What Your Real Estate Agent Can (and Can't) Do for You

Sooner than you think, it may become more common that buyers will have to directly pay their real estate agents for representation.

Traditionally, seller-paid commissions were the norm, but that may change by the end of 2024. As home buyers take on this new financial responsibility, it becomes even more critical to understand what your agent is and isn’t able to do so you know what you’re paying for.

Real estate agents try to be as helpful as possible. But various laws, liability insurance requirements, and ethical standards set by the National Association of Realtors (NAR) limit what they can do.

As a buyer, understanding these boundaries. It will help you and your agent accomplish your homebuying goals more quickly – and smoothly.

Share Data, Not Demographics

The federal Fair Housing Act and state-specific laws prevent real estate agents from sharing demographic information to avoid discrimination based on race, color, religion, national origin, sex, disability, and familial status, among other protected classes. These laws are designed to ensure equal housing opportunities for everyone, but they also restrict what agents can disclose about communities.

For example, an agent can provide data on the number of homes in a neighborhood or whether there is a playground, but they cannot disclose that the neighborhood has many families with children. They can point clients to online census data or other public information sources, but they cannot say that a community has a large Asian population. These restrictions help prevent any form of steering or bias in housing decisions.

This limitation extends to discussions about local school districts. Realtors are discouraged from sharing opinions about the quality of schools or labeling them as good or bad.

Not only might an agent's opinion differ from a client’s, but such statements can also be seen as steering clients toward specific neighborhoods, which is illegal. Additionally, feedback on schools could unintentionally appear racist or classist. Therefore, agents must be cautious and neutral in their comments, directing clients to independent resources for school ratings and reviews. The same goes for suggesting whether a neighborhood is safe or quiet.

Contract Assistance, Not Legal Advice

While Realtors receive education on state and federal real estate laws as part of their licensing and are trained by their brokers on real estate contracts, they are not lawyers. They can fill out contracts, add some standard terms and conditions, and write addendums, but their ability to interpret and explain legal documents is limited.

Agents can provide general explanations of contract sections but cannot offer specific legal advice. If buyers have detailed questions or need assurances about the implications of a contract, they should seek legal counsel. Realtors may advise hiring an attorney to review paperwork for any complex or unclear issues.

Realtors also cannot advise on escrow money disputes, seller disclosure issues, or how to take title to a property. These matters often require legal expertise beyond the scope of a real estate agent’s training.

Additionally, agents are not financial planners or accountants and cannot offer advice on the financial ramifications of buying or selling a home. For instance, while many sellers might ask about capital gains tax, Realtors should not provide tax advice since they are not familiar with the client’s complete financial background. Offering such advice would be considered practicing public accounting without a license which is illegal.

Answer Questions, But Within Limits

Real estate agents are knowledgeable about the industry and can answer many questions related to real estate transactions. However, there are areas where their input is limited by law and professional boundaries. Agents should not engage in detailed discussions about mortgage interest rates, insurance, or other areas outside their purview.

It is illegal for agents to discuss specific mortgage rates unless they are also a licensed mortgage loan officer. While agents can mention that average rates are around 7%, they cannot specify that a client will likely receive a 7.25% APR. Instead, they can refer clients to a trusted mortgage partner who can have detailed rate and term discussions.

Agents can ask general questions to guide clients, such as how much money they have for a down payment and closing costs, but they should not determine loan qualification based on this information.

Similarly, agents can share that the average homeowner’s insurance premium is $2,000 per year, but they should not provide specific quotes or assurances of a guaranteed premium. They can inform clients that the average lifespan of an HVAC unit is 10 to 12 years, but evaluating the condition of a specific AC unit in a home is the job of a home inspector or HVAC technician. These professionals have the expertise to give accurate assessments and recommendations, ensuring that clients receive reliable information.

Provide Assistance, But Not Acting as a Personal Assistant

Certain tasks are outside their professional duties and should be handled by other professionals or the clients themselves.

For instance, a Realtor should never perform a final walk-through on behalf of a client. This includes sending a video or using a video call as well. While they can accompany a client’s family member or friend, they should not be the sole person evaluating the home’s condition. The final walk-through is a critical step to ensure that the property is in the agreed-upon condition before closing, and it is best done by someone directly representing the buyer’s interests.

Similarly, Realtors should not sign documents on behalf of clients, even with a limited Power of Attorney. Signing legal documents is a significant responsibility that carries potential legal and financial implications. Clients must be present or appoint a legally authorized representative to sign on their behalf.

Agents can assist in coordinating with other professionals, such as inspectors, contractors, or utility companies, but they should not sign agreements or supervise work directly. In some states, even letting workers into the home and permitting them to start work without the client’s authorization can be illegal. Agents should facilitate these processes but leave the final decisions and meetings to the clients.

Moreover, Realtors are not personal assistants. Their primary duty is to assist with the real estate transaction, not to handle personal tasks for clients. They should not be responsible for tasks like setting up utilities, accepting deliveries at the home, or installing a security system. These tasks should be managed by the clients or a designated service provider.

Make It Easier On Yourself and Your Agent

Understanding the limitations of real estate agents is crucial for buyers navigating the complex process of purchasing a home. While agents are valuable resources for data, buyers should seek appropriate legal, financial, and professional advice for specific questions and tasks outside the agent’s scope.

By recognizing what agents can and cannot do, buyers can ensure a smoother, more informed home-buying experience. This separation of responsibilities protects both clients and agents, preventing potential legal and liability issues. Clear communication and realistic expectations will help buyers and agents work together effectively, leading to successful real estate transactions.