Basically a real estate broker or agent is the intermediary between the buyer and the seller in a real estate deal. Under law a real estate broker has what is called a fiduciary relationship with clients. This obliges the broker to act in his or her clients’ best interest.
From seller’s side, a real estate broker helps to market the property using various methods in order to get the best possible price. Services offered by a real estate broker may include, giving an analysis of the current state of market, appraising the property, general marketing of property, guiding clients during the process of selling, preparing the necessary documentation and contracts, and auctioning of property if that is the requirement, among others.
While buyers can enter into a signed agreement with a real estate broker (thus obliging buyers to pay commission on conclusion of the deal) to search for a property at best possible price for them, that is not necessary. Buyers can deal with seller’s real estate broker or with others under a verbal agreement.
Brokers who assist in the deal without representing either the buyer or seller are known as transaction brokers and are not bound by the fiduciary relationship.
Real estate brokers are compensated depending on the role they played, by a commission based on a percentage of the gross transaction price of the deal, or through an hourly consulting fee.
Generally real estate brokers are required to have a license. In fact in some States of US unlicensed brokers are not entitled to receive commission and their activity is illegal. In some other states lawyers are allowed to deal with real estate matters in the same way as licensed real estate brokers. Buyers and sellers can also come to a deal without brokers.