Real Estate Myths and Misconceptions
An Interview with Candis Carmichael by Chris Rose, Loan Originator at VanDyk Mortgage
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Real Estate Myths and Misconceptions – Interview Transcript
Hi! I’m Chris Rose with VanDyk Mortgage and today I have with me Candis Carmichael from Berkshire Hathaway HomeServices Florida Properties Group. She’s a rock star real estate agent over there and today we’re going to be discussing some Real Estate Myths and misconceptions about the market.
Thank you for having me today Chris. I really appreciate being here.
Real Estate Myths #1: I don’t need a Realtor
So, I’m sure that a lot of the myths that a lot of the myths that you get come from when you’re working with buyers and they need to get pre-approved and all that for their mortgages, right?
And so one of the most common things I think I’ve heard from anybody is, “I don’t need a Realtor.” And I don’t know how often you hear that one but I hear that a lot from a lot of folks, both buyers and sellers, right?
And what I always tell people is you don’t need a real estate agent you don’t need a Realtor, but you should have one. It’s always good to have somebody who’s in your corner and who’s advocating for you. I know one of the biggest elements that folks don’t understand, is that your Realtor ends up being that person who is in your corner rooting for you the whole way.
But a lot of folks think that just automatically happens and what they don’t understand is in Florida, we are a transaction broker state which means that we have no responsibility to either party. As an agent you actually have a responsibility, initially, to the transaction itself. What folks don’t get is that until contract is signed on one side or the other, either to for us to exclusively list your property or to specifically represent you as a buyer, that there’s no fiduciary responsibility on any angle to the individual.
So that was definitely a surprise for a lot of the buyers, especially, that I’ve worked with. They say, “My goodness! I thought you were you know that you were here for us.” And I am here for you, but primarily my responsibility is to help to facilitate this transaction for you.
That’s a great Candis. It’s always good to have an advocate in your corner.
Absolutely! I agree a hundred percent. And I think that that’s probably one of the most critical elements for an agent. Beyond that, everyone thinks, “Oh, an agent is there to, you know, facilitate my transaction, they’re there to negotiate a contract, they’re here for whatever advisory capacity that I need.” But in reality, it’s also that your Realtor is there as your expert. They’re there to be able to guide you to know what you should be paying for something. They’re there to advise you on long term goals and making sure that you’ve achieved your long-term dreams.
This house that you’re looking at might be one of the biggest investments that you’ll ever make and it’s a very emotional investment, which makes it a very different experience. Everybody has a financial advisor which is great for your dollars and cents, right? But you don’t have a long-term goal advisor and that’s kind of what your Realtor acts as. They’re there to make sure that your investment in your home and in your dreams is going to achieve that long-term goal and aspiration that you have for your family.
Real Estate Myths #2: Zillow is the same as having a Realtor.
So another myth I’ve come across is that Zillow and a Realtor are the same thing.
I wish they were! I don’t discredit sites like Zillow or Realtor.com. I think those all serve a very, very strong purpose in the market to help to educate the buyers and educate sellers and give them kind of that jumping-off point when they have a conversation with their Realtor.
However, I don’t feel that they are a “replacement for.” They’re a great “supplement to,” but not a replacement. What your Realtor has access to is what’s called the MLS, which is the Multiple Listings Service. And what I have found is there are certain notes that your Realtor has access to that the Zillows and Realtor.coms of the world don’t.
I had a buyer once that I worked with and they found a house on Zillow. They absolutely fell in love with it, and they needed to move in 60 days and it was great. What they didn’t realize was in the small notes hidden in the MLS, that the property was actually getting ready to go into probate and that created a whole long drawn-out scenario that was going to lead to much more than the 60 days that they needed to close in for finding a property. And so it was a little heartbreaking for them to fall in love with a property that just wasn’t going to meet their deadline in terms of timing. So we had to go back to the drawing board and find them something else.
But there are a number of situations where Zillow doesn’t have the full picture that your Realtor will.
Real Estate Myths #3: As a buyer I’m going to pay more if I hire a Realtor.
Another myth buyers have is that they think that they have to pay you for you to represent them as a buyer.
That’s true…and it’s not. It ends up being something that if you have a buyer agreement, a buyer is committing that you’re going to, as their Realtor and as their representative, that you will make a certain percentage that’s been agreed to.
Now where that money comes from is not always from the buyers’ pocket. In reality, what ends up happening is that number is typically somewhere in the ballpark of what would be expected on the sellers who’s listing the home and they will have agreed to a certain percentage to pay the Realtors on both sides of the transaction. And so the bottom ultimately comes from the seller.
