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Monday, August 25, 2014

11 Shocking Facts You May Not Know About Real Estate Agents

The more you know, the better decisions you can make.  Understanding some of these common myths about real estate agents will help you to better understand them and in turn hire the best agent to suit your needs instead of hiring based on discounts and assumptions.

Check out these 11 assumptions about real estate agents that are quite off base.

Technology used to sell houses

1) With today's technology it's easy to sell a house.

Quite the opposite actually.  The vast online portals and opportunities for advertising mean that agents must be "on their game" now more than ever.  From using professional photography to monitoring their listings' "online reputation" top agents spend a ton of time and money staying on top technology and providing the best services for their clients and exposures for their clients' homes.

2) Agents are paid the entire commission.

Definitely not. For most agents, they are splitting the commission with their broker. It can be as low as 50/50.  Agents are not employed by the brokerage so the agent's portion of the split is then used to pay for their business expenses, taxes and personal insurances/retirement. Oh, and to feed their families. (See #5.)

3) Agents get paid to drive clients around or show property.

Not so. We only make money when a transaction is closed and funded. (See #2). We are not employed. We have no salary or hourly wage. See also How Does My Real Estate Agent Get Paid? True and False

4) If you’re not being offered as much as you want for your home, your agent just isn’t working hard enough.

Usually not. An overpriced home just doesn't sell. Also, unless it is a cash sale, your home will have to appraise. The appraisal will be based off comparable sales of similar homes in your area that have recently sold.  A home that doesn't appraise will not be financeable. Your agent has no control over this. Just because your neighbor is asking $50,000 more for his home still doesn't mean that is what it’s worth, or what he’ll actually get for it when it eventually sells. Location, updates, condition and more factor into the price of a home.

5) All Real Estate Agents are rich.

While real estate can be a big money maker, it’s also true that 20 percent of the agents do 80 percent of the business. It may seem like an agent makes a lot of money at once on a transaction, but real estate is a very expensive business to be in. Namely, yearly and monthly dues and fees to national and state associations, local MLS, local showing service, and your broker. Plus, the agents pay for gas, signs, advertising, key boxes, websites, professional photography, health insurance, etc. Pretty much anything real estate related comes out of the agent’s pocket. Most are lucky to walk away with 1 percent of a transaction.

Not all good real estate agents have billboards and fancy cars!

6) Real Estate is an “easy” job since its just "putting a sign in the yard" or  “driving around and looking at houses.” 

Real Estate is VERY hard. It is constant marketing, prospecting, and handling complex transactions. It can be a lot of time and effort with no guaranteed return. Agents are trying to make a living like everyone else. It can be extremely stressful. It’s very rewarding to find someone the right property, but until the transaction closes, it’s pretty high stress for the agent as well as the client.

It’s rarely part time. Agents are constantly expected to be answering calls, emails and texts often including nights, weekends and holidays on top of the 9-5 activities they perform. And it’s not easy either. Agents work with people on the biggest financial transactions of their lives. It’s emotional and complicated. Agents NEED to shut down and take a break from this to stay at their best.

Not all agents are created equal and not just anyone can be an agent. An agent has to be a special person that is knowledgeable, helpful, and very thick skinned. We deal with emotional people, rude people and time wasters every day. We have to stay up to date with mandatory continued education classes and be great negotiators.

7) An agent can only show his or her own listings, or those of their sponsoring broker.

Sarah Marrinan, Twin Cities Real Estate AgentNot true. A buyer’s agent can show any listing on the market. The buyer's agent's commission offered is generally negotiated between the seller's agent and the seller at the time of listing. That said, if the seller's agent brings in the buyer, the agent will make “both sides” of the commission. In Minnesota, this is called Dual Agency if the agent has representation agreements with both the buyer and seller.  Search homes listed buy ALL brokers!

8) Real Estate are just trying to make a sale, and will lie or stretch the truth to do so.

Again, not all agents are created equal but in this situation, those that are unethical are often quickly out of business. Not only are there legal liabilities, a realtor’s business is based off referrals. They’d rather have you refer three friends than tell three friends about your bad experience.

9) Driving a fancy car or having a bunch of “million dollar listings” is a directly related to how good an agent is.

Not necessarily. Some agents have huge, very visible businesses. Some do not. There are plenty of great agents that provide wonderful, personalized service that do not have a billboard or magazine cover. Find an agent that you get along with, who understands your needs. Judge them by experience, not the car they drive or ads they run.

10) You’ll get a better deal if you buy directly from the listing agent.

Not true. In the majority of contracts, the seller has agreed to pay a set commission beforehand. If the buyer has their own agent, the commission is split between the listing agent and buyer’s agent. It makes little difference to the seller either way. In fact, it will likely help you, as a buyer, to have your own representative during negotiations.
Do You Know WHY The Listing Agent Wants you To Call Them Directly About The Home They Are Selling?

Find an agent the is a REALTOR

11) Real Estate Agent and REALTOR® mean the same thing.

Not true. The NATIONAL ASSOCIATION OF REALTORS® (NAR), “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries. Only agents that are members of NAR are REALTORS®. Agents that are REALTORS® abide by the NAR Code of Ethics and Standards of Practice. 

What else do you want to know more about?
How foreclosures work
What do agents do for buyers? (How agents get paid)

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