Buyers and sellers are often misled when it comes to their perceptions of real estate agents. In fact, sellers often suffer the most as a result of such false information pertaining to realtors and how they work as well as understanding the truth about agency relationships.
The Aitken Home Team presents five false statements pertaining to real estate agents and the truth, the whole truth and nothing but the truth:
All agents require a 6% commission on all sales.
Nope! Here’s the skinny: realtors don’t get to pocket the entirety of a charged commission. If that were true, EVERYONE would be a realtor. Furthermore, the listing agent’s broker ultimately approves the commission percentage charged to the seller as a buyer NEVER pays commission unless contractually agreed upon (that’s another story for another day). Typically, the commission is split between two brokers and two agents and brokerage commissions can sometimes be negotiated.
You are stuck with your agent for the life of your real estate transaction.
Once again, this is a false statement. Sellers sign contracts with their realtor and corresponding brokerage which covers a specified term (usually six months). Yes, if you sign such a contract, you are committed to that realtor/brokerage for the specified term…usually. In the event that you are unhappy with your agent’s performance, you can request to be relinquished from the contract. Be sure to ask what the stipulations of any contract are before signing and whether certain fees apply for early termination.
Buyers are not typically subject to such a binding agency contract as their agents are paid by sellers. All the more reason to be financially prepared, know exactly what you want, and be ready to purchase when you find what you’re looking for as many buyer agents go unpaid for lengthy periods of time. In other words, try not to waste the agent’s time. They have to feed themselves, too!
It’s more convenient for a buyer to use a listing agent for their real estate transaction.
This is never a good idea. First of all, you’re going to need more than your smartphone to buy a house. You need an ally; someone who has a vested interest in your happiness and a professional who isn’t advocating for the seller simultaneously. Buyers who wish to retain the seller’s agent are putting themselves at risk as this presents a conflict of interest. Selling agents are supposed to advocate for the seller. They cannot ethically represent the best interests of a buyer. In addition, an experienced buyer’s agent will know the market like the back of their hand, they will be well-connected within the community and have access to professionals such as inspectors, builders, lenders, and attorneys as needed. This is who you want on your side as a buyer.
All agents are created equal.
NO! NO! NO! Once again, emphatically no! “Realtor” cannot be used generically and such a statement can be likened to “all doctors are good” and “all lawyers practice the same way.” This simply isn’t so. For example, local agents are a great asset due to the aforementioned. However, any old agent from across town could really wreak havoc trying to conduct a successful real estate transaction in a part of the county that is completely foreign to them. When it comes to selecting your professional, experienced realtor, CHOOSE WISELY! Look for someone who has lived in the area for many years, knows how to find their way around, is familiar with school districts and crime rates, and doesn’t rely on a map to get around town. Look for a realtor who is more interested in building a long-term business relationship with you rather than making some money.
Related: “4 Tips for House Hunting Long Distance”
Buyers who have a realtor cannot purchase properties which are “For Sale By Owner.”
FALSE! Wise sellers, no matter how experienced, understand that real estate is complicated and involves contract law. While many FSBO (For Sale By Owner) sellers prefer to save money by avoiding commission fees, they might offer a percentage commission to a buyer’s agent in order to motivate agents to bring clients over. Don’t be afraid to ask your realtor about FSBO properties.