Most home transactions in the US involve at least one real estate agent — but many buyers and sellers don’t fully understand what agents do, how they’re compensated, or when their involvement is genuinely valuable. Here’s a complete breakdown.
What a real estate agent does
A real estate agent is a licensed professional who facilitates the buying or selling of real estate. They help buyers find properties, schedule showings, analyze comparable sales, draft and negotiate offers, and navigate the contract-to-close process. They help sellers price their homes, market the listing, host open houses, negotiate with buyers, and manage the transaction through closing. A good agent brings market knowledge, negotiation experience, and transaction management — a weak one adds friction and cost without proportionate value.
Buyer’s agents vs seller’s agents
A listing agent (or seller’s agent) represents the person selling the home. Their fiduciary duty is to the seller — to get the highest price and best terms for their client. A buyer’s agent represents the person purchasing the home — their duty is to protect the buyer’s interests and help them negotiate the best possible deal. Dual agency, where a single agent represents both parties in the same transaction, is legal in most states but creates an inherent conflict of interest. Buyers should understand whose interest the agent they’re working with is legally obligated to serve.
How real estate agents are paid
Traditionally, the seller paid a total commission of 5–6% of the sale price, split between the listing agent and the buyer’s agent. On a $400,000 home, that’s $20,000–$24,000 in total commission. In 2024, a landmark settlement by the National Association of Realtors changed how buyer’s agent compensation works — buyers must now negotiate compensation directly with their buyer’s agent through a written buyer representation agreement, and that compensation is no longer automatically bundled into the seller’s commission. The result: more transparency and negotiation around what buyers pay for representation.
The difference between an agent, Realtor, and broker
A real estate agent is anyone with a state real estate license. A Realtor is an agent who is also a member of the National Association of Realtors and has agreed to its code of ethics. A broker has additional licensing above an agent and can run their own brokerage and supervise other agents. Most buyers and sellers work with agents — the distinction matters most if something goes wrong and you need to understand who has oversight responsibility.
Do you actually need a real estate agent?
For most buyers and sellers, a good agent adds value that exceeds their cost — particularly in complex markets, competitive bidding situations, or for first-time buyers who lack transaction experience. For sale by owner (FSBO) transactions and flat-fee listing services exist for sellers who want to reduce commission costs, but data consistently shows that FSBO homes sell for less on average than agent-listed homes, which partially offsets the commission savings. The right answer depends on your experience level, market complexity, and how much of the process you’re willing to manage yourself.
How to choose a good agent
Ask for referrals from people who recently bought or sold in your target area. Interview at least 2–3 agents before committing. For buyers, ask how many buyers they’re currently working with (too many and you won’t get attention), what their average days-to-close looks like, and how they approach competitive offers. For sellers, ask for a comparative market analysis (CMA), their marketing plan, and their average list-to-sale price ratio. Check online reviews on Google and Zillow, and verify their license status through your state’s real estate commission website.