Sunday, September 7, 2014
Common myths about real estate agents
The reason I became a real estate agent is because I love houses and I love making people happy. There is no better feeling than handing over the keys to first time home buyer. Part of my job as an agent is to know the neighborhoods I work in, and act as a resource to the community. Once a month I deliver a flyer containing info about community events to all the homes in my neighborhood. Every once in a while I receive a rather nasty email or phone call from someone who believes I'm only delivering flyers to him to secretly drive him out of his home. This of course is not the case. I understand there are people who have had bad experiences with an agent, and some people who have been grossly misinformed about what an agent does. So here is a list of some of the most common myths people believe about real estate agents.
1. Real Estate Agents are Like Used Car Salesmen
False. While it's true that you may encounter one or two fast talking agents in your life who will say anything to make a deal, most do not employ these sorts of sales tactics. The truth is, most agents genuinely care about the well being of their clients and getting them the best deal. Find this hard to believe? What most people don't know is that 50% or more of an agent's business comes from referrals so hurting their clients will only hurt their business.
2. The More You Pay for a House, The More an Agent Makes
False. First off, it's important to remember that, regardless of your agent's input, you are the one who decides how much you will offer a seller for their home. So then why do you need a buyer's agent at all? Because they're negotiators, it's part of their expertise as an agent, and it's why you want one on your side when making one of the biggest purchases of your life. Adding an extra $5000 to your offer will yield your agent approximately $75, so if that's their suggestion to you it's most likely to be in your favor, not theirs. Ask your agent why they're suggesting you make a higher offer. If you don't agree with their reasoning, you can simply make the offer you feel comfortable with.
3. The Less Commission You Pay to Sell, The More you Make
False. Let me start by explaining what happens to the commission you pay your agent. First, half of your agent's commission goes to the buyer's agent.
Then, 30% - 50% or their remaining commission usually goes to their firm. Your agent is now left with approximately a quarter of their original commission, and out of that they market your house, pay their taxes, and of course feed their family.
Now that you know where an agent's commission goes, let's talk about discount agents who will willingly drop their commission price for you, how do they manage that? They generally do one or both of the following:
1) They cut the buyer's agent commission. Most people don't know that the listing agent decides what the buyer's agent gets in commission. Usually it's 50%, because we all have to work together and we like to be fair. But an agent willing to do discount prices tend to drop the buyer's commission, sometimes as low as 1%. This will affect the sale of your home, because a buyer's agent needs to feed their family as well and won't be too eager to show your home such a small commission.
2) They cut the amount they spend to market your home.
To put it simply, you get what you pay for!
4. Agents Get Kickbacks from Lenders, Inspectors, and Others They Recommend to You
False. The Real Estate Settlement Procedures Act, or RESPA, has prevented agents from receiving kickbacks since 1974. It is illegal for any agent to receive kickbacks and most will not risk losing their license for that sort of temptation.
5. An Agent's Home Inspector Will Always Favor the Agent
False. It is illegal for an agent to hide material facts about a house from the buyer, and by doing so they risk being sued. Like I mentioned earlier, a good agent will care about the well being of their clients, and will fight to get repairs done on the house. Agents will always recommend inspectors they've worked with in the past, because they know they will provide you with the service you deserve, but you are always free to choose your own inspector.
6. All Real Estate Agents Are Rich
False. The average annual salary of an agent in Washington is less than $40,000 a year. Half of all agents close an average of 4 deals a year, and some close even less or none at all.
7. Agents Must Tell You About The Ethnic-Makeup of a Neighborhood
False. Any agent who discloses this sort of information to you is violating Federal Fair Housing laws, which protect certain classes from discrimination. These laws also prevent agents from disclosing information about local school districts and crime rates. If you are a seller, your agent should not be expected to disclose the race, sex, religion, familial status, handicap, or sexual orientation of any person making an offer on your home.
8. Agents Will Say Anything to Sell a House
False. Any misrepresentation made on purpose by an agent is illegal and could cause them to lose their license and even spend time in prison. While you may come across this type of agent once in awhile, most will not be willing to jeopardize their business. Once again, most agents want to give their clients the very best service possible.
9. It's the Agent's Job to Sell Your House, You Shouldn't be Expected to Help
False. Selling a house requires teamwork, and at the end of the day it's YOUR house and YOUR money, so don't you want to do everything you can to get the best deal? When your agent asks you to keep your home tidy for an open house, or suggests you put a fresh coat of paint on the walls, it's in your best interest to do so.
10. An Agent Doesn't do Anything to Sell Your Home that You Couldn't do Yourself
False. You can put a for sale sign in your yard, put some ads online, and hold an open house, so why would you need an agent? That's all they're going to do, right? Wrong. Listing with an agent means your home will be priced accurately, it will be listed on the MLS and, if you have a good agent, hundreds of other real estate sites. Your agent will have a large database of clients looking for homes, as well as a database of hundreds of other agents who have their own clients, giving your listing much more exposure to able home buyers than if you listed it on your own. FSBO on generally sell their homes for less than they're worth because they lack the negotiating skills an agent would bring to the table, so at the end of the day they really aren't saving any money by not using an agent.
11. Agents Will Try to Force You to Sell Your House
False. Have you ever had an agent knock on your door, or leave a pamphlet on your porch, and thought to yourself "How dare they come right up to my door and try to force me to sell my home? If I want to sell my house I will find an agent myself!"? Probably. So if they aren't trying to force you to sell your home, what else could they possibly want? Well, I'll tell you the great secret. They want you to think about them, that's it. Real estate, like many other careers, is a competitive business. There are many more agents than there are homes being bought a sold, and the only way for an agent to survive is to let people know they exist. Of course, as I've said before, there are always a few rotten apples in the bunch who like to harp on people about selling their homes. The truth of the matter is no one can force you to sell your home, or buy a home you don't want.
What are your negative beliefs about real estate agents? Leave your thoughts in the comments!