mortgages buyer agent – Realtor Myths And Misconceptions
Realtor Myths And Misconceptions
Hiring a Realtor is the reason a house sells or doesn’t sell. FALSE, A Realtor doesn’t sell your house, your property sells itself. When is the last time someone said to themselves I’m going to purchase a property because so and so has it listed. If that were the case buyers would be searching by listing agent instead of the property’s features, location and pricing.
Have you ever seen anybody try to market a property for the mere fact it’s listed with a Realtor. No of course not, because the fact that it’s listed with a Realtor brings no added value to the property, as is the case with high quality windows or a reputable builder having built the house. Completely the opposite; having a Realtor involved in the transaction does nothing more than artificially inflate the sales price, but contributes nothing of lasting value.
Realtors do most of the work, that’s why they get paid the most. FALSE/TRUE, Realtors do the least amount of work, but stand to make the most. This statement is especially true for listing agents. Out of all the people involved in the transaction (seller, buyer, inspector, mortgage broker, title insurance provider, appraiser, attorney and agents) the listing agent does the least amount of work, yet receives the greatest piece of the pie. This statement might not have been true 10 or 15 years ago, but the Internet has made life much easier for the average agent. The Internet might also be their demise as well.
Realtors are professional Marketers and can Market a house better than the property owner. FALSE. This couldn’t be more untrue. Realtors are NOT professional marketers, if they were they would have a Master’s degree in marketing and likely own their own marketing firm or working for a well established one that offers a steady pay check along with a hefty benefit package, something their current occupation doesn’t offer.
The biggest marketing tool they have as their disposal is the Multiple Listing Service otherwise known as the MLS. Why do you think the National Association of Realtors (NAR) spent millions in legal fees trying to keep limited service brokerage firms off the MLS? Because they realized once everybody had affordable access to the MLS, they would be forced to compete with brokers that refuse to tow the line when it pertains to the type of services the
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y want to offer and the type of commissions they want to charge, essentially causing their monopoly to splinter due to a lack of cooperation and submissiveness that is required to keep such a business model intact.
Using a Realtor to coordinate the closing makes for a smoother transaction. FALSE The title company coordinates the closing, not the agent. The agents only job when it pertains to coordinating the closing it to ensure the title company they use is good at what they do; to make sure the closing takes place in a timely manner assuming everything pans out with the financing.
Realtors will not show FSBO listings. FALSE I never had a Realtor say to me after finding out that the property I had listed on the MLS, was actually being sold by owner that they didn’t want to show it or make an offer on it because it was listed by owner. Now I have had agents say that the commission they’re offering is to low, but I never heard or seen an agent bulk at showing a property that was offering a 3.0 percent or higher commission to the buyers’ agent at least not in my area. After all what is the agent going to say to their buyers if they want to look at a house that just happens to be listed by owner? I refuse because it’s listed by owner; go find another agent to show it to you. I highly doubt it.
Open Houses help you sell your home. FALSE There are always exceptions to the rule, but for the most part, Realtors hold open houses to attract buyers and not as a marketing tool to sell your house even though they try to sell it as such to potential clients during the interview process. That is why you see a lot of new agents at open houses and not the actual listing agents. The new agent gets the opportunity to obtain buyers, while at the same time the listing agent keeps their sellers’ happy by carry through with their promise. I never once sold a house because of an open house, but have picked up plenty of buyers for other properties in the process.
Quick side note about holding open houses, not only are they a complete waste of time for the most part, but there dangerous as well. Many agents have ended up robbed or even killed while holding open houses. At least when you’re setting up a showing you can pre-screen the person over the phone before letting the person walk thru the door, something not possible with open houses.
