Buying and selling a home is a complicated business. You probably have a lot of questions about the real estate biz. We’re hear to clear some things up for you! Here are three lies you’ve heard about real estate:
LIE #1: A CASH OFFER TRUMPS ALL
There’s an assumption out there that a seller, considering two different offers, will always go with the cash offer because there’s less risk. As a result, many buyers who hear they’re competing with a cash offer assume they won’t get the home. They may not even make a formal offer. At the same time, many cash buyers assume that is because they’re paying cash, they can make an offer below the asking price, and it will likely be accepted.
However, a smart seller may be more tempted by a solid financed offer. Take a look at a home priced at $399,000. The seller receives two offers: One is a cash offer of $375,000. The other is an offer for the full asking price, with 25 percent down, a bank pre-approval letter and swift contingency periods. A good buyer’s agent, upon learning their client is competing with a cash offer, will arm the seller with lots of data supporting their client’s finances, such as a credit report and verification of income or assets. The agent might even arrange a call between the seller and the buyer’s lender.
LIE #2: REAL ESTATE AGENTS SAY AND DO ANYTHING TO MAKE A SALE
Real estate agents are held to a very strict code of ethics and also many rules and regulations. Many believe, however, that real estate agents will say and do anything to make a sale, because they don’t get paid until a home closes. This real estate myth can certainly be possible as there are real estate professionals who will say and do anything to make a sale, however, the majority of real estate agents will not.
Most real estate agents business relies heavily on referral business, word of mouth business, and repeat business. A real estate agent who blatantly lies to clients just to make a sale, is unlikely to receive any of the above mentioned business. When buying or selling a home, it’s extremely important to select a very trustworthy real estate agent who you can trust and are comfortable with.
LIE #3: ALL REAL ESTATE AGENTS MAKE TONS OF MONEY
Successful real estate agents certainly can make a very nice income. The amount of time, effort, and money that top producing real estate agents need to put forth is significant. A common misconception is that all real estate agents make boatloads of money.
The general consensus is that real estate agents earn 6% of the sale price of a home, no matter what. This is not true. There are many things that effect the percentage of commission earned by real estate agents. First and foremost is the fact that commission is negotiable. Any real estate agent who says otherwise is likely violating rules and regulations.
Let’s assume that a seller is willing to pay 6% of the sale price of their home. The 6% commission is normally divided between the listing and selling brokers. The real estate brokers then take a “cut” of their respective commissions before distributing to the real estate agents involved in the transaction. In addition to their company taking their “cut,” there are many expenses that real estate agents incur that most don’t realize. Items such as health insurance, fuel, car maintenance, and advertising expenses are just a handful of the expenses that real estate professionals are responsible for.