Real estate agencies are the mechanism we use to buy and sell real estate. An agent is someone you hire to act on your behalf. A real estate agent is the representative of the seller of real estate. A buyer may also retain an agent to represent him or her in the sales transaction, but that is the exception rather than the rule and the buyer will compensate its agent independently from the transaction with the seller. The seller hires a real estate agency to advertise his or her home to potential purchasers, and to pass along any offers a buyer may put forward. In most states, real estate agencies are composed of licensed salespeople and a broker, under whose guidance the salespeople operate. The broker is a senior salesperson, is licensed by the state and is usually the owner of the real estate agency. Most real estate agencies are independently owned and operated and can be simple mom and pop type operations or can be a franchisees of national chains. Commercial real estate agencies may also be independent operations, but in the commercial field, larger, corporate-owned real estate agencies, many with a nationwide presence, are quite common.

Real estate agencies are paid by commission, and the commission is usually calculated by a percentage of the sales price. These percentages can run the gamut, but generally run from 2% to 6%, depending on the market, with 4% or 5% being the average. The agency agreement with the seller is usually for a period of 6 months, and can come in exclusive or non-exclusive types. In an exclusive agency, the seller owes a commission to the agent if the house is sold during the term of the agency agreement - even if the seller finds a buyer on its own. A non-exclusive agency agreement will only result in a commission to the agent if the agent is the one who secured the purchaser. In most commission agreements, the commission is earned and payable at settlement or closing of title. In others, a commission is owed when the realtor puts a willing buyer and a willing seller together.