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Armchair experts come in every field: NFL Quarterbacks, NBA coaches, MLB umps, political pundits, and real estate agents. Just because you own a home, are addicted to DIY shows, or frequent open houses for style tips, doesn't necessarily mean you are a real estate expert. Here are five common real estate myths, debunked.
Myth 1: Buyers Without an Agent Get a Better Deal
With so many houses listed online, many buyers find their dream home using their own internet searches. They may be tempted to not only find a home, but also buy a home, on their own without a real estate agent, in the hopes of saving money. But buyer beware!
Generally, the seller pays for both the buying and selling agent's commission. It is generally stipulated in contracts between sellers and their agents that the selling agent will get, say, a 5% commission, and then the buying and selling agent agree to split that commission, 50/50. There is no cost at all to the buyer for having a buying agent.
Keep in mind, too, that buying agents offer more than just finding you the right home. They can give you negotiating advice based on current local trends, as well as help you navigate the purchasing contract process. All at no cost to the buyer! But remember that an agent is not a lawyer. Never rely on agents for real estate legal advise, even though they are real estate experts.
Myth 2: My Agent Has My Back
Though many people commonly believe that their agent represents their interest, that's not always the case. Many states allow for transaction brokers, who have a duty to the transaction, not necessarily to the buyer or the seller. Meaning, it is their duty to get the best deal possible. They have limited duties to the buyer and the seller, such as being honest and fair, but not as many as you would think.
About half of the states allow for transaction brokers, so beware if that applies to you. If so, you may want to consider hiring your own agent, or at least your own real estate attorney.
Myth 3: Open Houses Make for Quicker and Better Sales
In the current hot real estate market, many home sellers have already received purchase offers before the first open house. Open houses for agents has proven to be effective, as they usually take place right before a home goes on the market. But open houses for buyers usually just serve as opportunities for the hosting agent to meet more potential clients looking to buy, or maybe even sell, their house.
Myth 4: Sellers Can Recoup Major Home Remodel Costs
Recouping 100% of a remodel cost when selling a home is extremely rare. In fact, it may only be possible when installing a new front door. Each major remodel has its own typical return on investment, but don't expect to receive more than about 60% in any case.
New homeowners often like to put their own finishing touches on existing homes, and if it pains them to tear out a new bathroom or kitchen, they may choose a house with older ones, whose new granite countertops and heated floors haven't been cooked into the sale price. Of course, you want to put your best foot forward, and any touchups or necessary fixes are great additions, if you can do them without expecting too much of a return. This is one of those times when you actually can benefit from putting lipstick on a pig.
Myth 5: I Can Sell My House to Whomever I Want
In America, people are generally allowed a great deal of freedom in how they transact their business. But there are a few caveats, and they apply even to residential home sales. Under the Fair Housing Act, sellers cannot refuse to sell to anyone based on color, sex, religion, familial status, or national origin. Doing so could put you in hot water with the US Department of Housing and Urban Development, leading to a forced sale to that individual, if the buyer so chooses, as well as a hefty fine placed on the seller, and maybe even punitive damages.
If you are in the market for buying or selling a home, contact a real estate agent to help you along the exciting process. Keep in mind that agents are not lawyers. If one ever tells you "you don't need a lawyer for that", odds are, you do!
Though using a real estate lawyer to help with buying or selling homes is an added expense, consider it an investment. Homes are probably the most expensive things you will ever buy. And if you've ever bought one before, you know that the contracts can be very daunting. But don't despair -- you don't have to go it alone!