Many professions require professional licenses, such as lawyers, teachers, dentists, doctors, HVAC and plumbing technicians, real estate agents and many more. Having a license to perform these jobs means the person is current on the latest technology and regulations within the industry and has completed the training necessary to perform the job ethically and professionally. Holding a professional license shows a person is dedicated to their field, and their insight comes from attending hours of expert-level training.
Real Estate Licensing Process
The pass rate for the Indiana Real Estate exam, which includes state and national sections, is 75 percent. Before sitting for the test, applicants must first complete 90 hours of classes, and once licensed, are required to complete an additional 30 hours of training within two years.
Annually, all agents are required to complete a minimum of 12, state-approved, continuing education hours. A majority of Realtors exceed this requirement because they strive to be industry experts for their clients.
Real Estate Transactions are not Created Equal
Because not every transaction is the same it’s important to choose a Realtor with experience in a particular area. For example, selling a home as part of an estate has different requirements and paperwork than a single-family home that’s currently occupied and owned by the occupants. A seller’s disclosure is required for some transactions but not others, regardless if the owners live in the home or even in the same state. Commercial transactions are also different from residential, probate and bank-owned real estate. Each different area of real estate has its own set of rules and it’s important to find a Realtor with experience in that area.
How Realtor Commissions Work
In a traditional residential real estate transaction, there are two realtors involved, the buyer’s agent and the seller’s agent. For example, if the seller pays a five to six percent commission on the sale of the property, which is split between the two agents. For example, if a home sells for $200,000, the commission would range between $10,000 to $12,000, which is taken from the sale price and split between the two brokerages representing whose Realtors represent the two clients.
This setup is effective because buyers are already paying money for inspections, a down payment, taxes and other fees associated with closing. Expenses for sellers are traditionally less or may include repairs or allowances. Buying a home is one of the largest financial purchases someone can make. Ultimately, the price a buyer agrees to pay for a home, which was determined by a seller and their Realtor, covers the payout to the seller and agents.
What’s the Value of a Realtor?
Buying or selling a home, especially for the first time, in a different state or different area of town can have challenges. Experienced realtors recognize these challenges and are here to make the process easier. The first thing a realtor does is determine a buyer or seller’s specific needs and time frame to move. They will also walk through a seller’s home and offer advice on ways to improve curb appeal and attractiveness inside so the property is enticing to buyers. This is also a time to make sure the personalities of the realtor and buyer or seller mesh well so there is open, two-way communication throughout the process.
Once timelines are discussed, for sellers, a pricing strategy is outlined. Sellers are informed of deadlines leading up to a sale, what happens if the property is still available after a certain number of days, and offer comparable properties to help set the initial selling price. Allowances and repairs are also discussed.
Through training, networking and experience, many realtors have a trustworthy list of contractors for just about every facet of a home. They can offer suggestions for fireplace cleaning, home inspections, plumbing repairs, appliance repair and more. This network of professionals is only assembled by someone who’s worked in the industry and knows which companies are the most reputable. A realtor can also research information about traffic patterns, school systems, neighborhoods, crime reports and find out if any major commercial or city projects are coming soon to that area.
How Realtors Help in Negotiations
Home buying or selling can be stressful and emotional. The sellers may be parting with a home they’ve lived in for more than 40 years, or the buyers are coming in from out of state and unfamiliar with the area. Regardless of the situation, realtors are trained to keep emotions and feelings off the negotiation table. They recognize the mental toll the process can take, and work on behalf of the buyer or seller to provide the best possible outcome.
Real Estate Deadlines are Critical
For a real estate transaction to run smoothly, it’s critical to meet deadlines. One missed deadline can move a closing back days or weeks. A realtor has the time and expertise to keep track of all deadlines, communicate with their client and the other parties to ensure those deadlines are met, and provide reminders to stay on track.
Knowledge is Key
It’s not uncommon for people to think buying or selling a home without a realtor is simple, but that’s likely because they’re unfamiliar with the changing landscape of the industry. Few people would go into a courtroom without a licensed attorney, and the same should be true for sitting at the closing table. By looking at the larger picture, realtors save their clients a significant amount of time, and that time is used for packing, working, going to school, running kids, helping parents or any other number of activities. Realtors are also qualified to know what to do when the unexpected happens, such as mold in the house, a land survey discrepancy or title problems. In many cases, the agent is familiar with the scenario and knows how to guide the client to a reasonable solution.
When considering a realtor’s commission, it’s important to reflect on the time and effort the person invested in becoming an expert in the industry, and the value attached to that time. Many professionals, in any field, are paid based on their worth, which is determined by the training and experience they possess; the same is true for realtors. The level of expertise and dedication a realtor brings to ensuring a smooth process justifies the small commission they receive.
Dawn McClara is an agent at the F.C. Tucker Company, and has worked in residential real estate for more than 17 years. She’s a licensed realtor, broker, is a member of MIBOR, and is the founder of Whalens Heroes, which provides funding to purchase service animals for veterans. She can be reached at dawn.mcclara@talktotucker.com.