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Debunking Misconceptions in the Real Estate Industry
Christopher Hoffer's Blog
May 13 2019


 In the real estate industry, all of us have the same common goal, and that is to make sure the buyers and sellers of the world are taken care of and are as happy as possible throughout their experience. But how can we keep them happy if we don’t know what their main concerns or hesitations are? When it comes to real estate, we have a few to share with you.

The agent gets to pocket all commission from the sale.

Not true. This is one of the biggest misconceptions regarding real estate agents is that they are walking away with the entire 6% commission in their pocket. As you know, in most cases the commission gets paid directly to the brokerage, and then is split out to the agent. That split varies based on the company and sometimes depends on that specific agent’s level of production. This doesn’t even take into consideration the taxes and social security money that needs to be withheld.

 

I do not need an owner’s title insurance policy.

Define “need.” Why should they have to buy their own separate policy when they have already bought a policy for the lender? So when explaining title insurance to your home buyer, make sure you break it down. They need to understand that the lender’s policy is to protect the lender from losing their loan investment, and the owner’s policy is to protect them in the case that they need to spend money defending their rights of ownership in the property.

 

The numbers on Zillow are what goes.

False. Sellers are often using online real estate sources, like automated valuation models (AVMs), to help spread the word about their home for sale. There are disadvantages to some of these sites as they have a tendency to give the buyer a false impression when it comes to the estimated value of the home “zestimate.” It is important to explain to both the buyer and the seller that the estimate or “zestimate” is not set in stone. Sometimes it will be higher than the home’s worth, sometimes it will be lower. It is simply a starting point.


It is better to overprice my home, somebody can always offer less.

Not true. Many sellers take this approach. They believe that if they price their home for higher than what it is worth, by the time somebody makes them an offer they will get what they wanted out of the home. What they aren’t thinking about is, many people will look past a home that is out of their price range (when in actuality it would be inside of their price range) and the result can be that the house remains sitting without much interest. It is best to advise your clients to put a fair price on their house to begin with, resulting in optimal traffic and a quick contract!

 

If I refinance, I don’t need a new title insurance policy.

Nope. Not True. If they have an owner’s policy, that will still be active, however their lender’s policy will need to be replaced with a new one. Just explain to them that when refinancing, their loan will be paid in full, which means the lender’s policy will expire. A new lender’s policy will be required for the new mortgage in order to protect their investment.

 

You should renovate your kitchen and bathroom before you sell.

Not always. Sellers often believe that the kitchen and bathrooms can “make or break” a sale. So they decided to renovate them before selling their house in order to list a higher price. Many times, this plan will backfire on the client. They need to know that generally, people do not recoup even close to the money put into remodel on an average mid-range home.

 

The home will either pass or fail the home inspection.

False. We know that home inspections are designed to assess the condition of a home. But buyers often look at the home inspection as a pass or fail type of situation. In reality, the home inspector will provide a report explaining all of the issues and/or key items ages and condition, and then they can work with their agent to decide if those are deal breaker items or not.

  

What can you do as a real estate professional?

At the end of the day, the people buying and selling homes far outweigh the number of people in the real estate industry that can help set these types of myths straight. Do what you can to educate your clients and let them know that we are all on their side. Sometimes taking a few extra minutes to explain the details, including some of the above, will make all the difference in the world to them and their experience.