Just when you think you've learned everything you need to know about the real estate game, it all changes. Or at least some of the common beliefs about real estate just need to be explained. Some of the long-held Myths of Real Estate include:
Myth #1: There is a "right season" for selling and for buying real estate.
Reality: Not necessarily. Traditionally, spring was the hottest season for real estate with 60% of moves taking place in the summer. But seasonal ups and downs of the market aren’t absolutes. One would think that no one would buy property in Montana in the winter and many sellers would take their properties off the market during the winter months. However, we have always had numerous winter sales, including properties shown on snowmobiles! One would also think that no one would buy property in New Mexico in the summer. Yet, statistics show that their sales are greatest in those hot months. Therefore, there is no real "season" anymore. Sales are more dependent upon the economy and the market than the weather.
Myth #2: The more you pay for a house, the more your agent makes.
Reality: Not necessarily. Commissions are a percentage of the sales price so the agent would make more if you pay more, but that is not their agenda. A reputable agent will be negotiating to get the absolute best price for his client, without regard for their commission. A good agent knows that a satisfied client is more valuable and more important to his/her success than a few more dollars on one deal.
Myth #3: The less commission you pay to sell, the more you net.
Reality: Not necessarily. Although price fixing is illegal, agents in a market area attempt to keep their commission rates competitive. There is a point of diminishing returns when a commission offered is lower than what is generally offered in that community. If an agent has several similar properties to show the client, naturally there is more incentive to show properties with the higher commissions. So offering a lower commission than what is typical could mean that your property receives less interest and activity from cooperating agents. A seller can actually receive more interest in his/her property by offering a higher commission, especially for overpriced properties. Some discount agencies claim they charge only 2% commission, but remember, you get what you pay for. These less-than-full-service agents can’t afford the advertising or time/effort to market your property. Top producers do not discount their services, they don’t have to.
Myth #4: Agents get kickbacks from Lenders/Title/Inspectors.
Reality: False. Since 1974, agents have been prevented from receiving any kind of kickback or favor from real estate vendors. It is against the law. The Real Estate Settlement Procedures Act (RESPA) prohibits these kickbacks. A reputable agent will not jeopardize his/her license.
Myth #5: A Home Inspector will always favor the referring Agent.
Reality: False. A reputable, licensed/certified home inspector will not jeopardize his/her license and reputation by submitting a less than objective report. Agents must disclose adverse material facts. Full disclosure is the best policy and avoids lawsuits. A reputable agent wants what is best for his/her client and expects the inspection reports to be complete and honest, whether it causes the deal to crash or not. Good agents care that a buyer receives full disclosure and they are willing to fight for repairs on the buyer’s behalf or help the buyer terminate the transaction.
Myth #6: Agents will say anything to make the sale or get a listing.
Reality: Not necessarily. It is true that some agents can be overzealous in fluffing up their property descriptions or their services just to get the client to commit. Making misrepresentations or false statements is illegal and agents can be sanctioned and lose their licenses. So the majority of real estate professionals are careful and responsible in their claims. However, all consumers need to beware and do their own due diligence. For example: Don’t just take the agent’s word for the condition of the property, always obtain a home inspection. Don’t just take the agent’s word for his/her marketing promises, check them out. Ask for referrals, look at their website, materials, listings, etc.
Myth #7: Large, national franchise real estate offices are the best.
Reality: False. Quantity does not equal quality. Large national companies have name recognition and large numbers of agents. "They" (The Big Guys "TBG") believe bigger is better. But of course that is not necessarily true. You can get lost in "bigger" where in an "independent" office, you become part of their family. TBG promote the idea that all the agents in the office are collectively working for you. But there is very little cooperation or coverage from the larger group, there is just more inner competition. Agents in a smaller independent office tend to work together as a team and cover for each other to make sure the client is served. TBG promote their national networking systems as a major advantage in working with them. The reality is that a person in Florida, for instance, interested in buying property in Montana would not go into their CB office in Florida to obtain information. So the number of referrals from other offices around the country is minimal – especially in this day and age of the internet where more than 70% of real estate searches take place. The prominence of a quality website and the office location are more important. And the most significant difference is that independent offices generally have a more focused approach to serving clients, than in building a larger organization.
