6 Myths About Real Estate Agents: Debunked
When it comes to choosing whether or not to hire a real estate agent to help you sell your home (or buy a new one), there are certain factors that you’ll want to consider. You’ll need to gauge if their personality compliments yours, if they take care to listen to your requests and follow through, and if they ultimately want to make sure that you come away from the whole experience feeling confident about choosing them as your agent. Not every agent is going to be the best fit for you (we’re human, after all), so it doesn’t hurt to shop around and find a real estate agent who is going to ensure your satisfaction.
While you’re looking around, trying to find the right real estate agent for you, you might hear some common myths that float around about real estate agents. We’re here to debunk those myths for you and give you the facts.
Here are 6 myths about real estate agents:
Myth #1: Real Estate Agents Are Paid a Salary
It might be tempting to look at successful real estate agents, see the suits they wear, the house they live in, and the car they drive and make assumptions based on the way they present themselves. It’s easy to believe that a top-dollar agent is making a baseline salary – they have to be if they’re making that much money, right? Well, actually no.
Real estate agents earn every dollar that they make with their own blood, sweat, tears, and hundreds of emails. Instead of a yearly salary, agents work on commission and service fees, which means that when a sale goes through, they receive a percentage of the sale price to cover their services. The higher the sale, the more an agent gets paid out – which can result in the super successful, luxury home and condo agents – but that doesn’t mean that your local agent won’t jump through hoops to ensure a smooth sale for you no matter the price point.
Myth #2: Real Estate Agents Get 100% of the Commission
One of the most common myths about real estate agents is that they get a full cut of the commission they “make” – but that’s not exactly true. As mentioned before, real estate agents do work on commission, and so it can be common for people to believe that they get all the commission from the entire sale, but that isn’t what typically happens.
Say the commission fee was set at 4% on a $500,000 home, which would be $20,000 in commission. Out of that $20,000 there are multiple parties who need to be paid out. Typically, the buying agent and the listing agent will each take half of the commission fee, so in this case $10,000 per agent. Then, each agent will need to pay a percentage of that $10,000 back to their respective brokerages or real estate agencies (this is mainly to cover costs associated with running a business like keeping the lights on and having office space for the agents to work at). This percentage may change depending on province, city, and even agencies, so there isn’t a set number, but in this case let’s say that the going rate is 30%. That means that $3,000 of that $10,000 is taken off the top to pay out the affiliated brokerages, which leaves each agent with roughly $7,000. How much a real estate agent makes depends entirely on what the agreed-upon commission rate is, and how much they will need to pay back to their agencies.
Myth #3: If You Want to Buy a Home, You Need to Pay a Buying Agent
Some people are hesitant to enlist the help of a buying agent as they are worried about the high costs of such a service but in reality, you don’t have to pay a buying agent upfront. Or, really, at all. The buying agent is there to help you find the home of your dreams. They will take all your wants, needs, and desires when it comes to housing in mind and look around for available listings that could match your checklist. They do all the hard work for you and you don’t need to pay them a dime.
Instead, buyers get paid when a sale goes through. For example, let’s say there was a buying agent involved in the situation above – 4% commission ($20,000) on a $500,000 property. Let’s say that you’re looking to buy that property and you have a buying agent helping you. You settle on a closing price of $500,000 and once that money (or mortgage loan) trades hands, both the listing agent and the buying agent will be paid out just like in the example in Myth #2. All you need to pay for is the house.
Because the buying agent ultimately helped the seller close the deal on the house by bringing them someone who wanted to purchase the property, it is, therefore, the seller’s responsibility to “payout” the buying agent, listing agent, and brokerage with that 4% commission.*
*Commission rates may differ by province, city, and real estate team. While there is a “standard” this isn’t always the default and will vary case by case.
Myth #4: All Real Estate Agents Are the Same
Another one of the more prevalent myths about real estate agents is that they are all the same, but that just isn’t possible.
