Most homebuyers use a real estate agent or broker to help find a home, negotiate the contract and handle other details of the house purchase process. But before you hire an agent, learn all you can the homebuying transaction. You need to be knowledgeable about your ideal home and neighborhood, your financing needs and options, your legal rights and how to evaluate comparable prices before you know what to expect from the professional who will assist you.

How Real Estate Agents Are Paid

Real estate agents work on commission, not salary, and get paid only after your home search is over, the contract negotiated and the transaction complete. Under the typical arrangement, the seller pays the commission to the real estate agent, and the agent's services are free to the buyer. Most listing brokers get sellers to pay 5% to 7% of the sales price. For probate sales, commissions are set by the probate court. And for more expensive homes, say over $500,000, or in competitive markets, sellers can sometimes negotiate a lower commission rate.

Because most real estate transactions involve two brokers -- one that produces the buyer and one that helps the seller -- the commission is divided, usually 50-50, between the two brokerage offices. Then, within each office, the salesperson who handled the transaction gets a share, usually 50%.

Choosing an Agent

The agent or broker you choose should be in the full-time business of selling real estate and should have, ideally, at least the following five traits: integrity, business sophistication, experience with the type of services you need, knowledge of the area where you want to live and sensitivity to your tastes and needs.

Get two or three recommendations from friends, family, co-workers and others you trust. The best referrals come from those who've recently bought or sold a home.

Ask each agent who's been referred to you to recommend one or two people (other than themselves) they consider top-notch agents who can fulfill your needs. It's a question the agent likely won't expect, but if he or she balks or refuses to answer, there are plenty of agents who will. Not only can the question provide you with others to interview, it also tests the agent's honesty and integrity.

Don't work with an agent you meet at an open house, find in the Yellow Pages or on the Internet without thoroughly checking their credentials, experience and practice.

All states regulate and license real estate agents and brokers. Only agents who meet minimum levels of state-mandated education, training and testing are licensed. Brokers, who generally oversee agents, have more training, education and experience. Ask for proof. The license offers you a layer of consumer protection should something go wrong.

Credentials

Real estate professionals obtain additional credentials from their trade associations, which require a state license before the individual can join. While credentials alone don't guarantee an agent's or broker's success, they do indicate a certain level of professional achievement that can translate into a less worrisome transaction.

Trade group membership is not legally required, but most residential real estate sales are conducted by trade group members. Trade groups offer yet another layer of consumer protection by mandating that members adhere to standards of practice and a code of ethics. Trade group members are also privy to listings, market information and other data non-members must struggle to obtain.

Trade group affiliation also gives agents the opportunity to attain special credentials and designations that indicate a member has achieved higher levels of professional skill. There are relatively few of these agents and brokers, identified by certain initials (much like post-graduate degrees) on business cards and other documents. The National Association of Realtors (NAR) offers GRI (for Graduate Realtors Institute), CRS (Certified Residential Specialist), CRB (for Certified Real Estate Brokerage Manager, a designation that is the brokers' counterpart to the CRS). Less than one-half of one percent of association member brokers have this CRS designation.

NAR also sanctions specialists' designations for relocation and international sales expertise as well as other specialties, should you need them.

Many real estate companies also offer special in-house training programs resulting in achievements that match NAR's designations.

Legal and Financial Relationships with Brokers

While you may have different options as to the type of legal relationship you have with an agent or broker, normally the seller pays the commission of the real estate salesperson who helps the buyer locate the seller's house. What this means is that a homebuyer's agent or broker has a build-in conflict of interest: Unless you've agreed to pay the agent separately, she won't get paid until you buy a home, and the more you pay for a house, the bigger the agent's cut.

Beware of dual agency -- that is, an agent, brokerage or company representing both the buyer and seller. Legal in many states, dual agency nevertheless comes with an inherent conflict of interest as the agent attempts to fairly represent two opposing clients and collect the full commission.

Consider working with a buyer's agent who represents you exclusively (not both you and the seller) and is more likely to work with your best interests at heart. He or she will split the total 5% to 7% commission with the listing agent.

If you don't want to pay the going commission, consider a discount broker who will charge you a reduced commission as small as 1%. Others offer you a "fee for services" rate. You select from a menu of services, such as preparing the written offer, and pay only for those you need. Discount services are available from franchise operations such as Help-U-Sell ( http://www.helpusell.com), as well as from other independent real estate companies and individual brokers.

The advantage of hiring a broker by the service or hour is that you get expert help with no built-in conflict of interest. The disadvantage is that you may have trouble locating an outstanding broker by the hour or service. Also, you pay for the hours you use whether or not you buy a house and you must do a lot of legwork yourself, such as negotiating with the seller.

Interviewing Agents

Once you've selected several real estate agents, let each know you want to interview him or her for 45 minutes to an hour. You can talk in person or on the telephone. Arranging the interview is a test of the agent's willingness to spend time with you and his or her punctuality. Ask the broker to sit in if you interview an agent. That will help you learn how not just the agent works, but his or her office as well.

During the interview, explain your needs, how you like to work and what you expect. Ask the agent to speak in English, not industry jargon and acronyms. Let the agent know you are still learning about the homebuying process.

Here are some of the major issues to discuss:

• The number of homes the agent found for buyers and sold for sellers. Don't accept a dollar amount answer. Ask for the addresses of recent transactions. Scan the list for homes similar in price to what you can afford. Determine if the homes are in the general neighborhood or community where you are buying. If so, get the agent to talk about what you can expect for your money and the pros and cons of the neighborhood or community.
• Listings that haven't sold. Ask why, but don't blame the agent for homes that were overpriced and sellers who've refused to reduce the price to a fair market value.
• Names of past clients. Ask for names of both buyers and sellers who can provide references.
• Financing. Ask the agent about mortgages, including special and new loan programs, creative financing, mortgage brokers and lenders and other financial details specific to your needs. Also ask about insurance and taxes.
• Management and communication tools. The real estate transaction is an esoteric entanglement of details, tasks and duties. Ask the agent to explain how he or she gets the job done, both online and off. Inquire as to how often the agent will report to you on sales activity or buying leads. You'll have to determine how much is enough for you, but once a week is a minimum in a stable market. Daily check-ins could be necessary in a hot market. Ask to see logs, checklists, worksheets and other tools or documents the agent uses to keep track of the details from the house search and financing through negotiating an offer and closing the deal.
• Representation. Will the agent act as a dual agent representing sellers with homes you may want to buy? If he or she is a buyer's agent, representing you exclusively, ask if a contract with fees is required. Also ask buyer's agents about fees in lieu of commissions, the duration of any contracts and other details.

As you ask questions and discuss your needs, consider how well the agent listens to your anxieties, fears and concerns. You want to feel that the agent cares more about your needs than collecting the commission or making a quota.

Once you've chosen an agent, don't double dip. Loyalty and time commitment is a two-way street. If your agent doesn't have your full attention, he or she may reciprocate. You'll also get a disconcerting array of advice and opinions, at a time when you need straight talk.