Real estate myths BUSTED in 2024

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In the wake of Sitzer-Burnett, the real estate industry has been mischaracterized and portrayed in the numerous litigation cases that came about, along with the mainstream media and by “consumer interest groups.” 

We took a beating being called a “cartel,” accused of steering consumers to homes based on co-op compensation that was offered, and images of big bad real estate agents huddling up or gathering in a smoke-filled room with brokers as pit bosses directing the show telling us what we could and couldn’t do were created by the negative rhetoric.

We have been accused of “ripping off homebuyers,” being non-negotiable about the compensation we charge, and the list goes on. The public has long had misconceptions about our profession, and they were blown out of proportion due to all of this. 

As a result of the practice changes that have taken effect and new ways of interacting with the consumer, it is time to bust these myths for good.

Myth 1: Buyers no longer need agents to help them find a home

Debatable. As a result of the class action litigation, there have been some assertions that buyers don’t need agents to find their homes. The internet tells them everything they need. While buyers can go to any number of websites to find homes, they have zero context about what they are looking at. 

That is why buyers need an agent’s inside advice and expertise when it comes to where to live. The internet won’t tell you:

• what streets flooded during the last big storm (or hurricane)
• why homes on this street or neighborhood sell for more vs. that one block over
• when the traffic bottlenecks at an odd hour, you might not expect
• that the smell from the trash dump wafts over when the wind blows. 

Real estate is extremely nuanced, and the internet cannot give you all of those nuances. An agent is an advisor and can help identify things to consider when evaluating areas and properties to buy.

They can help “big picture” things and narrow down the areas that would best fit your budget and other criteria vs. looking at a big map unsure of where to start. 

Myth 2: Agents do not work enough hours to justify the commissions

Wrong! We have long been accused of this on multiple fronts. Between the real estate reality shows coupled with the litigation and the media spin on all of this, the public thought before, but even more so post Sitzer-Burnett, that we did not put in the work on a sale or a listing to earn our keep. 

I’ve said it before, but it bears repeating — and louder for all those armchair quarterbacks in the background who have no idea about how we work but are glad to comment with a false sense of authority when given a chance. We are the only profession that essentially fronts all of our time and expenses upfront on behalf of the consumer, with zero guarantees as to whether we are going to get compensated.

Just because you see the conclusion (i.e., a closed sale) doesn’t mean you know how long it took to get there, nor all of the work involved. Many closed sales involved months and possibly years (especially in our current market) of nurturing a buyer, for example. 

Many buyers wanted to buy when the rates were extremely low but have been on the sidelines for the last several years after getting outpriced on homes, and then interest rates shot up like a rocket. That, coupled with inflation and rising insurance costs in some markets, made buying much more difficult, so they stayed put or continued renting if they were already doing so after selling a home.

Many buyers remain in a holding pattern due to all previously mentioned coupled with waiting until after the election. Again, many agents are trying to nurture these buyers to the starting line in the house-hunting marathon. 

What the public never sees is how many offers an agent may have written with a buyer that didn’t go through due to the market dynamics of the last few years, or the condition turned out to be more than expected, etc. Some agents literally killed themselves running all over town diligently showing homes to a buyer, gathering all sorts of information, and writing multiple offers, only for the buyer to ghost them. 

The agent has zero to show for months or years of legwork. Time goes on, and that buyer suddenly sees a property that interests them, and they go to the listing agent or click an online website to get connected to an agent, and they buy the home so therefore, they think no one really did anything. They forget all the blood, sweat, and tears their previous agent poured into their search. 

On the listing side, it can be similar. Sellers forget and the public doesn’t realize the incubation involved from initial contact to going on the market. There is often a lot of preparation required, much of it as a result of advice provided by the agent as well as assistance in deploying their contractors and other vendors to prep the home for sale.

The legwork is done on the back end which can effect a faster sale on the front end, but that often creates the perception that very little was done to sell the house. 

When an agent does get a buyer or seller under contract, a plethora of things transpire from offer to closing. The continual communication and coordination multiple times a day can be extremely time-consuming.

Some of this involves dealing with transactional items, other parts involve problem-solving and much of it involves serving as a sounding board/emotional support system while going through the process. Buying and selling can often be an emotional process, particularly as life-changing events trigger a real estate need. 

Myth 3: Agents have minimal expenses

Ah no, that is not the case. The media and the consumer do not realize that the agent has out-of-pocket expenses, not to mention all of the time that they have not typically billed the consumer starting from day one. This has long seemed to be ok, despite no other profession freely giving of their time, expertise, and sheer labor with a guarantee of being paid. 

