Debunking real estate myths
From the outside, the world of real estate may appear to be a hustle bustle of fast-talkers, sales-sorcery, and big fat commissions.
Over the years, the non-real estate world has come up with some wild ideas of how the industry operates. Some of them might be true, but here are half a dozen that aren’t:
Myth: All real estate agents are rolling in money
Some real estate agents are definitely rolling in money. But not all.
Like any profession with a focus on commission, average salaries only tell half the story.
Some agents may be more than happy to work no more than eight hours a day, five days a week, and be content with the income that comes with that, while others are more willing to sacrifice weekends and evenings to see their commissions soar.
While some agents will earn much more than others (based on a multitude of factors), it’s most certainly wrong to assume every agent is getting around in a Rolls-Royce.
Myth: Property managers just collect rent
Property managers – at least the good ones – have a great deal more to manage than just the intake of rent money.
Maintaining occupancy is the absolute top priority for a property manager, and this means constant inspections, liaising with potentially dozens of prospective tenants, and sifting through just as many property applications.
But once the home is tenanted, they can just sit back and let the money roll in.
Property managers handle building insurance, smoke alarms, maintenance, fencing legislation, lease renewals, inspections, rent reviews, and more, and all the while acting as the liaison for all of their tenants and landlords.
Even collecting the rent isn’t always sunshine and rainbows – if a tenant is late on their payments, it falls to the property manager to exercise their skills of diplomacy and chase them up, which is rarely a fun activity.
Myth: All agents are the same – just pick the one with the smallest commission
Choosing an agent based on their fees alone is a strategy fraught with danger. Most employers are happy to pay more in wages if it means hiring someone with more experience, qualifications, or both – and selecting an agent should be no different.
As a home seller, you’re hiring your agent, and if you choose the cheapest, you may be getting exactly what you’re paying for.
With that said, there’s no rule that says the agent with the lowest fees will be the worst either, so do what all employers do and start interviewing. Choose your agent based on their results (ideally in your area and/or with similar properties to yours), and their ability to work well with you and represent your property effectively.
If this agent turns out to be the cheapest – that’s a win-win; if not, at least you’ll know your money is being well spent.
Myth: Setting your price high will give negotiation room without risk of underselling
There are myriad pricing strategies, and which one is going to work best for your property will depend on the market, your home, and the location.
If it’s a buyer’s market, asking for more than your house is really worth will be an exercise in futility. If it’s a seller’s market, you can probably get away with asking for a little bit more.
There are other options though, such as price ranges (offers within x-y), or ‘offers over’ your minimum figure. Auction might also be a suitable option, depending on the situation.
Hiring the right agent (see above) will pay dividends here, because they’re likely to know which pricing strategy will suit you and your home best.
But, if overpricing isn’t the way to go, then the opposite must be true, right? Wrong, refer to the next myth.
Myth: Low-balling will attract more buyers, and then you can just wait for higher offers
This sounds great in theory – a low price will bring in a lot more buyers who will then see that the property is worth more than asking price, and will in turn offer more (up to and above your minimum sell price) than you’re asking.
It’s true that the low price will attract more buyers, but it will seldom attract buyers who would be willing to spend more than asking price.
The problem is that you’ll attract buyers whose budgets are in line with your low-ball price-point, rather than buyers whose budgets are in line with the figure you believe your home is actually worth.
And if someone wouldn’t be interested in a house priced at your minimum sale value, why would you want them to come to your open-house?
Sure, it’s possible for low-balling to work out for the best, and no doubt it has before, but as most good agents will tell you, more accurate pricing is your best bet.
Myth: Buyers are liars…
…and sellers are worse.
Or so the expression would have us believe.
Of course not all buyers are liars, and of course not all sellers are worse, but debunking this myth is more about understanding where this maxim comes from.
Plenty of buyers do lie, but it’s often unintentional, rather than malicious. A buyer might say they want a four bedroom home, but end up buying a three bedroom home. Or they might say their budget is $400,000 and go on to spend $420,000.
Circumstances change throughout the buying process, and it’s not unusual for someone to find a house they love, even if it doesn’t exactly meet the parameters they set out with.
Despite the hard work of our real estate agents, there remains a largely negative social perception of the profession which may incline buyers to be more guarded about the information they give to agents – especially when it comes to budgets and finances.
All of this can be frustrating for agents, and lead them to feel like they’ve been taken along for a ride – especially if the end result is no sale at all.
The real problem with the ‘buyers are liars’ mantra is that it assumes from the get-go that buyers are dishonest and deceitful, when in actuality, they are often simply mistaken.
Carrying out business with the assumption that potential clients are lying to you is less than ideal, so it’s much better to have an open, honest conversation with buyers to find out exactly what their needs are.
If someone says they want four bedrooms, ask them why (perhaps they would actually be just as happy with three bedrooms and a study, or three bedrooms and a larger living space), and also ask them if they’d be willing to settle for fewer bedrooms if it meant getting a great deal, or getting a home in the perfect location, etc.
There are near infinite possibilities, but the point here is to be honest, and discuss the buyer’s needs rather than simply taking them at face value.
And the rest
Real estate is a multifaceted profession, wherein everybody who isn’t an agent is sure they know the secret to getting the best deals, the best sales prices, the quickest sales, et al.
As a certain band from England once said, never mind the bollocks; the only way to ensure you’re in the best possible position is by working with a proven agent whom you can trust.