How does an Estate Agent from the UK differ for a Real Estate Agent in the US?

In most English-speaking countries outside of the US, real estate buyers seek out an estate agent rather than a “real estate agent”. An estate agent provides some similar services as real estate agents in the US, but there are some notable differences.

First, the US is one of the few countries that have buyer agents. These are licensed professionals who work primarily in the buyer’s best interest versus for the seller. Traditional offices may have have designated buyer agents and designated seller agents; exclusive buyer agent offices only have buyer agents within the entire firm. In the US you can also have transaction brokers who try to put together a deal for the buyer and seller within the same firm.

Estate agents in many non-US countries function more like transaction brokers and typically get paid a much smaller percentage of the sales price for this non-fiduciary role: oftentimes no more than 1-2%. The National Association of Realtors has worked to extend their consumer-protective practices to other countries.

However in the US, a real estate commission built into the price of the home for sale is typically around 6%. Out of that 6%, 3% is usually reserved for the seller’s agent to do their advertising and MLS listings and negotiations on behalf of the seller, and half is offered to the buyer agent to bring them a qualified and interested buyer.

While the US system is relatively expensive to help both the buyer and the seller to have a professional help them through the process, many people appreciate the protections offered on both sides. It can be argued that it is valuable to pay a little more to have a professional at your side at closing when there are a stack of legal documents 1 inch thick to be signed at closing. The US has many regulations and laws that must be followed which make the process of buying a home rather complex. The United States appears to have more regulatory hurdles involved in the real estate purchase that protect the buyer and the seller than other countries, but it can be argued that our system is overly cumbersome compared to other places.

In most non-US countries the estate agent and the buyer work together with an attorney to do the actual buying process. The buyer ends up doing a lot of the legwork on his own.

An estate agent in another country is more likely to have a more limited role of finding the right property for a client. However; sometimes the estate agent is limited to having knowledge about properties only within their own firm, as is typical in the UK. In these cases, this involves more work for the buyer because he or she must contact every estate agent who has listings in a certain area and work with all of them in order to have access to all of the property that is for sale. Buyer agents can occasionally be found, but they are often at an additional cost to the buyer. The advantage in the US, is that the buyer agent fee is built into the price of the property for sale.

However, non-US buyers beware! If you go directly to the seller’s agent, all they have to do is disclose to you that they have that listing in-house, and they can then keep all of the 6% commission built in for both sides of the deal, and you lose your buyer representation. In some cases, you can ask for a separate or designated agent within that firm to advocate for your interests, but most would agree that an independent exclusive buyer agent company that has no listings might be a better choice since they would have complete objectivity about the market place.

If you are thinking of working with an estate agent in the US, it behooves any non-US purchaser to understand how radically different the US real estate agent works.

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