Real Estate Transaction Myths
Social media has made the world smaller because anyone can get information on anything with the click of a finger. To that end, Most people are misinformed about the realty industry mostly because a few people say something and thousands simply believe what they read. Within a few weeks, many of these stories that are nothing more than myths seem to cement themselves in the industry.
Today we will focus on five of those common myths and shed a little truth on the matters to help inform both buyers and sellers.
The Realtor is Paid a Salary
You might think your local real estate agent has to be getting a salary to sell a home, because how else could they support themselves when they are constantly on the phone making deals, meeting with clients, texting information to buyers, meeting to show houses, hosting open houses, and attending house closings. While it is true that these folks are perhaps the busiest, they do not earn a salary from their office. In fact, if they worked for countless hours to put the deal together and at the last minute the deal falls through, the Realtor lost their time, their money, and got nothing as a salary for their efforts.
The Real Estate Broker Make a Six Percent Commission
Most people are under the misconception that because they agree to a six percent cut of the sale when signing a realty contract, that all that money goes to the agent. On a house that sells for $300,000, a commission of $18,000 sounds really nice on the surface, but don’t believe everything you hear. If you did agree to have a commission of six percent taken from the sale of the house, it is important you see where that money goes. Right off the top, the brokerage gets half the money for expenses to run the organization. Your agent then uses their half to pay for fuel and repairs to their vehicle, advertising of the listing in magazines or newspapers, taxes, and all the expenses of running around to meet with clients each day. There are more and more new, real estate brokerage models that are built around listings homes below the traditional 6%.
Mileage and Fuel are Reimbursed to Agent
Most people think all that traveling the agent does when trying to sell a home is simply reimbursed by their brokerage when the sale is closed. That is not the case, in fact, the agent is doing more driving around than many realize. For just one client, the agent travels to dozens of houses, makes multiple trips to meet with photographers or contractors, visits new construction sites, pays tolls, and on and on. Even if the sale falls through, all those expenses come out of the pocket of the agent that they never see back.
The Property Either Passes or Fails the Home Inspection
Many potential home buyers are under the impression that when they hire a home inspection crew to take a closer look at a property that they will get a report the listing either passed or failed. This is not the case, because the home inspection crew is not in the business to fail properties, only offer their clients an assessment of the said location. What that means, the home inspection crew won’t fail or pass the house, they will simply provide the client with a detailed report with all the findings they uncovered on the property. Although there could be issues with the electric, roof, HVAC, and plumbing, the report is only meant to inform the buyer as to areas they should be concerned with before proceeding to buy a home.
List High Then Lower the Price
Perhaps the biggest myth in the world of realty is that it is common practice to list the house price high, hoping to make maximum profit, then drop the price the longer the house sits. This is a dangerous proposition for a number of reasons. With over 95% of home buyers searching for homes for sale online, if your home is overpriced, you won’t even get a view. First, the longer the house sits on the market, the more buyers are curious as to why it didn’t sell. As the house becomes stale and you drop the price, savvy buyers see this pattern and simply wait you out. They assume you’ll keep dropping the price, so they just sit tight until you reach their comfort zone. Another issue in being overpriced, you may lose an audience who feel your house is just out of their reach. By the time you lower the price, they may have already found a house that was listed low to begin with.
Keep in mind that these are only a few of the myths that many people think are fact in this industry. Now that you are better informed, you could help to open the eyes of others who are simply following blindly what others are saying about the real estate industry as a whole and don’t know any better.