Most real estate agents or realtors, unless they specialize in high end real estate, rarely operate on their own, and can generally be found to be part of a larger organization, or real estate agency. The simple reason for this is financial. Most agents generally only make a few sales or purchases per year, and receive only a few thousand dollars on each sale after expenditures (not to mention taxes).
While in a very good year this could provide enough to live on, rarely does it provide enough for an individual agent to form the infrastructure and resources necessary to sustain a business (such as an office, or an assistant) Therefore, most agents find it economically feasible to be part of a larger agency, where they share part of their commission goes with the agency for maintenance of office space and other services, not to mention, ideally, profit.
Most agencies nowadays are also generally part of a larger franchise, and there are cases where selecting a franchise can be almost as important as selecting an agent. Agencies often give an agent access to numerous extra resources, especially in terms of listing services, and can be especially useful if an individual is moving a great distance, which requires them to sell a property in one area and purchase a home or business in another.
In these instances, the agency can oversee dual agency, where an agent in one locale serves as a listing agent to sell the property, while another agent in another locale works as a buying agent for the same individual. (These agencies may be parts of the same agency franchise, or they may simply have other working relationships.)
Agents representing an agency are entitled to provide a potential client with what is called full disclosure. Full disclosure informs the client of the agency’s other relationships, what programs it can provide access to the client, and any and all partnerships that can effect their role in helping the client. Often this refers to partnerships with other agencies, either inside or outside of a franchise, and how and to whom one’s listing will be shown.
It is important to note that agents and agencies do not operate on the whims of their clients, and are allowed to set guidelines to the kinds of property they will sell to an agencies which they will not do business with. These are outlined in the initial disclosure agreement, and should absolutely be taken into consideration by the client before entering into an agreement with the agency.
Nearly all real estate agencies work on an exclusivity agreement with the client to either buy or sell the property, but does not necessarily have to be for both, since some agents work exclusively on listing and some work exclusively on buying, and as mentioned, location and accessibility can be an issue. Nevertheless, the agency and the agent gain the exclusive right to buy or sell the property as a means of protecting their investment.
An important element to note that even if an agent is part of an agency or franchise, generally their agreement will be with the agent, thus only the agent is the one given fiduciary negotiating power, and is bound to keep confidentiality with the client. Transfers of representation to another agent, just as most all decisions regarding real estate transaction, cannot be done without the client’s approval.