buyer and seller, they end up acting as a transactional agent instead. So, rather than trying to get the highest possible price and best terms for the seller, or the lowest price and best terms for the buyer, the dual agent ends up acting as a neutral go-between.
Listing agents and selling agents work on opposite sides of the same real estate transaction. As a seller, your listing agent will have your best interests at heart and do their best to sell your property at the best possible price and terms.
If you’re a buyer, having a selling agent as part of your team can help you get good deals both on and off the MLS. Plus, because your selling agent receives their commission from the property owner, their services are absolutely free.