Buying or selling a house soon? What you don't know about the industry could cost you. Your real estate agent won't tell you, but we will.
Unless you have a lot of free time, or don’t care about getting the best deal, real estate agents are a necessary part of buying or selling a house. They know the industry in and out and make the task a lot easier for you.
But, as with any special service or skill you pay for, what you don’t know can cost you.
In the video below, Money Talks News founder Stacy Johnson shares real estate tricks of the trade. If you’re planning to buy or sell a house, he’ll show you what you’re in for and what you should know about the industry. Then read on for more details.
1. Using creative wording
Real estate agents word their advertisements in a way to cover up flaws and get you to view a house, possibly wasting your time. Today Money has a list of common terms and what may be their hidden meaning, including:
1. Cozy (too small)
2. Charming (too old)
3. Original condition (appliances are 50 years old)
4. Needs TLC (it’s a dump)
5. Conveniently located (noisy)
6. Desirable neighborhood (this little house has been way overpriced because the neighborhood has some snob appeal)
7. Efficient kitchen (too small to fit two adults)
2. Promising more than you can get
Some overly eager agents might be willing to stretch the truth a bit to get you into a contract – like saying your house will fetch more than it actually will. Then, once you sign with the agent and the house doesn’t sell, the agent will blame the market.
Do your own research before you sign up. Compare recently sold and for-sale homes in your neighborhood to get an idea of pricing. If an agent says you can make $20,000 or $30,000 more than the average, he may be stretching the truth. Ask him to explain how he arrived at the higher price.
3. Making referrals
The referrals you get from your agent might not be the best deal available to you. For example, agents may refer you to a mortgage broker they know, or connect you with a home inspector who may not be as objective and thorough as one you find yourself.
Consider any referrals your real estate agent provides, but look for professionals on your own to make sure you’re getting the best service and price.
4. Not disclosing commission details
According to MSN Real Estate, the average nationwide commission is 5.1 percent, which you probably know is split between the seller’s and buyer’s agents. What you may not realize is that 5.1 percent is just an average. Your real estate agent probably won’t tell you that the commission is negotiable.
Bring it up in your discussions. While you’re at it, everything else in your contract is negotiable too, so haggle a bit to get the best terms.
5. Confusing loyalties
Real estate agents are loyal to whomever they’re working for. If you meet a nice agent at an open house and strike up a conversation, keep in mind that the real estate agent is working for the seller, not you.
Don’t tell the seller’s agent anything you wouldn’t tell the seller directly — such as how much you plan to spend, how soon you need to move, or what you’re willing to overlook in repairs.
6. Stretching marketing truths
Some agents inflate their marketing plan, making it seem that your house will get a lot more exposure than it actually will. Then, once you give her the listing, you rarely hear from her and you can’t find much in advertisements or online.
Before you sign up, ask to see the marketing plan in detail, including which websites will be used and how much time she plans to spend. If you don’t think your house is being marketed enough, say so.
7. Not providing full disclosure
Bankrate says at least 32 states require a seller’s disclosure, but what the seller and the real estate agent must disclose can vary depending on the state. For example, some states require disclosure of common natural disasters in the area like earthquakes or mudslides. Others, like Texas and South Carolina, require disclosure of noise pollution.
But what if you’re not getting the full picture?
Before buying a house, research the area and see if any natural disasters occurred that could have damaged the house, and ask a home inspector to look out for warning signs. For other problems, visit at different times of the day to get a feel for the place.