Real Estate Myths and Misconceptions
According to most consumer surveys, real estate agents fall somewhere on the professional scale between personal injury lawyers and used car salesmen. Now I have known and worked with about 25 or more of them from all parts of the country. There are some bad apples amongst them, but there are also some of the nicest people you'd ever want to meet that are Realtors.
The good real estate agents are serious professionals who take pride in the industry and are sincerely dedicated to helping their clients achieve the dream of home ownership. In addition to being licensed by the state, agents take continuing education classes and acquire designations that help them serve their clients and become better agents. The good ones love their job, and are always people who love people.
Here are some of the myths associated with buying and selling real estate, and about Realtors:
1. When buying, working directly with the listing agent will help you get a lower price for the house-
Some buyers think a seller can save money on real estate commissions if there is no buyer’s agent involved with the transaction. In reality, sellers have usually negotiated to pay a total amount of commission, regardless of whether one or two agents are part of the process. If you don’t have a buyer’s agent representing you, it just means more commission for the listing agent. There can be exceptions, but in most cases, there’s nothing to be gained and a lot to be lost by not availing yourself of the expertise offered by a buyer’s agent.
2. All Real Estate Agents Make Too Much Money-
An agent's average annual salary is less than $36,000 a year. You will find that about half the agents in any large brokerage close fewer than four deals a year. Of those deals their commission is often shared with the broker and other agents involved in the transaction. Agents also pay office fees, MLS fees, lockbox fees, overhead and expenses. They also pay for their own health insurance. And small town agents often have a tough job.
3. Working with a lot of real estate agents will improve your chances of finding the right house-
Some buyers call half a dozen real estate agents, thinking that the more agents they have, the better their chances will be in finding the right house at the right price. Firstly, real estate agents work from the same multiple listing service, there is no “secret” list or inside track. You may get redundant information. Second, developing a close relationship with just one agent will allow that agent to more fully understand your real estate needs and wants. Finally, letting an agent waste hours of his time and gas showing you places, just for you to turn around and buy from another agent is just plain RUDE.
4. The higher you price your house, the more money you're likely to get for it-
Pricing a house for sale is one of the most important parts of a real estate sale. Some sellers think they’re building in extra negotiating room by overpricing their home, but this generally results in a negative impression from buyers. That impression will ultimately depress the perceived value of your property. Correcting the error of being overpriced can result in a lower sales price than would have been achieved if the house was reasonably priced from the start.
5. With all the information available on the Internet, consumers don't need a real estate agent-
There are many internet sites that can help you locate possible homes to buy. When it comes to negotiating a purchase or making sure a transaction actually gets to settlement, a laptop will never replace a real live agent. Agents are familiar with all the forms and deadlines associated with a home purchase or sale, and can spot errors or omissions you may not catch. You should never sign a contract for this kind of money without a professional looking over your shoulder.
6. In today’s market, it’s always a good idea to first low-ball sellers-
Since we’ve been in a buyer’s market for some time now, many buyers think “What the heck, let’s throw a lowball offer in there and see if we get lucky.” If it’s a house you’re willing to walk away from, that may be fine. But, if it’s a house you really want, low-balling the seller might poison your ability to ultimately do a deal. When the initial offer is unreasonably low, sellers frequently get their back up, and they can become significantly less willing when it comes to further price negotiations.
7. Sellers should never take the first offer-
Every once and a while, we put a house on the market and it gets an offer right off the bat. Even if that offer is a good one, sellers frequently start second-guessing themselves and are reluctant to take a contract that comes in quickly. We can’t tell you how many times we’ve seen a seller turn down that offer, only to find (six months later) that it was the one they should have taken. A fast offer for top-dollar doesn’t automatically mean you underpriced your home. You may have just been lucky to get someone who wanted a place exactly like yours, who was out there shopping right when you put it on the market.
8. Agents Should Tell You About Crime, Schools & Ethnic Make-up of Neighborhoods-
Federal Fair Housing laws prevent a real estate agent from discriminating against a number of protected classes, which automatically prohibits an agent from disclosing anything remotely relating to the protected classes. Therefore, it may come as a shock to many people that agents cannot disclose crime rates, school stats or ethnic mixes of neighborhoods. If that kind of information is important to you, an agent can tell you where to find it - but cannot provide it.
9. Real estate agents try to drive up home prices so they will get paid more-
People know agents get paid as a percentage of a property’s selling price. So it’s not unreasonable to assume that agents would have a vested interest in higher prices. But that’s not really true. If someone pays an extra $5,000 for a house, the additional commission for the agent will be less than $100. The market itself, the seller's motivation, and comparable sales dictate prices; not agents.
10. Agents will say anything to make the sale-
Making misrepresentations or a false statement is against the law. Agents who break fiduciary relationships or fail to disclose material facts are subject to prosecution and a loss of their license to sell real estate. Top producing agents - those who enjoy a solid reputation in the community and practice real estate honestly and truthfully - are very careful to uphold a client's trust.
These are just a few of the misconceptions people have about real estate and Realtors...there are many more. But I can attest as one who knows more of them than most people; in general, agents are genuinely nice people who like to do their best to help others find the perfect home.
Thanks to Greg Harrelson for the input on this article.