TOP REAL ESTATE MYTHS
For many of us the house we own is the only investment we have in our life. That’s why should get educated as good as possible if we buy or sell the real estate property.
Everybody has some knowledge about the real estate but I can assure you that many of them are MYTHS.
REAL ESTATE MYTHS
NUMBER 1: Working with one agent will give me limited access to available listings.
Completely wrong. The brokerages from the area where you want to buy have access to the same listings. It doesn’t matter if the agent works for RE/MAX, Century21, Your Choice Realty or any other brokerage if the brokerage is a part of the board. If you have requested listings to be sent to you from a few agents and you find out that some of the listings are different than the reason is not that they don’t have the access to the same listings but you could give them different search criteria (your wish list).
NUMBER 2: I will sell my house faster and for higher price with the biggest brokerage or well known
agent. You can get exceptional service from many agents. Interview 3 agents from different brokerages. Find out who do you feel comfortable with. You can get AAA service from the newer agent also. Listing your home with the agent who doesn’t have dozens of listings can be your advantage as the agent will be focused to sell your home.
NUMBER 3: The commission from the transaction is paid to the agent directly (He/She will get all money). Not true at all. The commission is paid to the brokerage and the agent will receive just a portion of it. In some cases even as low as 50%.
Here is an example: The house is sold at the price $300,000. If the commission is 5% than total commission is $15,000. The most common scenario is that the listing brokerage will receive 2.5% ($7,500) and same amount is paid to the buyer’s brokerage ($7,500). The agents are paid just the portion of it so let’s say that their split is 60/40 where 60% of $7,500 is paid to the agent. The agent is paid $4,500 in this case.
We are not done yet :)!!! The agent spends hour showing you the properties. Let’s say 5 full days, scheduling the appointments, paying the real estate fees, paying income taxes, spending money to market his/her business. So how much is the net profit?
It is not rare after calculating all expenses and time spent the hourly rate comes to
$10/hour or even less.
NUMBER 4: All agents make big bucks. Many real estate agents sell only 3 homes or make only 36,000 per year after deducting all fees – office, MLS, memberships, insurances. Also paying for advertising car expenses … It is hard to live from that amount.
Yes, there are agents who make good money but not too many. If you feel that the agent wants you to buy for a higher price to make more money on the commission than you can do a short calculation. Imagine that he will “push” you to pay 10% for the house.
Before I explained how the agent is paid so now calculate the dierence! 10% more is $15,000. 5% form this
amount is $750. Half ($375) paid to a listing brokerage and same amount to the buyer’s brokerage. If the split is 60/40 than the agent will receive $225 (minus expenses as mentioned before) . I wouldn’t risk my reputation for $225. Receiving good referrals from the client is worth much more than $225.
Yes, if the market is hot and there are multiple offers on the properties the agent will recommend you to offer the higher price so you have better chance that your offer is accepted but it is not because he/she will make more money.
NUMBER 5: Agents get kickbacks from lenders, inspectors… It is against the law!!! Anything paid to the agent has to be disclosed. Jeopardizing the career for few bucks would be pretty silly. The agents work with specified lenders or inspectors because they have good experience with them and the want you to get the best service.
NUMBER 6: Listing the house for less commission means more money in my pocket. I will not talk about that long. You got what you pay for.
NUMBER 7: I will choose the real estate agent who will offer to sell my house for the highest price. You can list your home for whatever price you wish. It doesn’t mean that you will sell it if there are better properties on the market. You will loose valuable time and you can lose money too because if the house is on the market longer, buyers got suspicious and they are not that excited to purchase your property if nobody was interested to buy for weeks or months.
NUMBER 8: More expensive house, more money agent makes. Yes the commission is higher but more expensive properties sell longer. Remembering my first broker who said that it is better to sell 4 houses priced $250,000 than one priced at $1,000,000. Of course it depends on the market and area where the house is sold.
NUMBER 9: Agent will tell you anything so they will make a deal. I’m sorry that I have to admit that some agents lie but I feel that it is unfair to say it about all of them.
Most of the agents build their business for years to come and having a solid reputation is a must to receive
referrals from the clients and having clients come back to do the business. Also it is against the law to make
misrepresentation and false statements and agent can be fined or even lose his/her license.
NUMBER 10: “The best time to sell the house is in Spring” – Real estate is seasonal that’s true. BUT! Many sellers want to list their home in spring as they are expecting to have more people interested to see their home.
At this time of the year you have a lot of tire kickers coming to see the properties and a lot of competition!!!
Because of that you will have to adjust the price according to that market situation. Maybe you saw that once one house is listed on the same street another one or more are listed few weeks after that. They adjust their listing price according to the situation to be more appealing to the potential buyer. This can make the sale of your home harder and you might consider reducing your price accordingly.
On the other hand listing your home in winter you can expect that only serious buyers are coming to look at your property, not too much competition. In many marketplaces you can see a statistics that more homes were sold in winter that in spring comparing to the number of listed homes.
NUMBER 11: “I will list the house for more than I want because I can always go down with the price in future and I have a space for the negotiation” – Be careful here. Set your price according to the market value! Having the house on the market for longer time will damage your house “reputation” and you will loose many potential buyers because you might be above their limit so they will not even nd your house.
NUMBER 12: By signing an agreement with the real estate agent (brokerage) to sell or buy a house will put me into a risk working with an agent I might not be happy with in future. This one is is very complex. Unless you understand how the agreement work, what are your options and what are agent’s duties than for sure it will be scary to sign any agreement.
It is always better to know the boundaries and the agreements will set them up. So read and learn more about the real estate agreements HERE. I strongly believe that knowing your right you will be more opened to sign the agreement in future. I personally oer to my clients “Easy Exit Agreement” meaning you can cancel the agreement with me anytime if you feel that you are not receiving proper service.
Any questions regarding real estate? Call me or sent a request.