Top 10 (+1) Real Estate Myths Debunked!
There are a surprising number of myths out there when it comes to real estate. With the prevalence of the Internet today, perhaps it shouldn’t be surprising. But it’s important to realize that many of the “facts” about Realtors and the real estate process are misconceptions that need to be busted. Although there are many more we could list, here are our Top 10 (+1) real estate myths debunked.
Real estate myth #1: Listing your home at a higher price leaves more room for negotiation and results in a higher sale price.
The reality: Pricing your home correctly is one of the key elements when selling a home. Pricing it too high because you feel you’ll get closer to the actual price you want could very well backfire. Today’s savvy buyers often won’t waste their time looking at a home they feel is overpriced. And that could mean your home sits on the market much longer than it might otherwise. You need to entice with the price: If your home is priced competitively from the beginning, the chances of attracting lots of interest right away greatly increases. Studies have shown that the first few weeks that a listing is on the market is the time when it will get the most attention.
Real estate myth #2: Your agent will pocket the whole commission.
The reality: There are all kinds of things that eat into an agent’s commission. Typically, there are two agents involved in a sale, the seller’s agent and the buyer’s agent, and each is entitled to a portion of the commission. From that portion, the agent must give a cut to the brokerage that employs them, as well as covering any office expenses they’ve incurred, such as marketing materials. Then there are funds to be set aside for things like taxes, health insurance, gas, car maintenance. In the end, what the agent pockets is far less than you might expect, and they have no salary to fall back on.
Real estate myth #3: All real estate agents are the same.
The reality: Although the general process of buying or selling is similar, every agent has different skills, experience levels, styles and personalities. As in every profession, there are those who are committed to excellence, are highly adept problem solvers and who devote endless amounts of time and energy into working with buyers and sellers. Others simply do the bare minimum to get by. It’s unfair to paint them all with the same brush.
Real estate myth #4: Open houses sell homes.
The reality: According to the National Association of Realtors in the U.S., only 2% of homes are sold as a result of an open house. Open houses are popular because they’re a great way for an agent to pick up new clients. Yes, an open house can sell a home, but if your prospective agent wants to hold one every Sunday because he believes it will sell your home, you may want to reconsider hiring them.
Real estate myth #5: You get a better deal when you buy from the listing agent.
The reality: The thought process behind this myth is the listing agent will cut their commission percentage because they are receiving both “sides” of the transaction. What a buyer may not understand is that the listing agent is also still representing the seller. While they do need to be honest, fair, and ethical to all parties, and certainly there are agents who can be trusted to represent both parties, it’s important to understood that the listing agent still has to represent the seller’s best interest as well.
Real estate myth #6: You save money buying or selling without an agent.
The reality: The main reason sellers believe selling their home themselves is a good idea is because it will save them lots of money, specifically, they won’t have to pay a commission. But there is a surprising amount of time, effort and experience that goes into selling a home and most homeowners aren’t willing or don’t have the know-how to properly do it on their own. More often than not, a seller who thought they had lots of time to do it themselves must scramble to find an agent and get a quick sale when they realize the process is taking too long. Or, they may very well end up losing money by not going with a professional. Recent National Association of Realtors studies show that a house sold by a homeowner will get 15-20% less than what an agent would have been able to.
Real estate myth #7: A home doesn’t need to be prepared for sale.
The reality: Properly preparing a home for sale can be the difference between it selling quickly or sitting on the market and developing a negative stigma. Many buyers are looking for a home that is move-in ready, and making an effort here can increase the number of interested buyers, strengthen your position when it comes to negotiating and encourage a quicker offer. That’s not to say that your home needs a $100,000 renovation to be ready; sometimes it’s relatively simple things such as decluttering and staging that will do the trick.
Real estate myth #8: The longer a home is on the market, the more negotiable the deal.
The reality: It may mean the opposite. A home that lags on the market is likely sitting due to its asking price as well as other factors. And if the seller is unrealistic about their asking price or wants the market to pay more than it is willing to bear, they may not be able to see reason. Similarly, a home that has had multiple price reductions does not necessarily mean the seller is desperate to sell. The reductions may bring the property in line with current comparables, make it more competitive, or underprice it to help generate more traffic and interest. Often when a seller has done several price reductions it means they are through with negotiation.
Real estate myth #9: Multiple offers give the sellers an advantage.
The reality: It can be easy to see dollar signs when there is more than one offer from multiple buyers. But it’s worth keeping in mind that every buyer has a limit, and no one likes to be played. If a seller plays this card wrong, the “advantage” could backfire with the seller forced to watch all the buyers walk away.
Real estate myth #10: Agents will say anything to make the sale.
The reality: Yes, there are some unscrupulous agents out there, but those who have a solid reputation in the community and practice real estate honestly and truthfully are very careful to uphold a client's trust. Agents who make misrepresentations or false statements are subject to prosecution and a loss of their real estate licence. Most Realtors rely heavily on referrals, word of mouth and repeat business. A real estate agent who blatantly lies to clients just to make a sale is unlikely to receive any of that type of business.
Bonus point – real estate myth #11: On home inspections.
There are several misconceptions regarding inspections, so let’s clear up a few. First, a home does not “pass” or “fail." An inspection merely assesses the condition of the home to give the buyer an objective evaluation. It’s not a case of an inspector “having to find something." No property is perfect, even a new build, which means an inspector will find something, although it might be minor. If a seller is concerned about what might be found, the best thing to do is get their own inspection before listing their home. That way, if there are issues that could become a deal breaker for a buyer, the seller can address them before the home goes on the market.
But doesn’t an agent’s inspector always favour the agent? Any good agent wants disclosure; it’s better for the client and the agent would not want to be sued. Good agents care that a buyer receives full disclosure and are willing to fight for repairs on the buyer's behalf or help the buyer cancel the transaction.