Agents typically have a monthly fee they pay to their brokerage and are responsible for their board dues, which cover local, state, and National Association of Realtors (NAR) dues if NAR membership is required by their local board) as well as:

• fees to maintain and obtain designations
• continuing education for license renewals
• ongoing education
• training
• marketing and branding
• content creation, websites and online presence
• preparation of materials for meeting with consumers, which involves printing, copying, mailings
• customer relationship management databases
• digital and print farming
• lead generation
• gas and expenses with respect to vehicle maintenance
• professional photos, 3D floorplans, drone and video footage for their listings
• money spent marketing properties, which can involve any number of things from online ads to mailings, printed flyers and brochures, specialty signage, potentially staging and the list goes on, etc. 

In the current climate, real estate brokerages are tasked with keeping the lights on, paying staff to support the brokerage and agents with essential services and the like. There isn’t disposal income to cover expenses on behalf of agents. 

Myth 4: Agents do not deserve common courtesy

Well, the consumer may not think of it in those terms, but that has been typical of the behavior they exude. There is often little regard for an agent’s time or expertise, and consumers who may have exuded signs of being committed or engaged with an agent suddenly disappear with no explanation.

I’m talking about agents who worked very hard with these prospects, and through no fault of their own, be it the market, inventory or lack thereof, the prospect’s true intentions were disguised, and the consumer has disappeared. Agents want and need a response from the consumer. 

Even if the answer is we aren’t sure we want to buy or need to put things on pause or are undecided or want to look into other areas, consumers need to respond and advise agents as to their status. We understand situations can and often do change for a variety of reasons that can affect your ability to buy. If you want to put a stop to endless follow-up communications or to adjust to more meaningful dialogue given your situation, don’t leave the agent hanging. 

Be upfront with your potential drawbacks. If plans change, be direct in saying so. And if you are changing agents simply because someone you know is referring you to another agent, despite your working with one agent, even if you were happy with that agent, please let them know!

Myth 5: All agents are the same

Wrong! The lawsuits and the media may have created that impression, but that has never been the case. While some of the processes and tasks involved in buying and selling are the same, they are not prepared for or executed (or lack thereof) in the same way by all agents. 

Every agent brings a different approach and has a different style of organization, communication and presentation. There is no one right way, and certain personality types may mesh better with different agents because of this. If you are a bottom-line person, you may want someone who is the same. If you are moved more by emotions vs. facts and enjoy details, you may appreciate an agent who is more flowery in their presentation vs. direct and no-frills. 

Myth 6: Agents make too much money

The public has long thought that we do relative to the amount of “perceived” work or lack of it that they think we don’t do. There are various sources that cite an “average” salary; however, it is difficult to determine an exact number in a profession where business is self-generated, and the agent is not paid a salary.

In addition, salary amounts vary by geographic area and price points, so you cannot really compare apples to apples. Agents work with a variety of clientele, and price ranges may vary.

It is more difficult than the public thinks to limit yourself to only buyers in a certain price range, etc. Otherwise, you could miss future referral opportunities from the clients you served as well as those clients moving up, downsizing, right-sizing, etc. 

Reality shows have certainly not helped this cause with agents lounging around or in bed negotiating a deal or while watching a movie or over drinks, no wonder. The real world is not like that.

The shows never showcase the lead-up to when/how the client was ready to work with the agent — was it months or years? How many offers were made that didn’t go through? What about offers on listings that never came together for various reasons? Transactions falling apart due to repairs and/or an appraisal? A show that’s less than an hour due to commercials couldn’t possibly showcase these things, not to mention the agent getting ghosted or terminated from a listing. 

The ebb and flow of the real estate business also creates income challenges. Ask any agent who has been working over the last three years. It has been a market of rising interest rates, inflation, insurance and indifference.

Buyers have not been motivated to buy, understandably, due to all of these reasons, along with seller expectations that did not adjust to more realistic pricing after 2022. This left frustrated sellers and buyers, many of whom pulled their properties off the market and buyers who decided to wait all out, no matter what.

After an agent receives their split from their brokerage minus additional fees, sets aside money for taxes and social security, and allocates what little is left towards savings and marketing/reinvesting into their business, there is very income left for necessities, let alone expenses. 

No one ever sees the struggle before the closing, and just about every transaction has one or multiple challenges associated with it for varying reasons. When you are dealing with people, people are not perfect and as such bring their baggage into a transaction that the agents involved have to sort through and deal with.

Sometimes, it is personal baggage, and other times, it is baggage dealing with the house (serious repair/condition issues) or a combination of both. Regardless, it is often the agent’s fault as they work through it when the outcome is not something the buyer or seller or both are happy with. 

The dark reality is there have been many agents struggling to make ends meet over the last few years, and some have had to pick up another job or a side gig or two to help cover their expenses. Health insurance is not a given, and this may have been an expense that some agents chose to forgo and take their chances.

