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.
But there have always been some myths about real estate agents. These wrongfully generalized myths are part of the 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 try to shed some light on why they are false:
You Don’t Need Real Estate Agents
This is one of the more recent real estate agents’ myths. Thanks to the internet, 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 does this mean that real estate agents are redundant?
The answer is a resounding no. 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 real estate agents on the most important financial transaction of their lives i.e., 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 state 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.
Real Estate Agents Get 6% of the money
You want the real estate agents to score a win for you. Sell your house for your dream rate or help you buy the ideal home. But is a real estate agent really worth 6% of your selling price? Isn’t 6% in one agent’s pocket is too large an amount?
This is one of the myths about real estate agents that are merely prevalent because sellers don’t understand how their 6% is divided. First of all, let’s get it out of the way that you pay your real estate agent 6%. You don’t. You pay the brokerage. The brokerage then pays the agent according to an agreed-upon split rate. But that’s not all. The buyer’s agent that brings the buyer to the listing agent (seller’s agent) gets their cut as well.
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. The money you give to your agent is paid at least two times over if they help get you a fair price for your house.
All Agents are the Same
This is one of the most absurdly wrong real estate agents’ myths. 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.
Therefore, not all agents are the same. Some have extensive knowledge about the market and the neighborhoods they operate in. Others might be part-timers, offering meager commissions, and only going for easy targets. Thinking them all the same and then picking the ones with the lowest commission might lose you much more money than the one you would have earned from a good sale with an excellent agent.
Agents get Kickbacks
A lot of people are so sure that agents get kickbacks. From appraisers, surveyors, inspectors, and even lenders. This is why they 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.
Real Estate Agents are Loaded
It’s one of those myths about real estate agents that perpetuates primarily because of ignorance. It’s the 6% thing all over again. While writing the cheque for the commission, you might do a quick calculation in your head and think that if he even sells ten houses in a month, he makes more in a month than you do in six.
Now that you know about the truth about the commission, you should also know that the brokerage rarely covers an agent’s expenses. In most cases, the signs and balloons for the open house, the fuel consumed in many property visits and many other small expenses, all come out of the agent’s own pocket.
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, they are also a tiny percentage of all the agents.
Real estate agents are salespeople. That’s how they make their living. That doesn’t mean that they are dishonest and will do anything to make the sales. That’s not how it works. In fact, most of the top real estate brokers are the most honest and forthright ones in the business. They will truthfully counsel sellers about the realistic price of their homes and won’t shy away from pointing the flaws in the deals, in fear of losing the client.
A robust ethics code and decent business practices are how most real estate agents operate nowadays. So don’t believe in these myths and do your research before reaching out to one.