Discrediting the Myths
Here are some common misconceptions within the real estate industry.
Click on a myth below to see more information.
Real estate related TV shows provide enough accurate information to viewers enabling them to know as much as real estate agents.
You can’t get enough of them and neither can I…real estate related TV shows are incredibly entertaining, especially if you have some sort of interest in real estate. But that’s really all it is…entertainment. It can take several months for a transaction to close but all of the events in a particular transaction are crammed into a 30-minute television show that is designed to capture an audience. In order to capture as much viewership as possible, the producers highlight certain aspects of a transaction and a lot of those segments are scripted. What you see on television is only a fraction of what happens in real life. Although viewers can gain some real estate knowledge, people should not consider them sufficient tools to replace the education, training and experience of a licensed agent.
The job of a real estate agent is easy.
While certain aspects of the job are easy, there are a lot of challenging aspects of the job as well. Real estate agents help you negotiate the purchase or sale price of your home, potentially gaining you thousands of dollars. Good agents also research current market conditions in the neighborhood that you’re interested in and continuously update themselves on industry news, market trends, and new laws and regulations that will affect your transaction.
Agents refer clients to specific service vendors because they receive kickbacks from them.
In accordance to how the average consumer understands what a “kickback” is, it is actually against the law for those involved in real estate transactions to receive kickbacks from each other. Specifically, Section 8 of the Real Estate Settlement Procedures Act provides the framework and prohibition of such acts.
Agents should tell you about the ethnic makeup of neighborhoods
Commenting about the ethnic makeup of a neighborhood can be considered a discriminatory act so real estate agents should not participate in such activity. In addition to ethnicities, real estate agents should not participate in discriminatory or potentially discriminatory acts or comments towards any protected class. Federal Fair Housing Laws protect seven classes of persons: race, color, country of national origin, religion, sex, handicapped individuals, and familial status.
Sellers should not accept the first offer if it is at list price or just below list price
Let’s first assume that the sale is not some sort of distress sale or liquidation. Secondly, let’s assume that the list price is not purposely below market value to generate a lot of buyer interest. That being said, sellers should always consider accepting an offer at list price, especially if the other parts of the offer are just as strong. Just because the first offer came in at or near list price, it doesn’t necessarily mean that the list price was below market value or that if you hold out, the subsequent offers will be higher. Yes, it is possible that higher offers could follow; but it is also possible that lower offers (or perhaps no offers) could follow.
As your listing agents, we will tell you what the market value of your home is and what we think it will sell for. Based on what your objectives are, we develop a strategic plan to meet them. That might include listing your home for more, less or at market value. The key to a successful sale is following the plan that was laid out based on your objectives.
Sellers know better with what their homes are worth than their agents do, so they should set the price
Believe it or not, a properly trained and licensed agent will know more about a home’s value than its actual seller. Great agents will conduct a thorough market analysis to support their objective opinions of value and not be swayed by the emotional attachment of the home that sellers may have.
It’s an agent’s job to get more than market value for a seller’s home
The selling price of a home is often its fair market price and it’s not a requirement for an agent to obtain an offer higher than market value. Normally, a seller’s agent strives to sell the home at the highest price while the buyer’s agent tries to buy the home at the lowest price, and both sides negotiate and meet at the current market price.
Sellers should always list on the high side because all buyers make low-ball offers
It is unfair to assume that all buyers make low-ball offers. And pricing your home too high might actually keep real buyers away because they could think that the sellers are being unreasonable. Remember, selling your home is a business transaction. Price your home appropriately and don’t take low-ball offers personally. If you have a business mindset, you will negotiate effectively towards your selling objectives. If you don’t want to negotiate, you can always decline the low offer.
Sellers should be present during all home showings including open houses
Often times, buyers are uncomfortable when sellers are present during showings because they feel like they are unable to openly discuss potential issues with their own agent when the homeowner is present. Great agents will know enough about a home to answer any questions that a buyer might have, minimizing the need for the seller to be present.
Sellers should sell FSBO to save on commissions
Every seller definitely has the right to sell his/her home without the use of an agent. So mathematically speaking, if a seller does not use an agent to list his/her house for sale, there will be no commission paid to a listing agent. But when sellers are unrepresented, they lose out on valuable expertise that can only be provided by an agent. In addition, the exposure to other agents who represent buyers will be small since the home will not be listed on the MLS. Often times, using an agent to sell a home is worthwhile. It is even more so when sellers pick the right agent to do so.
Open houses are not worth holding
Definitely not true! Yes, it sucks to have many people trek through your house but foot traffic generates interest and interest could turn into offers for your house. Even when curious neighbors come check out your house, chances are, they know someone that’s looking for a home!
Buyers increase their chances of success when they work with multiple real estate agents
Using multiple agents to increase the chances of success is a waste of everyone’s time, especially the buyer’s. In theory, all real estate agents have access to the same information thanks to the MLS. So what one agent has access to, all agents have access to. A buyer will spend a lot of time with an agent to discuss his/her wants and needs. It then takes additional time for the agent to fine tune the search. If that buyer were to use multiple agents, that buyer would have to repeat the same process with each agent he/she decides to include in the process. In that, a buyer might see the same homes over and over again from different agents. This is unnecessarily redundant. A buyer should choose one agent that is trustworthy, intelligent and diligent enough to get the job done.
Buyers should always make low-ball offers because all houses are listed too high
Not all homes are overpriced in comparison to market value. Making a low-ball offer carries a higher chance of insulting the seller; and if the listing agent can’t convince the seller to make a counter-offer, the buyer might lose the opportunity to negotiate all together.
Agents pressure buyers to offer more in an effort to earn a higher commission
Mathematically, an agent will earn a higher commissions on higher purchase prices. But the incremental commission earned on a higher offer is negligible enough to dismiss it as a motivating factor to encourage such higher offers. For most agents, that is not enough money to pressure and possibly lose any client. Instead, a good experienced agent will encourage a buyer to offer more to increase the likelihood of an offer getting accepted.
Agents cannot represent buyers in the purchase of a newly constructed home from a builder
Agents can certainly represent buyers in the purchase of a newly constructed home. In order to have representation, the agent must be present at the buyer’s first point of contact with the builder’s sales office. Typically, it involves accompanying the buyer to the sales office on the buyer’s first visit. However, some builders are allowing agents to register their clients online before their first visits. Just keep in mind that if a buyer registers himself/herself before their agents get a chance to register him/her, then the builders almost always prevent agent representation. Buyers should always tell their agents if they are open to purchasing a newly constructed home.
Buying a newly constructed home is always better than buying pre-existing home
Although buying a newly constructed home has its advantages, it also has its disadvantages. In order to determine which is better, click here to read about the differences.
Working directly with the listing agent will get you a lower price on the house
The listing agent has a duty to the seller to sell the home for as much as possible. When the listing agent becomes the buyer’s agent, then the agent also has a duty to the buyer to get the purchase price as low as possible. Working with the listing agent will not necessarily get you a lower price on the house but an ethical listing agent can help both the buyer and seller negotiate and meet at the fair market price. Working with the listing agent might give you a better chance of getting your offer accepted.
