Update: We Dispel These 6 Common Myths About Today’s Real Estate Industry 

This article is a follow-up to the Top 5 Tips For Finding The Right Listing Agent blog.

These days, the growing attraction to a career in Florida real estate isn’t any mystery. After all, the market is white hot, buyers are everywhere, prices are skyrocketing and houses are selling in two days instead of two months. Who wouldn’t want to capitalize on those kinds of market conditions? 

Myth #1: “Real Estate Agents make a lot of money.” 

False. The average real estate agent has less than two years of experience and makes around $40,000 before expenses and taxes. Source: National Association of REALTORS®. There are common sense reasons to select a listing agent with experience and respectable sales volume: Stress-free results and a smooth real estate experience. 

A nice couple chatted us up about the real estate market the other day. “My neighbor listed her home with a REALTOR for $450,000 at a 5% commission. The house sold in a day. $22,500 in commission. Not bad for a day’s work.” 

It’s hard to be humble when you’re busy biting your tongue. 

Myth #2: Houses are selling so fast, you don’t even need a REALTOR. 

False. Houses are selling so fast, you need a REALTOR now more than ever. 

With misconceptions of these proportions, it’s easy to see why sellers consider bypassing full service brokerage and opting for a small or flat fee, MLS-only solution. It’ll be under contract in a day, right? 

Maybe so. But getting a house under contract in a day isn’t a $22,500 haul for a day’s work. There’s still the matter of These 65 Things that must happen before a sale can close. And now, they’re all crammed into an even smaller window. It’s not even $22,500 when both brokers and a cooperating agent share a commission split. 

Not only do we have to jam 20 pounds of stuff in the proverbial 10 pound bag, today’s market has created a whole new can of worms: Multiple offers that have to be carefully reviewed and presented to the seller. Inspections revealing items that can’t be insured, such as an old roof or a disqualified electrical panel. Financing contingencies and appraisal gaps. Probate. Pandemic logistics. Open permits for contractors that went out of business. The list goes on and on. 

Fixing some of these issues can present even further challenges, given today’s labor and supply chain issues. So it’s back to the table to renegotiate contract terms. Or worse, it’s back on the market. 

Ask yourself: Would you feel you were getting a better value out of a full-service brokerage if it took four or five months to sell your home? There is no substitute for the experience it takes to get the job done, be it a day, week or month. 

Myth #3: “My neighbor got $650,000 for their home. I should be able to get $700,000 for mine.” 

Maybe. But without doing math homework, there could be serious under or overpricing. The Comparative Market Analysis (CMA) is a thorough, comprehensive document compiled from historic sales data, market conditions and facts on the ground. What it lacks is emotion and bias. 

The beauty of the CMA is that it takes into account that no two homes are identical. Regardless of whether the differences are subtle or obvious, the CMA gives weights to features and amenities, making the elusive “apples to apples” comparison possible. 

But at the end of the day, a home isn’t worth what anyone says it’s worth. It’s worth exactly what some one is willing to pay for it. 

Myth #4: “Zillow says my house is worth $755,000!” 

Inherently False. Zillow has a bad habit of overstating home values. Zillow’s “Zestimate” is nothing more than a proprietary algorithm that crunches selected data and comes up with an inflated price. Zillow is a web platform that wants your clicks. The only time their Zestimate is ever right is just after it is sold. Even a broken clock is right twice a day. 

Getting back to the CMA, Zillow’s algorithm doesn’t walk through a home when it comes up with a price. It doesn’t see the outdoor kitchen and new high-end appliances. It doesn’t see the ornate crown molding and lustrous granite countertops in the upgraded gourmet kitchen. Nor the expensive Italian tile laid on a diagonal. Same for the complete California Closet treatments in every bedroom. That new Surround Sound home theater system sure sounds awesome. Good thing there’s a whole home backup generator to keep it all going. All these things add up. As real estate professionals, we preview the property before we price it. The Zillow algorithm doesn’t. 

It’s not hard to figure out why Zillow made a profit just once in their 14 years of business. Nothing quite like real estate guidance from a company that’s lost over $1.65 billion in the real estate market since 2009. 

Myth #5: “I have to get $480,000 for my home or I won’t sell.” 

Conundrum. Back to Myth #3. A home is worth what a buyer is willing to pay for it. Regardless of the reason for drawing a line in the sand, such a statement conditions a sale on a value the home may or may not have. The market has no regard for the financial goals or obligations of the seller. Pricing a home to meet a price target is often setting up for failure. Some real estate professionals may even hesitate to take a listing where there might be unrealistic expectations. 

Myth #6: “These prices are crazy. I’m going to hold off until the market stabilizes.” 

While this common sentiment is the buyer talking, it’s important to understand the buyer mindset when listing your home. What buyer’s don’t realize, we counsel, is that prices are not going to suddenly bottom out overnight. And with this most recent spate of interest rate adjustments, mortgage home buyers are buying less and less home for the same monthly payment with each increase. Cash will still be king. The Fed has made it very clear that this is only the beginning. Could we see 70’s era interest rates? It remains to be seen. 

Myth #7: “The real estate market is going to crash.” 

TBD. It was once said, “Forecasting is difficult, especially with regard to the future.” With that in mind, we still have a 50/50 shot at the correct answer. 

It’s easy to associate the current real estate market frenzy with the unfortunate circumstances in the early 2000’s, where loose lending policies were met with over speculation. The big difference between then and now is simply ‘skin in the game.’ With little to literally no money down, homebuyers, speculators and investors were cobbling together portfolios based on little to no equity. It was easy to walk away when the wheels fell off. And walk away, they did, leaving billions of dollars in ghost houses all over the country. 

Today, roughly half of all home purchases are cash and the remaining home loans are secured with significant amounts of cash down payments, thanks to tighter lending policies. With interest rates now going up (one more point as of this writing) listing prices - and eventually home values - will stabilize or even trend down. Inventory will increase. So while a significant downturn in the market is always theoretically possible, the higher equity level in the real estate market will likely be the stabilizing factor. 

Speaking of stabilizing factors, deciding on the right REALTOR to list and sell your home is a question of who has the experience and local market knowledge to deliver a smooth, stress-free real estate experience. As experienced professionals serving the Venice, Nokomis, Englewood and Osprey areas since 1997, we bring you this proven level of stability in a full-service brokerage environment. 

Browse our website for more information about preparing to list and sell your home, including our FREE downloadable Seller’s Guide full of tips, suggestions and more. Call, email or text your comments and feedback. We’re happy to hear from you. 

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