Real estate is as alluring as it is mysterious. We think we know the key aspects of the process, but we still manage to miss some parts of it. Allow us to clear up some of that confusion by giving you an insider’s perspective into some of these common misconceptions.
- You Have to Work With the Listing Agent
Perhaps one of the largest misconceptions in our area, you don’t actually have to work with the listing agent. Although it’s not unusual for an agent to represent both sides in smaller communities like ours, many buyers think they are obligated to work with the agent whose contact information is on the sign outside a home. First and foremost, you should feel comfortable working with your Realtor. If that ends up being the listing agent, great! If not, know that all real estate agents are required to present all the information they know of the property to buyers, regardless of what side they’re representing.
2. Buyers Pay Their Agent’s Commission
If you’re looking to buy a home, here’s a fact we bet you didn’t know: your agent works for you for free! Well, allow us to explain. When a seller lists their home with a listing agent, an agreement is signed stating the seller will pay a percentage of the sales price to the listing agent as compensation for helping them sell their home. For our example here, we’ll use 5%.
Within that agreement, both also agree to split that percentage in the case another agent ends up bringing the buyer. More often than not, that 5% will be split in half, resulting in the buyer’s agent being compensated 2.5%. The funds you pay as a buyer go directly toward the purchase of your home, meanwhile the funds received by the seller are deducted slightly for that 5% commission, among other charges.
3. Real Estate Agents Get Rich Quick
With a staggering figure of close to 80% of new real estate agents quitting after their first year, it’s astonishing to think this misconception still exists. Partly to blame is the rise of reality TV shows that portray the lavish lifestyles of real estate agents in big cities like Los Angeles and New York. What these shows often neglect to highlight are the factors that allow these agents to afford the luxuries they have. Networking circles, higher home prices, and a more competitive market brew the perfect storm for agents in larger cities to fit the misconception of getting rich quickly through selling real estate.
In reality, a career in real estate gives you whatever you put into it. Ever notice those job listings online with outrageous headlines like “Earn $100,000 in your First Year!”? While it’s certainly possible to earn as much, the work involved to get to that milestone simply won’t just fall into your lap like they promise.
4. All Real Estate Agents Are The Same
Most people see “Realtor” and automatically group all Realtors in the same category. You wouldn’t ask a car salesperson to help you purchase an RV, would you? The same applies to real estate agents. Most specialize in residential resale, but there are various niches in real estate. New construction and commercial are just two of the more broader categories you’ll find, and just like what that car salesperson might do, don’t be surprised if your agent refers you to a colleague in one of those specialized areas.