Brokers protect their clients from liability. FALSE Brokers protect themselves and their agents by purchasing Errors and Omissions Insurance. You are responsible for protecting yourself against any claims of misrepresentation that might be brought forth by the buyer. That it is why it is absolutely essential that a seller hire a competent real estate attorney to help ensure that being sued for misrepresentation is minimized. Something a Realtor does not have the ability or legal authority to do. That is why in some states it’s not only recommended that an attorney be hired to review the disclosures and sales contract, but mandated by state law.
Realtors are highly educated when it pertains to the home buying and selling process. FALSE In most states all that is required to get a residential sales license is a high school diploma or an equivalent, 40 hours of class time along with a cumulative test and several hours of continuing education to keep your license in good standing. If you can learn what forms to use when and for what, you have what it takes to be a Realtor. Your average person could read a few good articles on the subject and be just as informed on the subject matter as your typical Realtor is or will ever be. Just with like anything else there are exceptions to the rule, but for the most part this holds true.
Homes listed with Realtors, sell for more FALSE This is a falsehood that the National Association of Realtors loves to try to sucker the consumer into believing by referring to a study they conducted (keep in mind these are the same people that got on national television and swore up and down tha
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t home values would continue to rise, regardless of the fact that the average persons income wasn’t keeping pace.) Unfortunately for them; every independent study conducted has shown otherwise. Like the recent study conducted by Northwestern Dept. of Economics that shows For Sale by Owners (FSBO’s) obtained a sale prices no lower than the sale prices obtained by owners using a Realtor. This is BEFORE subtracting commissions.
The bottom line is this; market forces (supply and demand) dictates what someone is going to pay for a property, not whose yard sign is planted in the front yard.
By: jtibble
Article Directory: http://www.articledashboard.com
Justin Tibble is the Founder and CEO of Reozom.com an ad supported online marketing place for For Sale by Owners.
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High foreclosure rates across the country as well as a faltering financial sector has dictated government involvement in the mortgage industry. This involvement has facilitated growth in both residential and commercial real estate such as Minnesota real estate and has created more favourable and secure lending situations for financial institutions. All this has been done in order to stimulate economic growth in the United States.
The growth of the federal government’s involvement since the onset of the mortgage crisis has created a situation in which the government has become a substantial pillar to the survival of the mortgage industry. Government has taken on much of the risk formerly assumed by lenders and has essentially become the mortgage market. With the power to set the terms that allow mortgages to be approved and their ability to own a proprietary share of many companies this government involvement now has the taxpayer shouldering a substantial part of the risk associated with lending in an uncertain economy.
The Federal National Mortgage Association and the Federal Home Mortgage Corporation have operated as government sponsored enterprises. These institutions are better known publicly as Fannie Mae and Freddie Mac. Although both institutions report to their shareholders they are protected financially and supported by the federal government. These safeguards include a line of credit through the U.S. Treasury, an exemption from state and local income taxes as well as an exemption from the Securities Exchange Commission (SEC) oversight. Their history has shaped the mortgage industry since the 1930′s and continued support by the federal government is essential to restabilising the economy and the housing markets across the U.S..
Fannie Mae was created in 1938 as President Franklin Roosevelt’s New Deal. The creation of the Federal National Mortgage Association was to ensure that mortgages were made more available to lower income families and to facilitate liquidity in the mortgage market. In 1968 the federal government converted Fannie Mae to a shareholder owned corporation in order to remove its transaction from the federal balance sheet. In order to create a competing the federal government formed the Federal Home Loan Mortgage Association in 1970. The idea was that competition would create a more robust secondary mortgage market.
The way Freddie Mac and Fannie Mae work is that they buy loans from approved mortgage sellers. These loans are traded either for cash or mortgage backed securities which guarantee payment of principal and interest. Mortgage sellers in turn can either sell or keep the securities. These companies also bundle mortgage backed securities from their own portfolios to investors in the secondary mortgage market. In order for Fannie Mae and Freddie Mac to guarantee their mortgage backed securities they set the lending terms and guidelines that determine which loan applications can be accepted for purchase. To simplify the role of Freddie Mac and Fannie Mae is to say that they provide financial institutions with the money to provide new loans.