Just like no two snowflakes are the same, no two real estate agents will be the same. Sure, working in real estate can sometimes require a specific personality type – it’s definitely not for the anti-social or incredibly shy among us – but every real estate agent is going to be a little different, not just in character, but also in the way they run their business.
Some agents may be more direct and upfront, giving you the facts and cutting to the chase. Some agents may like to invite you out for coffee and talk pleasantries before getting down to business. Other agents might do a bit of both. If you know how you like to be communicated with, it will be easy to figure out who is going to be best suited for you and your needs.
Here’s the truth: you’re not going to get along with every single real estate agent. Just like you wouldn’t get along with every single person on this planet. Some people we tend to butt heads with (and that’s okay!), so it’s important that you take the time to sit down with potential agents and make sure that you have a good rapport going before hiring them on to help you sell your house. You want an agent who you click with and who takes your comments, questions, and concerns seriously and handles any and all requests with care.
Want to find the right real estate agent for you? Give us a call and we can help you find out. Contact us here!
Myth #5: Real Estate Agents Will Say or Do Anything to Make a Sale
With the real estate world already being somewhat competitive, mixed with the impressions of what the real estate industry is like as told to us by T.V. and film, it can be easy to come to the conclusion that real estate agents are cut-throat and will say or do anything in order to make a quick buck. However, this is rarely the case.
Despite this common myth about real estate agents, most agents (particularly in North America) are held to very high standards and are made to adhere to a strict code of ethics, which means that they can’t operate outside of policy and just say or do whatever they feel like, or want to, as a means to an end. Doing so could get their license taken away, or their agency could end up being held responsible and having to pay a hefty number of fines. Also, the agents, too can receive fines as well as risked being sued themselves, so there really isn’t anything to gain for an agent acting outside of policy.
Oftentimes, real estate agents are incredibly careful about how they conduct their business and most of them rely heavily on client referrals and word of mouth as their livelihood depends on a steady stream of clients. Most real estate agents would bend over backward for a client if it meant keeping their trust and confidence – and as agents don’t get paid until the transaction has closed, there is always a chance that the agent could be working without pay if, at the end, you choose to no longer buy or sell. That means that your real estate agent, regardless of any financial guarantee, will work tirelessly for you to ensure your overall satisfaction.
Myth #6: Selling Your Home Without a Real Estate Agent Will Save You Money
One of the most damaging myths about real estate agents is that choosing to sell your home without one will save you money. Unfortunately, this one can get a little dice-y and it’s likely that if you don’t know exactly what you’re doing, it could end up costing you a lot more than you anticipated in the long run.
For example, when you hire a real estate agent part of what you’re signing up for is their extensive knowledge and expertise on the real estate industry. You also have access to their resources, their connections, professional advice and invaluable nuggets of information that can lead you to a quick and headache-less sale. They can help you navigate the best times to sell, what to price your home at so that it’s attractive to buyers (but not so attractive that you lose out), and can walk you through any legal or government fees that may pop up out of the blue. Your real estate agent is really your lifeline and support system when it comes to buying or selling a home.
When you decide to put your house on the market with a sign saying, “For Sale By Owner”, though tempting as it may be, choosing to sell yourself without professional help can be a lot more complicated than you’d think.
If you don’t have current-standing industry knowledge, you could very easily run into sticky situations that could cost you money down the line. Or, if you accidentally over-value your home and price it way too high, there is a high possibility that it won’t budge and will potentially stay listed for six-months up to a year. You could potentially mishandle the transaction and end up making legal mistakes which you could have to pay to fix – and even if you don’t, there could be hidden fees that no one warned you about, and you could end up having to shell out a large sum of money that you weren’t expecting to. Then, if you aren’t comfortable with negotiating, you could end up being walked all over by a real-estate-savvy buyer and negotiated down to a price and set of terms that you don’t agree with, but you’re not confident enough to sway the system back in your favour. Those are just a few examples.
Thankfully, when you have a trusted real estate agent on your side, they can help you navigate these situations and ensure that, at the end of the day, a deal is reached that benefits you as the client.
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