Discover the truth behind five common real estate misconceptions
Myth #1. Real Estate agent’s commissions are fixed.
The Sherman Antitrust Act forbids any type of price-fixing in any industry. Therefore, Real Estate
commissions are and have always been negotiable. An individual Agent can set their own preferred
rate, but it should not be fixed by agreements among competitors (such as brokers or agents within a community).
Myth #2. A downpayment on a home must be at least 20%.
To avoid PMI (Private Mortgage Insurance) a buyer needs to put down 20%. However, a buyer can put
down as little as 3.5% with an FHA loan and 5% with a conventional loan and still qualify for a loan. Consult a mortgage lender such as Prosperity Home Mortgage to see your options.
Myth #3. Buyer’s Agent works for free.
Even before the recent lawsuits, Buyer’s Agents didn’t work for free. Their commission was usually covered
by the Seller’s Agent who split their commission, called a co-op commission. In instances where the
seller did not cover the buyer’s agent commission, the buyer paid their buyer’s agent themselves. This practice continues today.
Myth #4. When multiple offers are received on a home sale, the highest offer is always the best.
There are so many factors that go into an offer: the type of loan, the downpayment amount, the closing
date, the Earnest Money, other contingencies and so much more. A full analysis is needed to truly see
which offer is best. A skilled Seller’s agent will help you navigate offers.
Myth #5. Everything is online now and a REALTOR® is not necessary.
A REALTOR® is a member of the National Association of REALTORS® and sworn to abide by a
Code of Ethics. They also have negotiation skills, access to off market homes, marketing skills,
experience with paperwork, a referral network, market condition knowledge, receive continuing
education….the list could go on and on!