Real Estate Myths


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1. The More You Pay for a House, The More an Agent Makes

Ever hear a friend say this: “Every dime more you pay for that house makes the agent more money, so don’t trust that agent.” That’s a misunderstanding. The difference between $200,000 and $210,000 is about $200 to an agent. Agents don’t pay any attention to the commission difference of a $10,000 spread.

 

2. The Less Commission You Pay to Sell, The More you Make

Discount brokers like to propel this myth. They claim to save sellers money by charging less. The truth is agents who are top producers and excel in this business do not discount services. Why? Because they don’t have to.

Less-than-full-service agents can’t afford all the bells & whistles paid for by full-service agents who tend to draw higher offers. It boils down to you get what you pay for. A 2% commission reduction doesn’t amount to much when your price is discounted 10% or more because your agent couldn’t afford full market exposure.

 

3. Agents Get Kickbacks from Lenders / Title / Inspectors

Since 1974, agents have been prevented from receiving any kind of kickback or favor from real estate vendors. It’s against the law. It’s against RESPA: the Real Estate Settlement Procedures Act. Some agents are slower than others to realize how the law affects them, but most have heard of RESPA and would not jeopardize their license, regardless of the temptation.

 

4. An Agent’s Home Inspector Will Always Favor the Agent

Any agent worth his salt wants disclosure. Why? Because a successful agent always wants what is best for his client.

Agents must disclose material facts. A buyer is always, without fail, better off knowing the truth about a house. Good agents care that a buyer receives full disclosure and are willing to fight for repairs on the buyer’s behalf or help the buyer cancel the transaction.

 

5. All Real Estate Agents Make Too Much Money

An agent’s average annual salary is less than $36,000 a year. You will find that about half the agents in any large brokerage close less than four deals a year. Nobody can live on that. Not once office fees are paid, MLS fees and lockbox fees are deducted, overhead and expenses for the agent are deducted, errors & omissions insurance and office supplies are paid.

 

6. Agents Sell Their Own Homes for More Money Than Yours

Busy agents and top producers don’t have the luxury of time to waste when selling their own home. They also understand the market better than your average home seller, which means if a home isn’t selling within a reasonable period of time, it means it is priced too high.

I have witnessed first-hand what happens when agents put their residences on the market. If they need to sell, they might even cut the buyer a better deal than the buyer can get on the open market. After all, the person most likely to be persuaded by a sales pitch is a person who sells for a living.

 

7. Agents Should Tell You About Crime, Schools & Ethnic Make-up of Neighborhoods

Laws prevent a real estate agent from discriminating against a number of protected classes, which automatically prohibits an agent from disclosing anything remotely relating to the protected classes.

Therefore, it may come as a shock to many people that agents cannot disclose crime rates, school stats or ethnic mixes of neighborhoods. If that kind of information is important to you, an agent can tell you where to find it but cannot provide it.