The 2007 sub-prime mortgage crisis found a lot of low income borrowers some with poor credit were unable to pay their mortgages. Almost 80% of mortgages issued to the sub-prime borrowers were adjustable rate mortgages (ARM). With home prices peaking in 2006 home prices began to decline. Values continue to decline as these high risk borrowers could no longer afford their homes due to steep increases in the payments of ARM mortgages.
This caused an explosion of foreclosures across the country. Again the situation was compounded by problems with the Auto industry and the failure of economic icons such as Bearr Stearns, The Goldman Sachs Group, Citigroup Inc. and even Freddie Mac and Fannie Mae. Home prices accelerated their descent as foreclosures increases, jobs were lost and the countries financial situation teetered on the brink of disaster.
As a result lenders began to employ much stricter standards for loans. A shell shocked lending industry was not equipped to respond to financial failures of this level and they essentially shut off the flow of money available for loans. The federal government was forced to step in to bolster confidence. The Treasury Department and Federal Reserve were given the authority to grant access to low-interest loans and removed the prohibition on the Federal Reserve to purchase stock in Government Sponsored Enterprises. Despite these efforts the economy continued on its downward trajectory.
Currently government involvement has extended programs to reinvigorate the mortgage industry. There are no longer institutions offering mortgage terms that do not require a down payment. But federal programs are in place that assist with down payments for lower income families as low as 3% of the home’s value. Government backed mortgage insurance has made this possible by insuring that lenders are protected in the event of default on loans with limited equity in the home.
The federally backed Hope For Homeowners program offers a glimmer of hope for struggling homeowners hoping to avoid foreclosure. The program allows homeowners to refinance their home at more favourable terms with a fixed rate mortgage backed by the Federal Housing Administration (FHA). Lenders have to agree however to take a substantial loss on their original loan but at least are guaranteed a partial pay off and avoid costly foreclosure proceedings.
The federal government has also extend tax credits to home buyers in order to stimulate growth. The Worker, Homeownership and Business Assistance Act of 2009 has extended a valuable income tax credit. This incentive has stimulated the housing industry and brought some hope back to struggling home sellers languishing in struggling markets.
The Home Affordable Refinance Program is designed provide more affordable loans to existing mortgage holders in good standing. By providing Freddie Mac and Fannie Mae guaranteed mortgages borrowers can refinance at a more affordable monthly payment. It is hoped that this program will save 3 to 4 million families from avoidable foreclosure.
Federal programs now operate as the only means to provide a stable loan marketplace. Without federal involvement corporate and personal finances would be crippled by the inability to obtain affordable, secure and stable financing. Programs such as Asset Guarantee Program, the Home Affordable Modification Program and the Public-Private Investment Program have bridged a period filled with financial uncertainty and have allowed provided much needed support to an industry crippled by its own practices.
The growth of the federal government’s involvement since the onset of the mortgage crisis has created a situation where the government no longer just supports the mortgage market but rather has become a substantial pillar to the survival of the mortgage industry. The government has taken on much of the risk that was previously assumed by lenders and has essentially become the mortgage market. They have the power to set the terms that allow mortgages to be approved and they own a proprietary share of many companies that are major players in the mortgage industry. This government involvement now has the taxpayer shouldering a substantial part of the risk associated with lending in an uncertain economy.
Someday the federal government will be able to limit its involvement in the mortgage industry. But for the time being their support is necessary to reinvigorate the economy and stimulate growth in both residential and commercial real estate sector. You can know more at www.agentsranking.com
About The Author
Chuck Harris is the founder of Agents Ranking; a Minnesota company that helps home buyers and sellers throughout Minnesota connect with the best real estate agent for their particular needs. Agents Ranking provides a unique consulting service free of charge to anyone who wants the best Minnesota REALTOR® possible. You can know more at www.agentsranking.com
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