Debunking Real Estate's Biggest Myths
What less-seasoned home buyers and sellers should look out for
Denver's real estate market isn't going anywhere. Thanks to scant housing inventory, massive population growth and still-low interest rates, buying or selling a home in, or even near, the Mile High City means stepping into a fierce game with ever-changing rules. As new buyers and sellers dip their toes in the waters for the first time, they also enter the market with assumptions about how everything works.
These assumptions – and often, myths – may come from reality TV shows or watching their parents’ house hunting experiences. Maybe they’ve been referred to an agent from their grandmother, who insists Mabel’s 40+ years in the industry makes her the best in the business. The trouble is, these assumptions are often based on outdated or generalized real estate myths, which haven’t caught up to 21st century.
Here are three such myths that many less-seasoned home buyers and sellers might assume are true:
- Commissions are non-negotiable
According to the National Association of Realtors (NAR), 88% of homebuyers purchased their home through a real estate agent or broker, a share that has been increasing steadily since the early 2000s. Sellers, too, rely on agents, with only 9% selling their homes on their own. As most people are aware, agents make their money through commissions, with the average rate coming in at 6%. What most buyers and sellers don’t know, though, is that commissions are fully negotiable.
Thanks to current technology and tools, rising home prices, record-low inventory and lightning-quick average days on market, agents are doing less heavy lifting to coordinate transactions and more button clicking. Not helping the traditional agent’s case is NAR’s 2017 Home-Buyer and Seller Generational Trends Report, which found that over 50% of homebuyers ages 51 and younger found the home they eventually purchased by themselves on the internet – no slew of agent-led listings required.
Not only are commissions negotiable, but with agents having less on their proverbial plate, it seems silly that most buyers and sellers sign away 6% without even knowing it. There are also plenty of other brokerages that offer flat fees or reduced commissions – shameless plug: my company, TRELORA, offers a flat fee of $2,500.
- Buyers and sellers can only communicate through their agents
Another myth that benefits agents – and not buyers and sellers – is the old adage that buyers and sellers can only communicate via their respective parties. This allows agents to hold all the cards, effectively controlling the communication in line with their best interests. And while it’s important for agents to communicate, and handle the trickier parts of a negotiation, buyers and sellers should be free to chat through the little things, like whether or not the water heater works or the windows need replacing. Doesn’t it make you want to be more amendable to someone once you’ve spoken with them directly or seen their face?
- The market is steady and predictable
While the old saying, “Buy land, they’re not making it anymore” was once relevant, it’s no longer the right approach. There’s no Midas touch for real estate anymore, and the best thing buyers and sellers can do is to trust themselves and do their homework. Don’t rely on predictions or the anyone else’s gut, and always anticipate that the market will change at the drop of a hat.