The only time a buyer pays a Realtor is if you have a difference in the percentage of commission between what’s being offered by the seller versus what has been agreed to in that agreement, or you’ll find that it’s also in a situation where, a lot of times, for example a for sale by owner where the sellers are not using an agent and they’re not honoring a commission at all at which point the buyer would then be responsible under their buyer broker agreement to pay the Realtor their commission out closing costs.
Either way it is not an out-of-pocket expense for the buyer and it’s not an out-of-pocket expense for a seller. It is always going to come out of those closing funds at the end of the deal and it’s counted against your bottom line. Because they always think, a buyer or a seller, they always feel that it’s gonna cost them more money if I hire a Realtor.
In reality, it’s not gonna cost either side, technically, more money to hire a Realtor because that money comes out of the closing funds and oftentimes we’ve been able to offset that expense by, “Okay, I was paying a Realtor X percentage, but I was able to get double that in the extra value on my home. My Realtor was able to negotiate a better price for me,” or “My Realtor was able to negotiate more concessions and add-ons and long-term things. They were able to get the seller to pay for a home warranty or they were able to get them to leave behind certain window treatments or fixtures.”
And so there were a number of elements that could be negotiated within that contract that they themselves may not have come to an agreement and ultimately there may have been money left on the table that would have instead been in somebody’s pocket had they hired a Realtor to negotiate that for them.
Real Estate Myths #4: I can sell my house better, faster and cheaper than a Realtor.
That makes perfect sense. Do you have any advice for sellers?
Absolutely I do! So sellers oftentimes think that selling homes themselves is going to be the best way to go. It’s going to be the most cost effective and the fastest way because everybody’s used to a society now where you have that direct to consumer interaction in sales. what they don’t realize is a few points that end up being big pitfalls for them.
The first one is that they often times will get lowball offers because everybody figures similar to eBay or any of the other outlets out there that you’re going direct to the seller so you should be able to negotiate and get a discount. You should be able to pay a lot less because they’re doing it themselves and there’s no additional costs involved. In reality, there are always additional costs involved between your titles and your closings and pretty much everything else that goes into it including your Realtors.
The other thing they fail to realize is that there’s always a lack of promotion. I know everybody thinks everything’s on Zillow. It takes a lot of creative marketing to sell a house fast. there’s a lot of resources and connections that Realtors and other agents have to each other. There are often times that, when it’s done right, there can be offers coming in with the house only being on the market for two days because it’s already been pre-pitched in a lot of “Realtor only” environments.
The other one that ends up being a big pitfall is inaccurate pricing. And when I say inaccurate pricing I’m not gonna say that “Oh this person lists their house for too much money.” That’s one side of it, but it’s also possible to undervalue your home and then you end up losing out on a higher value. You should be able to get top dollar for your home and that’s what your Realtor is really there to do. They use their industry knowledge, they have access to a number of resources that can provide that analytical information to make sure that you have right priced your home for the existing market.
Real Estate Myths #5: I have to renovate the house completely to compete on the market.
What about renovations? What are your thoughts?
I love renovations! Personally, I think it’s a great opportunity to customize your home. But I only think that they’re worth doing when it’s your home. In reality, a lot of times you’ll find people that will put in a $40,000 pool right before they’re about to sell and they don’t realize they’re not getting $40,000 added to their sales price! They might get an extra $20,000, it just depends on the market.
So in reality I’m a huge advocate of renovations! Do them when you move in, make the house your own, and customize it. But ultimately don’t make renovations right before you sell it just because you think it’s going to add value. What it may do is it may shorten your turnover and make it that your house sells faster. It does not guarantee that you’ll be getting more money necessarily.
So you have to do is weigh what’s more important. Do you need to sell the house right now and get out as quickly as possible? Or do you need to get the most money out of it?
That’s a great point, Candis. And sometimes you can actually roll in the cost of renovations into a specialty loan. That’s an excellent point!
Yeah, a lot of folks don’t know that.
Well, Candis, I really appreciate you being with me today and chat through some of these Real Estate Myths.
Well, thank you very much for having me Chris to discuss some Real Estate Myths, and I’m always happy to help anytime anybody’s got a question. If you’ve got any buyers as they’re going through your approval processes, if they have any questions that pop-up along the way, I’m more than happy to help. You can always direct them to my website. It’s CandisCarmichael.com or they can give me a call at 727-888-3292.