For the majority of people, the real estate industry is a confusing mess of passed along knowledge. You hear about the escrow process from your cousin who’s co-worker just sold their home. When you visit an open house, every prospective buyer you meet has advice about what the best approach is.
But unless you’re working with an experienced agent take everything you hear with a grain of salt. Whether you’re a home buyer, a seller, or aiming to become a high-rolling investor, the real estate industry is full of myths and misconceptions.
Here are seven that you need to know about and what the truth is behind them.
1. Seller’s Myth: “You Can Save Money Selling Without an Agent”
Yes, listing your home “For Sale By Owner” means that you don’t have to pay a listing agent, but it also means that you won’t have access to the MLS that buyer’s agents use. Fewer people will see your home and it will stay on the market for longer leading to low-ball offers.
The National Association of Realtors has done the research and FSBO sellers make just 66% of what they could if owners had sold the same home with a realtor.
Not to mention, your buyer will have their own agent and it’s standard for sellers to pay for the buyer’s agent commission. On top of that, the buyer’s agent is going to know how to play hardball better than most FSBO sellers. They’re looking to get their client a good deal, not you.
2. “The Market is Only Going Up”
There’s truth in the fact that over the course of history, the value of property has gone up faster than inflation. Real estate is a smart investment in a long-term sense. However, every single market has the potential to go down.
When too many people rush into a market and build housing that no one needs, prices will be driven down. Housing markets can work around the standard ebb and flow of supply and demand but developers and investors often test the margins. If a market seems out of reach for investment or too low to sell at the moment, be patient because conditions change all the time.
3. Buyer’s Myth: “You can Get a Better Deal Without an Agent”
While sellers might want to tell you this so they don’t have to fork over a 6% commission to pay both agents at the end of the transaction, it’s not true. Without the knowledge and experience of an expert negotiator on your side, it’s unlikely you’ll get as good of a deal as you would otherwise.
This is especially true if the seller is using a real estate agent. The seller’s agent will receive the entire commission and will be less likely to negotiate with you.
4. Seller’s Myth: “Set Your Price Higher Than You Expect to Get”
This myth can actually land you a much lower price than you’d expect in the end. Buyers and their agents don’t look at homes priced above the standard market value, as they assume negotiations will be a pain in the neck. Pricing too high doesn’t mean you can just lower it later.
When the price of a house on the market drops, listing sites keep track of that. Buyers become suspicious of a home that’s dropped in price. They assume the home is riddled with problems, so make sure your listing agent offers you a comparative market analysis to ensure you price to sell, not to negotiate.
5. “All the Properties on the MLS Show Up Online”
While the MLS is the best way to ensure that every agent in your region knows about homes for sale, it’s not the only place to find a home.
Sellers who have their home on the MLS ensure that their listing is in front of every agent in the region. However, it’s important to check that your agent is going to post your listing online. There are dozens of other potential listing sites that buyers are looking at.
For buyers, whose agents are only looking at the MLS, it’s good to know what’s for sale online. A buyer’s agent who isn’t looking at other online sites could be missing out on the perfect property for you and your family.
6. Buyer’s Myth: “A Buyer’s Agent Always Represents Their Interests”
In most situations, the realtor that you deal with will be licensed by the National Association of Realtors. In that case, they’re required to uphold ethical standards that ensure that they represent the best interests of their clients and disclose everything.
However, many states allow agents to act as “transaction brokers.” In these cases, the agent has no fiduciary duty to the buyer or the seller. They’re out to earn their commission and may fail to fulfill their role to either party.
Read through any form you’re given carefully and don’t be afraid to ask questions.
7. Seller’s Myth: “You’ll Make Your Money Back on Renovations”
While renovations can certainly help in selling your home, there’s no promise that you’ll make your money back. Fixing the HVAC system or a leaky roof will certainly assure that you’re not dealing with wary buyers. However, dollar for dollar, there are almost no renovations that pay all your money back.
Major remodeling of your kitchen or bathroom is going to help sell your home. However, you’re only likely to get 75% back from your investment, at the most.
The Most Common Real Estate Myth: You Should Go Solo
If you need to remember one thing about real estate, it’s that having an experienced local agent in your corner makes all the difference. With the help of an agent who knows the lay of the land, which zip codes are trending, and which are in decline, you can make a smart financial decision.
Working with a Clever Partner Agent gives you the chance to work with a fantastic agent from right in your backyard who is ready to negotiate on your behalf.
Contact us today and we’ll pair you with an experienced agent to dispel the myths and get right down to business.