There's a lot more to being a real estate agent than hammering signs into the ground.
Most real estate agents don't live a luxurious life with little actual work to do besides dress well and escort clients from house to house. The portrayal that you see on TV bears little resemblance to the real-life agents that you might work with. Does that surprise you? A lot of misconceptions about the industry make the rounds, and that's probably because most of an agent's work is done behind the scenes.
Here are some of the more common mistakes that buyers and sellers make when measuring the work of a real estate professional.
Most Agents are Wealthy
Most real estate agents dress in a professional manner and many drive a reasonably nice vehicle. But remember, an agent's appearance is part of the job. The idea that agents are wealthy as a rule is as flawed as the theory that all business owners are rich.
Some agents work only part time, some are just getting started in the business and some are simply not as motivated as others. There are million-dollar agents. But the majority of pros earn a comfortable living and aren't cashing enormous checks.
Buyers Pay a Lot for an Agent
This might be one of the biggest misconceptions of all. Buyers don't pay real estate agents out of pocket for any services. An agent gets a commission from the proceeds from the sale of a house. Realtor.com® says the average commission is about 6 percent. If the buyer's agent is not the listing agent, both agents split the commission, usually 50/50.
Related to this myth is the idea that taking the For-Sale-by-Owner (FSBO) route saves a ton of money. Certainly, sellers don't have to pay an agent commission if they sell on their own. The problem is that almost no seller really knows the real estate market or has the connections that an agent does. Trying to figure out the required paperwork related to selling a house is anything but simple. That doesn't even cover the advertising and exposure benefits of having an agent.
While buyers and sellers are busy worrying, agents pull all of the details of a sale together.
An Agent's Work is Busywork and Showings
A real estate agent could, in theory, take on clients, list houses and occasionally show property. But a good agent does a whole lot more. Even an average agent with equal motivation has many jobs that clients never see.
Jobs also vary depending on who the agent represents. An agent must know the market and how to price a home competitively. He also completes and files important documents, researches listings, stays on top of industry news and trends, coordinates appointments and open houses, and much more. There's also licensing and the required continuing education to keep up with.
Buyers Have to Work with the Listing Agent
When buyers peruse a real estate website or see a for-sale sign in a yard, an agent's name is usually connected to it. That's the listing agent, who is the person that officially put the house on the market for sale, is advertising it, and is scheduling appointments for viewings. But the property isn't restricted to that agent only, although that agent will get some commission when it sells.
Buyers can view any property with any agent, says Agent Harvest, or with no buyer's agent at all. When buyers prefer to work solo, it's a good idea to hire a real estate attorney to review all of the documents before signing. That is an out-of-pocket expense, as opposed to working with a buyer's agent who works on commission.
Agents Receive Kickback Money from Referrals
Every business person has vendors and other professionals with whom they prefer to work. But kickbacks are a great, big, fat 'no.' Realtor.com® says The Real Estate Settlement Procedures Act strictly prohibits kickbacks of any kind.
Buyers or sellers can use any vendor, such as an inspector, that they want. Agents won't insist on any vendor. One sale on one house seems like a big deal to the buyer and seller. But a potential kickback isn't worth risking the loss of the agent's whole career. If an agent makes a recommendation, it's likely because he knows that the vendor has a good reputation.
Real estate agents wear many hats. They meet with clients, take photos of property and create the real estate listings that buyers review. They go to school, show property, fill out paperwork, search listings to find a property that fits a buyer's needs, according to Kaplan Real Estate Education, and most are on call 24 hours a day.
It doesn't matter what an agent drives or how much bling they wear. Professionalism, credentials and experience matter. Agents don't get paid for time spent searching or marketing, or work that doesn't end in a sale. It's in their best interest to help you every way that they can, and most of them do.
Learn more about buying, selling and the real estate industry in general with our library of mortgage articles.