5 Common Myths and Truths About Real Estate Agents

Do you want one? Do they pocket the whole commission? Let's put the facts straight. 

Buyers and sellers often enter the market with misconceptions about real estate brokers -- how they operate, how the procedure works and what the agency relationship is all about. 

It is helpful to point out, without getting too much into the weeds, that in any one real estate transaction, there are most likely two representatives: one to the buyer and one to the seller. 

Here are five myths (and five truths) about working with both purchaser and seller's agents. 

1. Agents receive a 6% commission, no matter what 

Most people assume that their agent is pocketing the whole commission. That would be nice, but it is just not accurate. 

- Truth 

First, it's helpful to know that the seller pays the commission, and they split it four ways: between the two brokerages and the two brokers. 

Finally, the brokerage commission is not fixed or set in stone, and sellers can sometimes negotiate it. 

2. Once you start with an agent, you are stuck with them 

If you are a seller, you sign a contract with the real estate agent and their brokerage. That contract contains a term -- normally six months to annually. Once you register the agreement, you can, in fact, be stuck with their broker through the term. However, that's not always the case. 

- Truth 

If things are not working out, it is possible to request the agent or the brokerage manager to discharge you in the arrangement early. 

Buyers are rarely under a contract. In reality, buyer's brokers work for free until their clients find a house. It can be as fast as a month, or it may take up to a year or longer. And sometimes a buyer never buys a house, and the broker doesn't get paid. 

Before jumping into a broker's car and asking them to play tour guide, think about a sit-down consultation or a call, and examine their online reviews to find out whether they are the ideal fit. 

Otherwise, start slow, and if you do not feel comfortable, let them know early about -- it's more challenging to breakup with your broker if too much time passes. 

3. It is OK for buyers to use the home's selling representative 

Today's buyers get things on demand, from meals into a trip to the airport. If it comes to real estate, buyers assume they need only their smart phone to buy a house, since most property listings live online. 

- Truth 

First-time buyers or buyers new to an area do not understand what they do not understand, and they need an advocate. 

The listing broker represents the seller's interests and also has a fiduciary responsibility to negotiate the best price and terms for the vendor. So working directly with the selling agent presents a conflict of interest in favor of the seller. 

A fantastic buyer's broker lives and breathes their local market. They have probably been indoors and understand the background of dozens of homes nearby. They're connected to the community, and they understand the best inspectors, architects, lenders and lawyers. 

They have facilitated many transactions, which means they understand all the red flags and will inform you when to run away from (or toward) a home. 

4. One agent is just as good as the next 

Many people think that all agents are created equal. 

- Truth 

A great local broker can make an incredible difference, so never settle. The ideal agent can help save you time and money, keep you out of trouble and protect you. 

Consider an agent who has lived and worked in the same city for about ten years. They know the roads like the back of their hands. They have deep relationships with the other local brokers. They have the inside track on upcoming deals and previous transactions that can't be clarified by taking a look at information online. 

Compare that agent to one who's seeing a place for the first time. Some agents aren’t forthright and might be more interested in making a sale. Many others care more about creating a long-term relationship with you, as their business is based off referrals. 

5. You can not purchase a For Sale By Owner (FSBO) home if you have an agent 

In a previous generation, sellers who would not deal with any brokers attempted to sell their house directly to a purchaser to conserve the commission. 

- Truth 

Smart sellers know that real estate is complex and that most buyers have different representation. And many FSBO sellers will offer payment to a buyer's broker as an incentive to attract their client customers to the home. 

If you see that a FSBO home on the market, don't be afraid to ask your representative to step in. Most of the time that the seller will compensate them, and you can benefit from their knowledge and expertise. 

North Bloomfield Properties has been helping owners and tenants enjoy affordable, quality homes in Southeast Michigan since 1989. Check out our website for hundreds of listings in locations that range from lakefront in the country to lofts in the city. To get the best real estate rental services contact us now.