(Published on - 2/23/2018 5:36:33 PM)
Just when you think you've found out everything you need to know about how to hire the right real estate agent, someone will give you their “two cents” worth of info and have you reconsidering your choices over and over!
Here are 7 common misconceptions to remember in your decision making.
1) Agents make too much money.
May as well deal with the big one head on! Many agents get paid by way of a commission that is often a small percentage of the sale price of a home. So yes, commissions can be high because even a small percentage of a large asset can be a significant amount of money. I could try talking about the hours that agents often spend working for clients, the expertise provided and the expenses paid to be able to provide services to clients, but I know how that sounds. It sounds like a sales pitch and, at the end of the day, if a client feels like they did not receive the kind of help that they wanted then they will feel like the agent didn’t deserve their commission. There are many professions where this is the case and real estate is no different. Just like those other professions however, there are many business models and agents that you can choose from. So if you are looking for an agent and you want to make sure you are “getting your money’s worth”, ask around, check out testimonials online, interview agents and find out exactly how they will EARN what they expect to be paid. We know that the onus is on US to show our value to YOU and this is what should guide your choice of real estate professional. A good agent will have no problem demonstrating their value. And considering the things that can go wrong when people buy or sell the most expensive asset they will ever own, a good agent will be worth every penny.
2) Agents want you to pay more for a home because then they make more.
Again, I want to deal with this head-on. If an agent is getting paid a commission based on a percentage of the sale price then yes, the more a house costs the more the agent will make. It may help to see the real impact of this by using an example however. Let’s say a client wants to look at a house that costs $400,000. If the agent gets paid a typical commission rate (3.5% on the first $100,000 and 1.5% of the balance), that agent will make $8,000. If we apply that rate to a home that costs $450,000 (a huge leap in price), then the agent could make an extra $750. I don’t want to suggest that this is nothing. But that is not an amount worth losing a client over. A good agent knows that getting their client into the home that is right for them matters a lot more, and that pressuring a client is a great way to lose that client. And not just that client – all of their friends, family and potential referrals too! I recognize this, which is why I would never push a client into a higher price range. I am concerned about helping you find the home that makes sense for YOU. Happy clients come back and happy clients refer others and that’s where the real success is in this industry.
3) The less you offer to buyers’ agents when you sell, the more money you keep.
In most cases, the agent representing the buyer will get paid a commission offered by the seller (and the seller’s brokerage). So offering a low commission amount may seem like a good idea, but it comes with risks. Buyers who have agents will have entered into what is called a “Buyer Brokerage Agreement”. This is a contract between the buyer and their agent and it will often specify a commission that the agent must be paid. If the agent does not receive that amount from the seller, then the buyer MAY be required to pay the difference. Buyers may instruct their agents to only look at homes where the amount being offered will cover the amount required by the Buyer Brokerage Agreement. It may also be the case that if a buyer has to choose between two otherwise similar homes, they may lean toward the deal where they are not going to be out-of-pocket directly themselves. So it may actually become a competitive disadvantage to try to save money that way.
4) You can call any agent and get them to show you houses.
A good agent will expect to have a contract in place before providing services. Nobody likes working for free and real estate agents are no different. Although it is possible to enter into a “non-exclusive” agreement (where you can have service agreements with other agents), there should still be an agreement in place so the relationship is clearly understood. We want to invest a lot of time and effort into representing you and helping you, and in return we just want to make sure the expectations and obligations for both parties are agreed to. Even if you are just starting out looking for a home, it’s better for both you and the agent if that is clearly understood up front. For me, I would love to help you out even if you’re just getting started. Client satisfaction is EVERYTHING in this business and I want to help you every step of the way.
5) Agents want you to use their home inspectors just to make a sale.
A good agent may be able to refer you to several qualified inspectors but they are only guided by what is best for their client. Why? Because they are primarily concerned with YOUR best interests, not a quicker payday. And there is a selfish reason too; a client who is unhappy with their home or who feels misled or pressured will never use that agent again, nor will they refer their friends and family. I know that my buyer clients are always better off knowing the truth about a house. Also, the inspection agreement would be between the client and the inspector, and a good inspector will not want to risk liability and lost business by “colluding” to make a sale happen. Like with your agent, ask around and check references!
6) Agents price homes to benefit themselves.
Sometimes, sellers feel that their agent either (a) made them list for a low price for a quick sale, or (b) TOLD them their home was worth a lot to GET the listing, only to see it sit for a long time and sell for a lot less. When it comes to pricing your home, there are two important things to consider:
- A buyer will not overpay for a home if they can get something similar for a lower price; and
- Most buyers have agents who are giving them detailed market information to they can compare purchase opportunities.
A seller’s agent cannot MAKE people pay a certain price for a home. The numbers don’t lie, and a good agent will show you the applicable market activity to support their market value estimate. The choice about the listing price should then be up to YOU, based on YOUR circumstances. You should be able to clearly understand how the agent arrived at the market value price range they show you. Once you are informed you can then make your decision. Listing high may mean your home will be on the market longer, but you may end up making more money (although it may also lead to “low-ball” offers if buyers see that it has been on the market for a long time; they may think you are getting desperate). Listing low may mean a quick sale, but for a lower amount than you might otherwise have obtained (although it may also lead to multiple offers and a higher sale price). Ultimately, the “proof is in the pudding” in the sense that the number of showings and the number of offers is the market talking to you. If a home has been on the market a while and there are few showings and no offers, then chances are buyers are seeing better opportunities elsewhere and it MAY mean that the home is priced a little too high. Similarly, multiple offers within days of listing MAY mean that a home was priced very aggressively. Yes, the market can be very complicated, but a good agent will be able to SHOW you how different pricing strategies may work, help you find the “sweet spot”, and then let you make the call. I am happy to spend as much time as you want going over market trends and the sales data to back up any home evaluation I provide. I want you to understand the market like I do.
7) Agents will say anything to make a sale.
A good agent will always look out for their clients best interests. Not only is that better for business, it’s the law! Agents who lie to their clients or act against their best interests may be subject to complaints and even lawsuits. Ultimately, an agent could even lose their license. Like most agents, I take my professional responsibilities to my clients seriously because this is my career and my livelihood. Even more than that though, this is my passion. There is no feeling like a “thank you!” or a referral from a satisfied client. I know I won’t get those if a client feels pressured or “taken” in some way.
I know there are negative perceptions of real estate agents out there. But a good agent will have no trouble demonstrating their value and making their clients feel secure and well-represented. So take the time to shop around; get recommendations from friends and then interview agents and check their references. You want someone who will inform you, respect you, and work FOR you. As I said above, a good agent can be a lifesaver when you set out to buy or sell you next home!