A lot of myths circle Real Estate Agents and we are here to dispell them. If you are an agent, make sure to educate clients on expectations and the reality of the work you do. Buyer or seller? Understand exactly what it is your agent does and everyone wins.
1. Real estate agents are paid a salary
The truth: Real Estate Agents are paid on commission. This means that if they aren’t finding or selling homes for people they don’t make money.
Client takeaway: You are likely not your agent’s only client. Part of the Real Estate game is finding a variety of clients. However, you should still feel like your agent is giving you enough attention and is responsive in order to keep you comfortable throughout the process.
Agent takeaway: Even if you have multiple clients, make sure each one of them feels like they are your one and only. Buying or selling a home is stressful, and for first-time homebuyers who are putting all their trust in you, they will want to feel like they’re a top priority.
2. The agent keeps all the commission
The truth: I’m sure they wish that was true, but unfortunately, it’s not. The commission percentage changes within different markets but generally the total commission is split about 50/50 between the buyers and sellers agents. These commissions are then further split between agent and brokerage. Depending on the seniority of the agent and agreement with their brokerage these could be 50/50, 60/40, 80/20 etc…
Client takeaway: Commissions can always be negotiated but in general, agents and sometimes their brokerages, will be set on a percentage. If you are asking for a reduction, make sure you have a good reason.
Agent takeaway: This is an important area to be transparent in with your clients. Let them know how the commission works and what the relationships are between brokers and agents. The more clients understand, the more at ease they will be.
3. An agent’s expenses are reimbursed
The truth: All expenses come out of their own pocket. Every time they meet you on that ranch property an hour out of town, that’s on their own dime.
Client takeaway: Be respectful of your agent’s time. You are their top priority, but if you get the sudden urge to look at the property at 11 pm, or multiple times per week, see if you can consolidate.
Agent takeaway: Your clients may not realize this. If they continue to ask you to make long trips or start to take up too much of your time, have a simple conversation and try to streamline some of the tours or visits.
4. The internet said so…
The truth: This is the point that every agent will be nodding at. Real estate agents don’t just set a random price when selling a home. Zillow may say the home is worth “x” but it is just an estimate. A lot more goes into evaluating what a home is worth than what a computer algorithm says. Websites like Zillow or Redfin haven’t been to the house so can’t assess the condition — possibly the greatest factor in determining a home’s worth. When agents determine listing prices, they look at a list of important factors including; the neighborhood, condition of the home and more. One of the most important things agents do when determining a price is to look at comparable homes or “comps.” They search within a close radius of the home for homes with similar feature i.e. bed, bath and other amenities. They then look at what the homes were listed for and what they actually sold for. From there they will set a price. So no, it’s not just picking a nice sounding number, it’s hours of looking for what’s going to get your home sold quickly and for the highest price.
Client takeaway: Your agent is trained in reading market activity and should have a solid understanding of how to read comps. If you feel unsure about the price they are recommending, ask to see a list of comparable houses that have recently sold, and your agent’s proposed price should make more sense.
Agent takeaway: Do your due diligence and make sure you have the knowledge and resources available to best serve your clients. If they are set on a number that you don’t agree with, let them know why you think differently. If they don’t budge, let it role but advise them things might move slower.
5. Once you see a house with an agent, they remain your agent
The truth: If you are selling your home you likely have signed an agreement with an agent saying they will be the sole listing agent, in which case it’s set in stone. On the buyer’s side, this is not true. However, there is some etiquette around it…
Client takeaway: The worst thing you can do to an agent is lead them on. If they have shown you multiple homes and then at the last minute you switch agents and they find you your home (and get the commission), that will be heartbreak for your initial agent. Remember, they’re not on salary and once you begin a relationship with them they will put a lot of work into it and if you suddenly go with someone else, it’s a big blow. Think of it as if you are starting a relationship with your agent and every open house is a date. Once you have gone on multiple dates think how it would feel if after 6 months you suddenly went and married someone else.
If you and your agent look at one or two open houses and you don’t click, feel free to let them know that you’ll be looking for another agent.
Agent takeaway: A lot of the time, your clients won’t understand how the agent/client relationship works. If you are transparent with them and get them to understand what goes into it, they will hopefully be respectful of the time you put it and understand the repercussions of switching agents far along into the process.
