This document will give you some insight on the real estate industry and how to speak to agents with the correct vanacular.

1. What does a Real Estate Brokerage do?
We help buyers and sellers of real property transact the sale of said property.
o In short we bring buyers and sellers together
A typical Real Estate transaction goes like this:
o A family decides to sell their home
o They decide to bring in an expert to help them since this is their most
valuable asset
o After speaking to several experts, they hire one to list, market and sell
their home
 To list a home means to list it for sale in the multiple listing
service
 This service displays all the homes listed for sale by other
agents. We’ll talk more on it later
o The clients sign an Exclusive Rights Agreement giving that agent the
sole right to market that property
o They agree that the agent will earn the typical 6% commission once
the home sells.
o The agent lists the home for sale on the MLS, and offers to pay any
agent who brings a buyer to the property 3% or half of the commission.
o The listing agent advertises the property in the news paper, in home
sales publications, on the web, and other places he deems necessary.
 He does this at his own expense
o The agent puts up signs leading passersby into the neighborhood to
view the home and places a sign and flyers in the yard
 He does this at his own expense
o The agent then holds an open house allowing potential buyers to freely
view the home at a set time
 He advertises this in multiple publications at his own expense
o Finally Mary, a buyer’s agent, shows her client the house, and the
client loves it.
o Mary writes an offer on her client’s behalf and submits it to the listing
agent.
o The listing agent submits the offer to his clients who then reject the
first offer, and then make a counter offer.
o Finally, both sides agree to a price and “Ratify” the contract by signing.
 The buyers also have to provide a “Consideration.” This is called
an Earnest Money Deposit

2. o The agents and brokers help coordinate the lenders, attorneys, title
companies, contractors, and other various players until the deal has
closed
What is a Real Estate Agent?
How does one become an agent?
o Take a 60 hour to 120 hour course called “Principles of Real Estate.”
 Must pass an exam demonstrating they’ve learned national and
local laws
o They must take and pass the national and state board examinations
o They must undergo national and state background checks
o They must affiliate with a broker
o The jargon used is “Hang my license.”
A broker is an agent who
o Completed more training
o Has been in the business 3 years or more
o Is able to demonstrate advanced knowledge and skills
o Has completed and passed all legal requirements by the state in order
to earn a broker’s license
o Some agents have earned broker’s licenses but choose not to open their
own business, but instead work under a managing or principle broker.
Some brokers open their own firms or are hired by owners to manage a firm
o A firm is simply the legal name for a real estate brokerage
 Century 21
 ZipRealty
 Re/Max
o The brokers are called “Principle Brokers.”
o Every office is required by law to have a principle broker listed
o Principle brokers take on the legal responsibilities of the agents who
hang their licenses with that broker.
o Agents do not have clients, brokers have clients
 Once an agent signs her own mother, she become the broker’s
client technically
o Broker’s determine how commissions are split between she and the
agent
o By signing the broker agreement, and hanging his license with a
broker, the agent agrees to the terms laid out in the compensation
agreement portion of the buyer’s agreement

3. Agents generate clients for the broker
o Sphere of influence
o Advertising
o Past clients
o Word of mouth
o Working open houses
o Calling expired listings
o Calling FSBOs
o Maintaining a website
o Purchasing clients
Agents List and market homes for sale
o Agents have to know their markets
o Agents have to know how to price homes competitively
o Agents have to advertise listed homes on the web and in publications
o Agents place listed homes in the MLS
 Multiple Listing Service is an online database of all homes
available for sale by other agents
 Memberships also allows agents to have an access key to
lockboxes where keys are stored
Most all agents are members of the National Association of Realtors
o This is a private company that advocates on behalf of Agents
o Allows agents to trade with the Realtor® designation
o Costs $1500 - $2000 up front, and continual dues several times per
year.
Agents help home buyers find homes
Agents negotiate on behalf of their clients
Agents have 6 Legal Fiduciary Responsibilities to their clients
o Obedience
 Agents, while in an agreement with a client, must obey all
LAWFUL instructions of the client
Excluded are illegal request such as not to show the home
to minorities
o Loyalty
 The duty obligates a real estate broker to act at all times, solely
in the best interests of the principal, excluding all other
interests, including that of the broker.
o Disclosure

4.  The agent must disclose all pertinent information regarding that
pertains to the relationship
o Confidentiality
 The agent is required to keep all LAWFUL confidences and
secrets.
Cannot keep secret that the home floods each time it
rains
Is required to keep secret that the home is being sold
because the client is desperate for money.
o Accounting
 The agent is responsible for ensuring all funds are dispersed
properly on behalf of his client
o Reasonable Care and Diligence
 In short, this is the responsibility to be knowledgeable in one’s
field
What is a customer
o A customer is anyone who inquires upon an agent the request for
information on real estate
o An agent has NO DUTY toward a customer
o An agent cannot get paid from customers
What is a client
o A client is a customer who has signed an agreement
o Real estate is one of the only fields of law that an oral agreement is not
honored
o An agent has fiduciary responsibilities to a client, but none to a
customer
An agent is entitled to a commission when
o She brings two ready, willing, and able parties together
 It doesn’t matter if the transaction goes to escrow or closes
 Although this is the law, it is very difficult to get paid on a
transaction that doesn’t close
Why would you want to hire a real estate agent (Exercise)
o You need to sell your home, why would you hire an agent. Is there a
time when you wouldn’t hire an agent?
The Bottom Line is
1. Agents are the lifeblood of a real estate brokerage. They are valuable
commodities.

5. 2. Agents generate clients for the brokerage
3. Agents help facilitate the escrow process