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Originally Posted On: 5 Debunked Myths About Real Estate | FastExpert
For people who are in the important business of homes, real estate agents are not afforded much trust. Like any other profession, some real estate agents operate with less than desirable honesty and integrity. But painting all of them with the same brush is not a good idea. Most real estate agents are simply hard-working people who want to make an honest living.
There are tons of generalized myths that are a big reason why people don’t readily trust real estate agents. Almost none of the myths about them are true. We are going to take a look at five of the common myths, and debunk them for you.
Myth 1: You Don’t Need Real Estate An Agent
This is one of the more recent real estate agents’ myths. With the help of modern technology, there are plenty of ways to place your home on the market, advertise, and sell it. Similarly, buyers can use the internet to find a plethora of properties.
So, this created a larger question, how necessary are agents?
Of course the answer is yes. Some people do manage to buy and sell their homes successfully without the help of an agent, but most people still need to work with a realtor in some capacity.
Real estate agents provide a level of security for one of the most important financial transactions of your lives, like buying or selling a home.Most real estate agents have a feel of the market, necessary legal knowledge, and experience to make a successful real estate decision.
If you want to save the amount you pay to the agent and sell or buy your house yourself, you have to do extensive research and legwork. And still, you will be fighting with one hand tied behind your back because you won’t have the necessary experience, exposure, and contacts.
Myth 2: Real Estate Agents Get 6%
When you are hiring an agent, you think about their commission. The average commission given is 6% of the total sale price. The myth here is that the agent receives it all, in reality, they don’t.
For every sale, that commission is divided. You aren’t even paying the agent, you pay the brokerage instead. The brokerage then pays the agent according to an agreed-upon split rate. The buyer’s agent that brings the buyer to the listing agent (seller’s agent) gets their cut as well from that total percentage.
So essentially, your real estate agent will be getting a fraction of the 6% commission you are paying. Let’s say you paid a commission of $12,000. Your agent will most likely receive $3,500 to $4,000 out of it.
And a 6% commission is not set in stone. It’s negotiable and usually rotates between 5% and 7%. And if you think that it’s an unfairly high cut, understand that most homes sold without an agent typically go for much lesser on average.
Myth 3: All Agents are the Same
This myth could not be further from the truth. Some people feel that showing houses and negotiating prices is an easy job that everyone can do, but that’s not all there is to be a real estate agent.
Agents have to understand the market, have necessary legal knowledge, and the ability to assess the properties realistically. Beside their job, they also have personalities, hobbies, and goals they want to achieve just like you.
Some have extensive knowledge about the market and the neighborhoods they operate in. Others might be part-timers, offering meager commissions, and only working with those with low maintenance needs.
Thinking that all agents are all the same and then picking the ones with the lowest commission might lose you much more money than interviewing them and letting them prove that they are the best for your needs.
Myth 4: Agents Get Kickbacks
Kickbacks refers to illegal payments or prefered treatment. Many people think that agents might receive kickbacks from appraisers, surveyors, inspectors, and even lenders.
This could be a reason why some people usually ignore sound advice from good real estate agents and go for services that are much worse than the ones their agents recommended.
It might have been the case once, but not anymore. Thanks mostly to the RESPA (Real Estate Settlement Procedure Act). A Congress bill that was passed to make home buying and selling easy, and to curb corrupt practices in the real estate market.
Even the agents, who might be morally and ethically lenient, will still refrain from kickbacks because of the law.
Myth 5: Real Estate Agents Are Rich
It’s one of those myths about real estate agents that perpetuates primarily because of lack of correct information. We already mentioned commission and how it functions, plus the average of homes sold per year is 12 in the US.
With the way commission is split, the payments need to cover the agent’s out of pocket expenses. In most cases, the signs and balloons for the open house, the fuel consumed in property visits, and any other smaller expenses come from the real estate agent..
The average yearly income of a real estate agent is $41,289, which is undoubtedly not a boatload of money. Though top real estate agents might make much more than that if they can leverage higher commission rates and sell more expensive properties.
Real estate agents are salespeople. That doesn’t mean that they are dishonest and will do anything to make the sales. In fact, most of the top real estate brokers are very honest and forthright.
They will truthfully counsel sellers about the realistic price of their homes and won’t shy away from pointing out the flaws in their client’s deals.
We suggest interviewing potential candidates so you can better understand who they are as a person and an agent. We even have a database of agents that we can get to you. Our agents have a robust ethics code and decent business practices.
After learning about these debunked myths, you can take the next step and contact us.