Five Myths About Real Estate

 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.

 

  1. The Realtor is Paid a Salary

 

You might think your local realty 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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. 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.

Millennial’s Can Buy a Home

How Millennial’s Can Buy a Home

The Federal Reserve Bank of St. Louis recently published a study that found Millennials, those born before 1984, may never recover from the recession in 2008. In opposition to Generation X or the Baby Boomer generation, Millennials are far less likely to buy a home or any real estate at all. As a result, they are more than 17% worse off financially than they would otherwise be expected to.

While taking into account appreciating home values, financing rates, and the student debt loads that Millennials are carrying, home buying can certainly be more difficult than it has been in generations past, but that does not mean it is impossible.

If willing to think outside the box, Millennials can buy property and chip away at that generational wealth gap.

Hire a Realtor

Let’s just get this one out of the way, because for some reason the idea of hiring a Realtor has become outside the box thinking. If anyone wants to buy a home or sell a home, in a competitive market they should hire a professional Realtor.

There is a lot of information on the internet about leveraging technology, valuation websites, and knowledge in the public domain to buy homes for sale. While all of that information is a great place to start and a knowledgeable consumer is one who can interview a Realtor and know their secrets, going it alone is almost always a bad financial decision. Especially when using some of the more advanced tactics.

Buy Where it Makes Sense

If the internet can help inform why you should buy where you are currently renting, there is no reason why it can’t help inform them of markets that are financially more attractive. A home buyer in New Orleans, where homes and rentals can be quite expensive, can pick up rentals in other cities where prices are much cheaper. A strong agent will serve as the eyes and ears for a good deal on a rental property out of a buyer’s home market.

Then, when it comes time to sell a home, that agent can take care of finding your new buyer.

Explore Notes and Tax Liens

If you live in a hot market, it can be understandably frustrating to drive from property to property only to fall in love with a new home and be beat out by a competing offer. Often from an investor looking to flip the property. There are ways to get around that.

Instead of competing against investors for property that is on the market, it can often make a lot of sense to try and buy a property loan that has stopped paying. It can be a bit more complicated, but there is a lot less competition and a skilled Realtor can help find these deals to get out in front of investor offers.

The same can go for tax liens. Often when homeowners stop paying their bills and move out of a property, they stop paying their taxes. While not a happy situation for the homeowner, the opportunity for the millennial trying to afford their first home is that these tax liens are a priority to be paid, even before the first mortgage. This is what’s known as “priming.”

This could allow a potential homeowner to secure a first right of refusal before other home shoppers and investors. A skilled Realtor can help find these opportunities to give their client a leg up on any potential competition.

Conclusion

The first step in building real wealth in property is to buy some property. The next step? To sell a home.

While Millennials may be worse off financially than previous generations due to the Great Recession that doesn’t mean they’re out of the game. If willing to think outside the box and hire the right professionals, there’s no reason why they can’t buy a home.