It is common for buyers and sellers to enter the market with misunderstandings about real estate agents – how they work, how the process works and what the agency relationship all consists of. It’s important to note that in any real estate deal, there are usually two agents – one for the buyer and one for the seller.
Here are five myths about working with both buyer’s and seller’s agents.
Myth 1: Agents get a 6% commission, no matter what
It is common misconception that agents pocket the entire commission themselves, but this is not the case. The seller pays the commission and it is split four ways between the brokerage and the two agents. It’s important to note that the brokerage commission is not fixed, and sellers can sometimes negotiate it.
Myth 2: Once you start with an agent, you're stuck with them
You can ask the agent or brokerage manager to release you from the agreement early if you feel things are not working out. It is rare for a buyer to be under contract. Until their clients find a home, a buyer’s agent works for free. The home buying process can be as quick as a month or it can take up to a year or more. Sometimes, a buyer never ends up purchasing a home and the agent doesn’t get paid at all. Before deciding on an agent, you should have a sit-down consultation or at least a phone call. It’s also a good idea to check their reviews to factor into your decision.
Myth 3: It is fine for a buyer to use a seller's agent
The listing agent represents the seller’s interests and has a responsibility to negotiate the best price and terms for the seller. So, working with the selling agent presents a conflict of interest. A great buyer’s agent knows the ins and outs of their local market. They are connected to the community and they know who the best inspectors, lenders, architects, and attorneys are.
Myth 4: One agent is just as good as the next
Never settle for an agent, because a terrific local agent can make a huge difference. The best agent for your needs will be able to save you time and money, as well as protect you and keep you out of trouble. An agent who has lived in the same town for ten years will know the area like the back of their hand. They will have relationships with other local agents and will know of any upcoming deals and past transactions that cannot be explained by looking at data online. Compare this to an agent who is new to the area. Some agents may not be upfront with you just to make a sale, while many others care more about building a long-term relationship with you, because they build their business from referrals.
Myth 5: If you have an agent you cannot buy a for sale by owner (FSBO) house
In the past, it was common for sellers to try and sell their home directly to a buyer to save the commission. Smart sellers realize that most buyers have separate representation because real estate can be complicated. Many FSBO sellers will offer compensation to a buyer’s agent as an incentive to bring their buyer clients to the home. If you see a FSBO home on the market, don’t be afraid to ask your agent to step in. The seller will more than likely compensate them, plus you can benefit from their knowledge and experience.