Sharing information related to the real estate market occurs everywhere. Still, we need to understand that the real estate market is very volatile, and things change not only in regards to prices. Most people may not be as up-to-date with what’s happening in the real estate market, which is why understanding what is fact or fiction is essential.
Being familiar with what’s happening in the real estate market’s residential sphere because you bought a house at one point does not mean that you know what’s happening in the real estate industry. If you purchased a house 30, 20, or 10 years ago does not mean you know what it’s like to buy a house now. And we aren’t even referring to prices here, even if those changed dramatically.
Information regarding the correct home buying process ten years ago might be outdated now. Even as a real estate agent, you can face some of those real estate market myths, which is why it’s good to know what’s fact and what’s not. Up next, we’ll go over some real estate market myths and bust them. Get ready to take notes!
Real Estate Myth #1 — The real estate market is a sure path to wealth
Real estate agents work on commission, which usually means around 6% of the home’s sale price gets in their bank account. The seller pays this real estate agent fee, but the 6% commission is split between the seller and buyer’s agent. For a clearer picture, if a home sells for $300,000, with a 6% commission, that means $18,000. That amount is then split equally between the seller and buyer real estate agents, resulting in $6,000 for each agent. If a bidding war increases the price of the home, that still means that the agent’s commission will stay within the 6% commission margin. From whatever their commission brings, they have to pay for additional costs related to their practice. That means car maintenance, gas, marketing, taxes, health insurance, and so on.
Because of that, real estate agents need to sell a lot more than just one home per month. Yes, homes that sell for more money bring them more significant commissions but more considerable expenses, as well as a $1,000,000, may need more meetings, negotiations, and time invested. That means that while a $1,000,000 home brings a more significant commission, that commission is intended to cover their expenses for a more extended period of time. The amount of time they invest in the profession is directly related to the amount of income they make out of it. According to GlassDoor.com, the average income for a real estate agent is $106,000. This can be higher or lower depending on their niche, hours invested in their profession, and experience.
Real Estate Myth #2 Any house is available through any real estate agent
When you look into purchasing real estate, there’s a real estate agent that represents you under contract. Due to that contract, they show you properties. On the other hand, a seller’s listing agent isn’t contractually obligated to show the property to a buyer represented by another agent unless the buyer’s agent requests it. Furthermore, real estate agents aren’t obligated to spend time and energy on someone who is looking at homes with no real interest in buying. They can make an offer for collaboration with them whenever they are ready to make a purchase. They can politely say that they’d be happy to show them properties that fit their criteria and budget when they are ready for that step. There is no obligation for an agent to show listings when not under contract, especially if they know that they are not ready to make an offer.
Real Estate Myth #3 Agents will lie to make a sale
Honesty with their clients is detrimental for any respectable real estate agent. The real estate industry code of ethics is very strict, and the rules and regulations are not something to trifle with. This myth exists because real estate agents don’t get their commission if the home sale doesn’t close. Because of this people believe that agents are willing to say anything to sell a property faster to get their commission faster. In real estate, agents want to make it so that their clients get exactly what they want by having their best interest in mind. Another motivation is that violation of the code of ethics and rules and regulation can lead to trials and the loss of license.
The code of ethics for real estate agents obligates them to disclose any information related to the property. They make sure that their clients have access to all the information related to the property so that they can make an informed decision. Disclosure is a key characteristic of any good real estate agent. While every profession has its bad apples, it’s unfair to lump them all in the same category. If you are dealing with a reputable real estate agent, they will do everything in their power so that their clients find their dream home. The motivation for this is simple. The best real estate marketing strategy is referrals from satisfied clients and that helps them grow their business and their profits.
Real Estate Myth #4 You get preapproved when you find the perfect home
While many buyers believe they can only get pre-approved for a loan once they find the home they intend to purchase, this is not true. The whole idea with pre-approved loans is to have proof that your loaner approves your loan before you have the house on your radar so that when you have the house, you have clear information proving that you can make the purchase. You aren’t just looking without having the financial possibilities actually to make the purchase. Being pre-approved for a loan means that you can simply pay up when you find the house that you like. You’ll no longer have to wait for the, sometimes, lengthy process of getting approved, and the seller will know that you are 100% committed to your offer.
If you aren’t pre-approved, you might wind up finding the perfect property, which leads you to make an offer with no security from your mortgage. However, without a pre-approval, you risk being denied the actual loan by the mortgage lender. Without a pre-approved mortgage, you can lose the home of your dreams on a technicality. Furthermore, if you’re not the only buyer interested in the property, a pre-approved buyer will have the upper hand in a bidding war because they have actual proof that they can actually buy the home.
The real estate market is a live organism with wheels that keep on turning and offers that keep on changing. It’s not always possible to know everything that can happen before hand and pass along all the information related to a property if you don’t have access to it. However, every real estate agent is under the direct effect of the code of ethics and the strict rules and regulations that apply to every real estate professional. This makes real estate agents their clients best friends as they can not, ethically, provide services to someone that aren’t in the best interest of the party they represent.
Working with real estate agents simplifies the homebuying and homeselling process for every client and maintains a security for their interests because if they keep their clients happy, they keep their bank accounts happy. Yes, real estate agents work on commission, but the commission from one sale doesn’t give them the security necessary to sustain their livelihoods. What doesn’t sustain their financial security are happy clients that retain their real estate professional and provide further referrals for them.