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What does a real estate agent do?
Part 1
By Marc Holt
 Very few people really understand what a real estate agent does. Some people have told me it's a really easy job. All we agents have to do is take clients around to see properties and collect a large commission. Boy! I wish it were that easy.
Now let me tell you what we really do.
First, an agent must have a large list of properties on the books so that clients have a wide range to choose from. These 'listings', as we call them, come from a variety of sources. We spend a lot of time driving around looking for signs outside properties put there by the owners. Then we call the owner to ask if we can represent their property and if the answer is 'yes' we negotiate a commission.
Some owners will approach an agent at his office. Others will register through the agent's website, if he has one. And the agent will advertise in various publications asking owners to register their properties with him. Word of mouth is another popular way for agents to get properties.
All this takes time, a lot of work, and that all costs the agent money long before he is likely to make a sale. This is one reason why agents make such good commission money on each sale. They have to recoup their investment and have enough left over to continue in business. By the way, an agency sales commission has traditionally been 3% for many years. However, with rising costs and increasing competition, some agents are asking for as much as 5% these days, and getting it.
Who pays the commission? The owner usually does. But in some cases they may ask the agent to add their commission on top of the selling price. Either way, the commission is an integral part of the sale price of any property.
So now that the agent has a good selection of properties on the books, the next step is to find clients. The most obvious choice is to advertise in magazines, newspapers, on the radio and even on TV. By far the most popular choice is magazine advertising, especially in magazines that specialize in promoting real estate. Advertising is not cheap, and any reputable agency will want to create a good impression by full page advertising in color. This is another expense the agent must bear before making a sale. And a reputable agency will operate out of an office, and pay support staff; yet another expense.
The Property Search
So how does an agent help clients looking for property?
First he must find out what the client is looking for by asking as many questions as reasonably possible. He must get a 'feel' for the client's needs and he must establish a rapport with the client so that they don't waste each others time. This is not easy. Some clients don't always know what they want until they start looking around, so the agent may have to start by showing a few properties and asking which features the client likes. Again, more time and expense that may not show any results.
Does the client like wood, tile or stone floors? Does he want a large balcony, or no balcony at all? What about the kitchen? Is it important to have a big one, and should it be open or enclosed? Is the client looking for a garden to tend? How big? The questions go on and on until the agent has a clear picture in mind of the type of property to show. Then he will prepare a list of properties to take the client to view. Then it is down to slogging around each property, pointing out the advantages, discussing any disadvantages, and continuing to observe the client's reaction to each property.
Let's go on now and assume that the client has found the property he is looking for. It's time to negotiate the price. This is the very difficult part, because the agent is representing the seller and the buyer, so he must tread carefully. If the price is too high he may lose the sale: too low and the buyer may want to cut his commission or even cancel the sale.
During these negotiations the agent must clear up any additional questions the buyer may ask and ensure there are no surprises for the buyer later on.
The Legal Process
Once a price and the terms and conditions have been agreed on it's time to visit a lawyer. Some sellers will offer the services of their own lawyer. A good agent will always counsel the buyer to get his own lawyer, and to get the best possible lawyer regardless of the cost. It is better to pay a higher fee for a reputable and experienced lawyer. Saving money on the legal process is false economy and can cost the buyer more than it is worth in the long run if his lawyer is not experienced in real estate law.
A good lawyer will look for any problems, explain them clearly, and advise whether to continue a transaction or not. At this stage, the lawyer will check the validity of the land title deed at the land office and ensure there are no liens, debts or other attachments on it. And this is when the client must put down a deposit to show he is serious.
Reputable agents will insist on a penalty clause in the deposit contract that states that if the seller pulls out of the deal for any reason he must pay back the deposit in full, plus another 50% penalty. And if the buyer pulls out without good reason he will forfeit the deposit.
How much deposit should the buyer pay? This all depends, but most sellers ask for between 10 to 20 percent of the agreed purchase price.
At this meeting, the buyer and seller must furnish proof of identity, and the seller must also provide any documents to prove ownership of the property. When this is done all parties will set another appointment at the lawyer's office within an agreed time, usually within one or two weeks. During this period the lawyer will draw up the Sales and Purchase agreement, and check everything to make sure there are no last minute problems. He will send copies of the S&P agreement to both parties to check and ensure that they both agree on the terms and conditions of the sale.
At the next meeting, all parties will sign the S&P agreement and any other documents included in the deal, and the payment for the purchase will be handed over to the seller. Then buyer and seller go to the land office to register the sale and transfer. It is at this stage that some buyers experience some worry, because they don't actually get the land title deed straight away. In some land offices it can take 24 hours to process, but in others it may take up to a week, or even more. However, the buyer need have no worries. Once both parties have signed the S&P agreement in front of witnesses, and they have registered the sale with the land office, the deal is set in concrete and each party is legally committed.
In my next article, I will discuss the moral and legal obligations of the agent.
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Thai-Norwegian Chamber of Commerce
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Thai-Norwegian Chamber of Commerce.
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 © 2005 Holt WorldWide Co Ltd, Published in the Pattaya Property Trader magazine, April 2005
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