Entering the real estate industry is a new and exciting prospect for any hopeful buyer, agent or investor. The market is your oyster — unless you fall victim to the misconceptions that plague both buyers and sellers. To ensure you don’t fall into the trap of believing all the myths of the real estate market, 15 members of Forbes
What are the biggest misconceptions about real estate agents?
10 Common Misconceptions About Real Estate Agents
Like everything in life, people have their own opinions about real estate agents and the real estate industry in general. However, take care to distinguish between opinion and fact if you’re thinking about buying or selling a home. There are numerous sources which criticize the profession, but like many other jobs, a few bad seeds can spoil perceptions of the industry. They should not be taken as general rule.
Some websites aim to spread mistrust in real estate agents as a way to get you to subscribe to their paid online magazine, buy their real estate books or buy whatever their product may be. That’s why it’s important to always take online information and general opinion with a grain of salt. When you’re searching for your own agent, you’ll want to look at the facts and compare your options carefully. It’s also helpful to look at some common misconceptions floating around out there.
Misconception 1: Real estate agents are always late for inspections or meetings
This is patently false. In any profession, punctuality is important. This is particularly true in the real estate industry. Although you may sit in a dentist or doctor’s waiting room for longer than you would like, they tend to be the exception to this rule. Good real estate agents, just like other professionals, are careful to arrive on schedule.
With numerous successive open inspections and property auctions on weekends, this is no easy task. But the majority of successful, experienced agents will make it their priority to be on time. Like any working relationship, you will want your agent’s respect and vice-versa. If your agent tends to be repeatedly late, this is probably a sign that it’s time to switch agents.
The right real estate agents will take care to earn your trust by living up to their word, which involves things like being on time. If your agent is always giving excuses to explain their tardiness, remember that this will only continue if you let it.
Misconception 2: The more money you sell your home for, the more your real estate agent will earn
This is another common myth caused by a misunderstanding of the commission system. Whether your house sells for $875,000 or $885,000, this will hardly affect your real estate agent’s paycheck. There’s no need to be suspicious of your real estate agent and think that they are simply trying to make a high commission.
Misconception 3: If you pay your real estate agent a lower commission, you’ll make a greater profit
This common belief is most likely spread by bargain-basement real estate agents who are trying to attract new business. Cheap agents may tell you that you’ll save a great deal of money with their lower fees, but in reality the only reason that they offer these low-priced services is because they aren’t getting enough business.
The most likely reason they don’t have enough business is that they provide substandard services. The top real estate agents sell enough properties that they don’t have to worry about lowering their rates. Just like consumer products, such as cars and televisions, the old adage, you get what you pay for, is true when it comes to estate agents.
When you sign with a cheaper agent, you may get poorer service because they won’t be able to afford the high-tech advertising and high-quality marketing materials that a top-tier real estate agent would use. Highly-qualified, experienced agents provide you with the most comprehensive service, which in turn, lures in higher offers from a wider pool of buyers.
All it takes is some simple mathematics to illuminate this situation. You may pay a couple of percentage points less, but this is not much savings when compared to the discount you’ll end up selling your property for. The real estate agent simply won’t have the funds to market your house effectively.
Misconception 4: Real estate agents must show you a home if you enquire about it
If you have expressed interest in a house, a real estate agent may not necessarily stop what they’re currently working on in order to meet you and your demand. Agents have quite busy schedules, so unless you are planning on making an immediate offer you shouldn’t expect them to drop everything to rush and show you a home immediately.
Misconception 5: Agents receive kickbacks or bonuses From affiliated valuers, inspectors and other associates
It’s illegal for an estate agent to receive favours, gifts or money from associated services, according to the rules set forth by the Real Estate Institute of Australia (REIA); the industry’s governing body. Good real estate agents know that losing their license means losing their career, livelihood and identity. They know that this practice is simply not worth the risk.
Misconception 6: Real estate agents will hide information from clients in order to land deals
If your property is in need of some form of repair or improvement before putting it on the market, a good real estate agent will tell you about these before sale and freely disclose these issues with potential buyers. It’s important not to hide any information about the property because it is not only potentially illegal but it could also end up hindering the sale. If agents illegally hide information, they could face going to court, losing their professional license and being fined (or sued for) large amounts of money.
An experienced agent will also want to protect your safety by disclosing all pertinent information that relates to your home. This will help lessen the chance of a buyer breaking the contract of sale due to a technicality or some problem that only arises at the twelfth hour.
Misconception 7: All real estate agents earn large salaries
There’s certainly money to be made in the real estate industry and, during boom times, many experienced agents will earn a large salary. When you look at it from a long term perspective however, you’ll find that most agents make the average median income in Australia. There are numerous costs associated with running a real estate business, including marketing costs, insurance, supplies, the rental of an office space and other overhead costs. As a result, many estate agents are barely scraping by and don’t close a large number of sales each year.
Misconception 8: If an agent sells their own property they will make a higher profit than when they sell your house
It seems that an estate agent would go the extra mile and have more (personal) interest in selling his/her own property at a high profit, yet most agents are extremely busy people who don’t have a great deal of spare time.
If they don’t manage to sell their property right away, they are aware that the sale price must be reduced and will do so immediately. In fact, a buyer may obtain a better deal if they purchase straight from an agent. If you’re looking for a bargain and are good at negotiating; an estate agent may be willing to accept your lower offer because you present them with the opportunity for an easy and quick transaction.
Misconception 9: All real estate agents must inform you about a suburb’s crime rate, hospitals, parks, schools, amenities, etc.
It’s not in a real estate agent’s best interest to make any negative comments about a neighbourhood. They will give you the means to find out the information you need about a neighbourhood, but they won’t necessarily give this to you first hand. At the same time, in order not to have a broken contract or an unhappy client/buyer, an agent is unlikely to keep this information secret. Furthermore, if they think this is likely to help the sale, you can be sure they’ll tell you all about it. Remember to do independent research about an area before and during the process.
Misconception 10: Just like used-car salesmen, real estate agents will say or do just about anything to make a sale
Fortunately, this statement is also a fallacy (for most salesmen in any industry). It’s natural, that as with all areas of society, there are some liars in the real estate industry, but the majority of agents are honest.
For an agent to become respected professionally, they must forge open and honest relationships with their peers and clients. This practice helps put them on the road to success and is much more profitable than lying. Experienced agents and top sellers know that any lying or misrepresentation puts their career in jeopardy. They would risk legal prosecution as well as the loss of their valuable license.
By unmasking these common falsehoods, you can see that it’s in most agents’ interests to be honest and forthright in their dealings. Keep this in mind as you search for the right real estate agent to represent your needs. Although it is of paramount importance to find the right real estate agent, there is no need to be too paranoid about encountering the incorrect cliche dodgy real estate agent as very few actually exist.