The Realities of Real Estate: Are real estate agents salespersons?

One thing that we've pondered lately is the degree to which real estate agents should be classified as salespeople. We all have different ideas of what constitutes a salesperson, but generally, the image is not a positive one. For most people, the picture that most immediately pops to mind is Vince for the Slap Chop, or a plaid jacketed fellow roaming a used car lot. In this way, the definition of a salesperson is often characterized as someone peddling a product in hopes that their powers of persuasion will inspire you to either buy something you don't really need or select their version of some gizmo over that of a competitor. That's all fine and well, if you're talking about selling a proprietary product, whether it be something as small as a candy bar or something as big as a jumbo jet. But when it comes to homes, selling is a little bit different.

In the broadest sense, real estate agents can perform two different functions. At times, an agent may be acting on behalf of buyers, as a buyer's agent. At other times, an agent may be representing a seller as a listing agent.

When assuming the role of a listing agent, the idea of being a salesperson seems most logical. After all, the seller has hired an agent to effectively market the property and secure a sale at the highest possible price. Even so, there are a number of legal limitations placed on agents that can restrict the degree to which selling can be part of the job. For example, an agent can't really make any representations about the neighborhood, especially when it comes to issues like crime and the quality of schools. Agents are strictly prohibited from saying anything that could be construed as possibly steering a buyer.

Additionally, agents must also tread somewhat carefully in what they say about the property. After all, the agent hasn't been living there, so they have no first-hand knowledge. This isn't to say that a listing agent can't make a meaningful contribution to selling the home. It simply points out that the degree to which they can represent the property as a sort of product is more limited than what might be allowed with other types of merchandise.

For listing agents, much of the selling effort is actually directed toward other agents. Most home buyers have agents representing them. Consequently, it's important for a listing agent to inspire other agents to show your property. This is especially true in today's market, where there is a lot of competition and many alternatives for buyers. This makes a lot of the agent's selling function more of a "wholesale" business-to-business effort rather than the regular retail form of selling, where the listing agent works directly with a buyer. In reality, the number of times an agent will sell their own listing to an unrepresented buyer is very small. As you can see, the sales part of a listing agent's job is really multi-faceted and can differ substantially from a traditional sales job. To be effective, a listing agent must appeal to several audiences and do so in a manner that recognizes numerous legal and ethical standards.

For real estate agents representing buyers, the concept of being a salesperson becomes much less relevant. When we work as buyer's agents, it's not really our job to talk someone into buying any particular house. A house is a huge economic investment, and selecting a place to live is a very personal decision. It's not right to complicate matters by doing a "sales job" on someone who's working their way through the decision process. Rather, we see the buyer's agent as a resource for information. We can help people understand relative market values, the pros and cons of how to negotiate, assist in searching for homes and ultimately get a buyer to settlement.

But we would never be so presumptuous to begin telling a buyer what kind of house would be good for them. Buyer's agents must always be careful not to begin rendering subjective opinions about a house. Sometimes, as an agent, you can go into a house that you think is an awful place and nothing your buyers would be interested in, only to find out that they love it. When you've been working with a client for a long time, it's easy to believe that you're completely in tune with what they're looking for. Some of that is fine, in that it can assist the agent in searching for appropriate homes. However, it's possible for an agent to become a little too involved, and that can be counterproductive in allowing buyers to discover what elements of a house are most important to them. There can also be ethical issues, if an agent begins to make unsubstantiated representations about a property. Even if you're representing a buyer, agents are not absolved from representing a seller's property in an accurate manner.

There can be buyer agents who apply some pressure just to get on with making a sale. We feel it is inappropriate to do anything like that. A home purchase is an enormous investment, and where you live is an equally important part of anyone's life. For agents, being a salesperson is best set aside when it's time for a buyer to pick out their home of choice.

As you can see, being a real estate agent doesn't always mean being a salesperson. In fact, there are times when selling shouldn't be part of the job. A few states have eliminated much of the salesperson aspect of real estate, by allowing agents to act as what's called a transaction broker. The South Broward Board of Realtors in Florida defines a transaction broker as follows: "The transaction broker crafts a transaction by bringing a willing buyer and a willing seller together and assists with the closing of details. The transaction broker is not a fiduciary of any party, but must abide by law as well as professional and ethical standards."

Being a transaction broker can relieve an agent from some of the responsibility to sell either the buyer or seller's point of view. But the downside is that can also tend to prohibit an agent from offering clients the benefit of their knowledge and experience. Completely eliminating fiduciary responsibility may work in some cases. In others, the lack of representation can leave some buyers or sellers inadequately assisted in what is a complicated, high value transaction.

There's no perfect answer to how real estate agents should be defined in completing a home sale. The Real Estate Commission and various trade organizations (like the National Association of Realtors) are constantly reviewing the system to make sure everyone gets a fair shake, and all parties involved know who's representing who. One thing is for sure: Being a real estate agent isn't simply being a salesperson.

Bob and Donna McWilliams are practicing real estate agents with more than 20 years of combined experience in the Annapolis area. Their Web site is www.BobDonna.com, and you can e-mail them at McWilliams@BobDonna.com.