Realtor Myths and Misconceptions

A Realtor is the reason between selling and not selling your house? FALSE. A Realtor doesn’t sell your house, your property sells itself. When is the last time someone said to themselves; I’m going to purchase a property because so and so has it listed? If that were the case buyers would be searching by listing agent instead of the property’s features, location and pricing.

Have you ever seen anybody try to market a property for the mere fact it’s listed with a Realtor? No of course not, because the fact that it’s listed with a Realtor brings no added value to the property, as is the case with high quality windows or a reputable builder having built the house. Completely the opposite; having a Realtor involved in the transaction does nothing more than artificially inflate the sales price, but contributes nothing of lasting value.

Realtors do most of the work, that’s why they get paid the most. FALSE. Realtors do the least amount of work, but stand to make the most. This statement is especially true for listing agents. Out of all the people involved in the transaction (seller, buyer, inspector, mortgage broker, title insurance provider, appraiser, attorney and agents) the listing agent does the least amount of work, yet receives the greatest piece of the pie. This statement might not have been true 10 or 15 years ago, but the Internet has made life much easier for the average agent. The Internet might also be their demise as well.

Realtors are professional marketers and can market a house better than the property owner. FALSE. This couldn’t be more untrue. Realtors are not professional marketers. If they were they would have a Master’s degree in marketing and likely own their own marketing firm or be working for a well-established one that offers a steady pay check along with a hefty benefit package, something their current occupation doesn’t offer. The biggest marketing tool they have as their disposal is the Multiple Listing Service otherwise known as the MLS. Why do you think the National Association of Realtors (NAR) spent millions in legal fees trying to keep limited service brokerage firms off the MLS? Because they realized once everybody had affordable access to the MLS, they would be forced to compete with brokers that refuse to move the line when it pertains to the type of services they want to offer and the type of commissions they want to charge, essentially causing their monopoly to splinter due to a lack of cooperation and submissiveness that is required to keep such a business model intact.

Using a Realtor to coordinate the closing makes for a smoother transaction. FALSE. The title company coordinates the closing, not the agent. The agent’s only job when it pertains to coordinating the closing it to ensure the title company they use is good at what they do; to make sure the closing takes place in a timely manner assuming everything pans out with the financing.

Realtors will not show FSBO listings. FALSE. I never had a Realtor say to me after finding out that the property I had listed on the MLS, was actually being sold by owner that they didn’t want to show it or make an offer on it because it was listed by owner. Now, I have had agents say that the commission they’re offering is too low, but I never heard or seen an agent bulk at showing a property that was offering a 3.0 percent or higher commission to the buyers’ agent, at least not in my area. After all, what is the agent going to say to their buyers if they want to look at a house that just happens to be listed by owner? I refuse because it’s listed by owner; go find another agent to show it to you. I highly doubt it.

Open Houses help you sell your home. FALSE. There are always exceptions to the rule, but for the most part, Realtors hold open houses to attract buyers and not as a marketing tool to sell your house even though they try to sell it as such to potential clients during the interview process. That is why you see a lot of new agents at open houses and not the actual listing agents. The new agent gets the opportunity to obtain buyers, while at the same time the listing agent keeps their sellers happy by carry through with their promise. I never once sold a house because of an open house, but have picked up plenty of buyers for other properties in the process.

Quick side note about holding open houses, not only are they a complete waste of time for the most part, but they’re dangerous as well. Many agents have ended up robbed or even killed while holding open houses. At least when you’re setting up a showing you can pre-screen the person over the phone before letting the person walk through the door, something not possible with open houses.

Brokers protect their clients from liability. FALSE. Brokers protect themselves and their agents by purchasing Errors and Omissions Insurance. You are responsible for protecting yourself against any claims of misrepresentation that might be brought forth by the buyer. That it is why it is absolutely essential that a seller hires a competent real estate attorney to help ensure that being sued for misrepresentation is minimized. Something a Realtor does not have the ability or legal authority to do. That is why in some states it’s not only recommended that an attorney be hired to review the disclosures and sales contract, but mandated by state law.

Realtors are highly educated when it pertains to the home buying and selling process. FALSE. In most states all that is required to get a residential sales license is a high school diploma or an equivalent, 40 hours of class time along with a cumulative test and several hours of continuing education to keep your license in good standing. If you can learn what forms to use when and for what, you have what it takes to be a Realtor. Your average person could read a few good articles on the subject and be just as informed on the subject matter as your typical Realtor is or will ever be. Just with like anything else there are exceptions to the rule, but for the most part this holds true.

Homes listed with Realtors, sell for more. FALSE. This is a falsehood that the National Association of Realtors loves to try to sucker the consumer into believing by referring to a study they conducted (keep in mind these are the same people that got on national television and swore up and down that home values would continue to rise, regardless of the fact that the average person’s income wasn’t keeping pace). Unfortunately for them; every independent study conducted has shown otherwise. Like the recent study conducted by Northwestern Dept. of Economics that shows Sale by Owners (FSBO’s) obtained a sale prices no lower than the sale prices obtained by owners using a Realtor. This is BEFORE subtracting commissions.

The bottom line is this; market forces (supply and demand) dictate what someone is going to pay for a property, not whose yard sign is planted in the front yard.

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