There are many myths that people believe about how real estate works that simply aren’t true. Today I’ll list eight of these myths and why they’re false.
There are eight myths many people believe about real estate that could be causing them to hesitate to enter the market or skew their decisions once they have entered. Today I want to dispel those myths so that you can be a more informed consumer:
1. Real estate agents are paid a salary. Agents are actually paid a commission; what they reap is what they sell.
2. Agents keep 100% of that commission. Each commission has a co-broker payout. If there’s an agent from another brokerage involved in the transaction, they will be paid a portion of that commission. In our marketplace here in the Minnesota and Wisconsin area, that percentage is 2.7%—just shy of half the commission rate.
Additionally, there are the costs of advertising on sites like Zillow and other marketing, costs of paying admin staff, and other expenses that come from commission payments.
3. The real estate commission is 6%. Yes, the standard in our marketplace is 6%, but there are agents that will offer a lower commission rate at the cost of providing less value for you. In real estate, you get what you pay for.
4. Everything gets reimbursed to the agent. People think that the gas and mileage we spend performing our duties are reimbursed to me, but that’s not true. Those expenses come out of my pocket. I could potentially get some tax deductions for those costs, but, no, my broker does not pay me to cover them.
In real estate, you get what you pay for.
5. Marketing expenses are not the agent’s responsibility. In fact, these expenses are typically 100% my responsibility, including ordering front yard signs, photography, advertising, and so on. If an agent fails to sell a house that they invest money to advertise, the money they spent is lost to them.
6. A home either passes or fails an inspection. Every home, no matter if it’s a new construction or a 100-year-old home, will typically have a few maintenance issues come up on the inspection report. A good agent will walk through the home prior to you putting an offer on it so you can have a general sense of how that home might inspect out.
7. Inspectors have to find something wrong. It’s commonly believed that because of the price you pay for an inspector, they have to find something wrong. Actually, they’ll not only go through the home to point out defects, hazards, and structural issues, but they’ll also point out items that you should be concerned about as a buyer.
8. Weekends bring out the most serious buyers. That’s not necessarily true; the most serious buyers will typically take time off work to explore homes when there aren’t as many other buyers in the marketplace. That said, any buyer can be turned into a serious buyer if they find the right house, and it might be that they can only look at homes on the weekend, but it’s not a generally true statement.
These are just eight of the myths that people tend to believe about real estate, and when I return next time, I’ll discuss a few more. Until then, if you have any questions for me, feel free to reach out. I’d be happy to help you.