When it comes to buying, selling, or owning real estate, everybody knows something – you know something. But how true is what you know? Perhaps it’s just a myth in the real estate market!
With multiple sources all over, information about real estate can never be scarce. But not every piece of information you read on the internet is true, and if it is, it might not apply to your location or type of home. Also, friends, colleagues, and neighbors will definitely have something to advise us when it’s about real estate.
But always keep in mind; poor information and misbeliefs are a menacing combination. When it comes to real estate, stakes are high, and you don’t want to act on a perceived myth. But is what you know about the real estate market a myth?
Keep rocked to learn the common real estate-related myths and avoid damaging assumptions.
Myth One: All Real Estate Agents Are the Same
Fact: It can’t be further from the truth! If you’ve heard all real estate agents are the same, well, it’s a myth. This misconception can lead to a costly mistake in choosing a rogue real estate agent for the transaction.
While the general process of buying or selling a property is similar, the real estate agent you pick makes the process unique – a smooth and effective process or a horrible, stressful process. The agent’s approach, negotiation skills, responsiveness, flexibility, and experience will make all the difference.
Also, there is a thick line between real estate agents who work with buyers and those who work with sellers. Each category handles different matters and helps clients either buy or sell a home. What you aim to achieve determines the perfect agent for your situation.
Remember, real estate agents aren’t created equal.
Myth Two: All Real Estate Agents Make a Stack of Cash
Fact: It’s a common misconception that all agents make boatloads of money. Furthermore, how can an agent afford to be well-groomed and polished at all times, hosting opulent broker events, driving customers around neighborhoods, and buying them lunch? Well, it’s more than meets the eyes.
While a successful and best real estate agent can make a decent income, it’s not always the case. The income will depend on the agent’s determination and the time, effort, and money they have invested in their career. Also, agents don’t earn a salary but earn a commission after every successful sale.
Have you heard the agents make a 6% commission on the sale price of a property? That’s another myth.
There is no stipulated rate on commission a real estate agent should make. In every real estate transaction, the agent’s commission varies.
They might not have told you that the commission is negotiable, did they? Working with a real estate agent ensures you negotiate for a favorable commission. The commission percentage depends on a wide range of factors such as the price of the property, type of property, and housing market.
Myth Three: The Agent Keeps All the Commission
Fact: You pay the commission directly to the brokerage after selling or buying your property through a real estate agent. The brokerage firm is the employer to a real estate agent, and they pay them.
Depending on who they represent (seller or buyer), their brokerage firm will earn the selling or listing commission. The exception is when the agents handled both sides of the real estate transaction. While it’s rare to find an agent representing both sides, it happens, and when it does, it’s not a piece of cake.
After the brokerage receives their respective commission, they take their portion and distribute the rest to the involved agents. Regardless of the amount received as compensation, the brokerage gets a portion to finance its operation and keep running. The split also varies depending on the company, agent’s experience, and agreement.
Apart from the brokerage taking their portion, an agent also incurs multiple expenses during the process, and most people are unaware. These include travel expenses, car maintenance, and advertising expenses. And don’t forget the agent need to pay social security and taxes, hmm.
While it’s easy to venture into providing real estate brokerage services, you need to consider a lot of things before getting a license.
Myth Four: When Selling a Home, Price It Higher to Leave Room for Negotiations
Fact: One of the most important aspects of selling a home is setting the right price. It determines how fast or slow you will sell the property. While it might be tempting to set the price above the market value just in case the buyer negotiates, don’t do it.
Setting the price high will be digging your own grave. You may have to remain in the market for weeks or even months, not even getting a potential buyer for your property. These common pricing mistakes among sellers are a result of real estate myths.
Setting your property value demands a lot of market research and in-depth knowledge of the market rates. It’s key to understand who your potential buyers are and what they are looking for. Today, buyers are savvier and know the real value of the property they are buying.
Buyers no longer waste their time checking out overpriced houses. Before you apply the notion of pricing your house higher to leave room for negotiation, you might want to think again.
Also, to avoid overpricing or underpricing your property, work with a reputable home appraisal. These experts will evaluate your home to give the correct home appraisal value depending on your home’s condition.
Myth Five: When Buying a Home, Start With a Low Offer
Fact: Similar to sellers’ grave mistake of overpricing, buyers are also tempted to start with very low offers.
While giving an offer expecting counter negotiations is not bad at all, a lowball might show you are not a serious buyer and turn away the seller. If you give an unrealistically low offer, the seller might give a counteroffer at all. They disregard you and continue looking for serious buyers.
Myth Six: Home Will Pass or Fail Inspection
Fact: Home inspection is not an exam where a pass or fail is expected. You reach out to an inspector so they can assess the condition of your home.
The inspector provides a summarized report of all issues with the house. Also, they provide a summary of key systems such as HVAC, plumbing, roof, electricity, and more.
As a buyer, an inspector is key to help you determine if you are paying a fair value for the property. They advise about any existing and hidden issues that could cost you a fortune in repairs. You may think you have DIY experience and can spot any problem, but an expert’s eye is invaluable.
Don’t avoid a home inspector to spare a few dollars only to incur thousands of dollars in repair for issues that could have been detected. Purchasing a home is a major purchase, and you need to get it right from the beginning.
As a seller, keep in mind that the buyer hires the inspectors, and their job is to evaluate the property independently and professionally. No home is perfect, and you are sure they will find things. In case you are concerned about what might be found during the inspection, hire your own inspector before listing the property in the market.
Myth Seven: It’s Your House; You Can Do Anything With It
Fact: It’s your house, of course, but doing whatever you want with it – is just a myth. Anything you do in your property is regulated by your state’s code of residential properties. Also, consider the municipal regulations and any requirements by the homeowner’s association in the neighborhood.
If you just relocated to a new area, remember regulations vary, and the permits and zoning you were used to might not be the same. Also, the new homeowner association is a different entity, and rules may differ. You thus want to inquire about what is expected of you after joining a new community.
Myth Eight: Your Credit Score Must Be Perfect to Buy a Home
Fact: While there is some truth in this, the greatest part is a myth. In reality, a higher credit score comes with incentives like favorable interest rates making it easy to get financing. However, this doesn’t mean poor credit is a barrier to owning a home.
If your credit score is poor, check out the multiple options you have to own your property. Check lenders who are willing to provide financing for borrowers with low credit scores. It might take thorough research to get the right lender for your unique situation but rest assured you will find a perfect match.
You Now Know the Common Myths in the Real Estate Market
The decision to sell or buy a home is major, and you need to be spot on. Before you set the ball rolling, arm yourself with correct information from reliable sources. The above are some of the most common real estate market myths commonly thought to be true by the general public.
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