Everyone seems to know a realtor. Whether it’s a friend, family, coworker, we all know someone working in the real estate business. This is especially true during a seller’s market when buyers outweigh the number of properties for sale or lease, maximizing the gains of any transaction. So between real estate savvy friends and online research, several people are becoming overnight experts in the benefits of buying and selling homes, making armchair quarterbacking all deals. But just like fake news, not all information about the real estate world is helpful. So here are 5 myths about realtors debunked:
Myth 1. You don’t need an agent to buy a home. You can use the seller’s agent:
The listing (Seller’s) agents are legally and ethically bound to represent the seller and find them the best outcome for their transaction, regardless of who comes along to purchase their property. Using the listing agent for any real estate transaction creates a conflict of interest as legally the broker cannot represent both simultaneously. Likely the buyer (who is not bound by any contract) will be asked to sign a no brokerage or transaction agreement. This means sellers’ interest comes before the buyers. Any city has plenty of well qualified and professional real estate agents who have been immersed in that community and can offer insight in recent local transactions. This information can help you tremendously in negotiations a fair and realistic deal for your next home.
Myth 2. Agents get 6% commission, no matter what:
The listing agent is the one that always earns commision in a real estate transaction. While today’s average commission is about six percent, this cut is negotiated before any listing agreement is signed. However, any commission earned by the listing agent must be split up amongst four parties: the listing agent, the listing agent’s broker, the buyer’s agent and the buyer’s agent’s broker. In fact, once you account for all the expenses — gas, food, office supplies, marketing, taxes and other operating costs — the agents are left with only a fraction of commision, leaving most agents to earn only an average of $36,000 a year.
Myth 3. It’s always better to price the home higher because the buyers will bid lower:
Overpricing is one of the biggest mistakes a seller can make when listing a property. Even the most attractive homes in the best locations lose potential buyers’ interest due to an overly high price. These homes sit on the market much longer than a property that’s priced accurately and competitively in the market. Once a homeowner makes the decision to sell, the next step should be to consult a real estate professional on price to run a competitive market analysis on the property. Competitively priced homes in any market have statistically obtained multiple offers in the shorter amount of time.
Myth 4. Home buyers should make a low offer right off the bat:
Just like seller’s make the mistake of overpricing, buyers often make the mistake of starting their bid for a home too low. While negotiating the price of a home is always welcome and expected for the best possible outcome for both parties, an unrealistically low offer will probably end up alienating the seller and any hopes of negotiating a serious offer will be gone.
Myth 5. All Agents Are Created Equal:
Many people believe home buying and selling is just a game of repetitive formalities. The reality is, even a custom built community where all homes are built to look similar offers custom modifications and upgrades made by individual homeowners that offer variety to the neighborhood. Combine this personalization with the unique personality of the community, city, region, state where the property is located and you’ll quickly realize all homes require its own sales and marketing approach. Always look for an agent that lives and works in the community you’re buying in. They know the streets, the neighborhoods and are even familiar with the recent transactions and trends in the local market. Agents that are focused on forming long term relationships instead of a quick dollar. An agent that is not interested in getting to know you and your family may be out to make some quick money and your interest are at risk. Those agents will not understand why a sunset facing patio deck is a must for your next home and will not be the most effective choice in your real estate business.