So, public, that agent you have run around endlessly with and told them months after working in good faith with you that “you are going in a different direction?” Perhaps you should consider what that really means, as there is usually no bill you are being asked for to cover their time and gas. 

Myth 7: Representation should impact commissions earned

The Consumer Federation of America has alluded to this numerous times in various pieces they have written. From alleging that agents functioning as transaction brokers in the State of Florida should get paid less than agents who function as single agents and other unfounded assumptions, this kind of false narrative has created unnecessary confusion for the public.

Agents don’t write the rules of agency in the state(s) they practice in, and they are limited to the choices offered and what practically works best with the realities of their market, without compromising representation to the consumer.

No matter the kind of representation, agents have a duty to deal honestly and fairly, disclose all facts materially known that could affect the value of the property and are not readily observable, account for all funds, and keep any information the consumer wants to confidential as well as any other required duties. 

Strong agents work very hard on behalf of the buyers and sellers they represent. Starting my real estate career in 2001, I can’t think of a situation whereby a buyer or seller’s interest was compromised because I was functioning as a transaction broker, nor have I observed it in the transactions I have been involved with, no matter what side of the aisle I was on.

If a consumer was more comfortable with a single agency relationship, that could be accomplished, so long as they understood that we may have to transition to a transaction brokerage relationship if an agent from the same brokerage wanted to show the property or ended up writing an offer. 

Representation means always doing the right things for the client, and given all that goes on in a transaction; there are a myriad of details and pieces of information to vet and verify and to refer the consumer to appropriate experts to help them have a clear understanding of all that is involved with the property they are buying.

Agents are always going out of their way, taking those extra steps, dropping everything to show properties when asked by the consumer, even if they have rearranged things on their personal schedules, taking calls after hours, nights, weekends, on “vacations” and family events, because it is important to their client. The client’s schedule becomes our schedule.

They don’t say, “Well, I’m only a transaction broker; therefore, I’m not going to do x, y and z.” When an agent works with buyers and sellers, they are “all in” and there are many things that encompass representation. A lot of it is serving as an emotional sounding board as the consumer navigates the single largest transaction of their life, in addition to all the procedural, contractual and service-oriented things they do for their buyer or seller. 

Myth 8: Agents should be paid a flat fee

These kinds of statements have been bandied about during the Sitzer-Burnett case and post-settlement. First off, no one has the right to dictate how much real estate agents should get paid except what is agreed upon between the agent and their client. Every transaction is different and has a different set of components between the buyer, seller, and property, along with varying complexities, nuances and challenges. 

Agents can structure compensation that works best for themselves and the consumer they are representing and the kind of transaction they are involved in. In some situations, a flat fee may make sense vs. a percentage, or a retainer charged upfront, but in real estate, every scenario is different, and no two are ever the same. Nothing is ever “easy” or “simple,” involving a couple of hours of work.

While we can anticipate, plan, and prepare, we never know precisely how much time any transaction is going to involve until we get into it. There are always surprises, twists and turns along the way, no matter how well we may anticipate, prepare, and plan. 

There is typically a lot of time spent before the consumer is ready to transact — it may be months or years of incubating a buyer or seller — they may have thought they were ready to buy or sell and may have even attempted it, but then did not have to regroup and start over. By then market dynamics may have changed which affects what they can do and what they are interested in, etc. 

Final thoughts

We have never been set up as a “billable hour” profession and have long been paid as a percentage of the asset (i.e. the piece of real estate being sold). At this juncture, our industry has not been set up with the tools to transition to easily be able to bill for the time spent on each task, process, offer preparation, negotiation, follow-up, travel time to/from properties, etc.

If we did, that could be quite costly and may exceed some commissions based on a percentage vs. hourly rate and the nature of the transaction involved. The amount of communication alone billed in six-minute increments, for example, could be quite pricey with clients. 

This could also lead to agents charging retainer fees upfront, just like attorneys do. It may also lead to clients not electing to communicate as much with us, which is a bad thing and could lead to a lot of issues in a transaction.

While agents have the ability to structure compensation as they see fit, the real estate process is never a finite process, and there are lots of unknowns. Especially given market challenges whereby agents have worked hard on many potential buyers’ behalf, but they have not transacted due to high interest rates and affordability issues.

Nevertheless, those who love to be armchair critics of our profession should not have a say with regard to how much we should be compensated, nor the method involved. 

Myths involving real estate agents are varied and full of misperceptions, misunderstandings and misinformation. As a result of the class action litigation, settlement and practice changes, it is more important than ever to tout the truth and legitimacy of what is involved with what we really do and what we are worth.