There are plenty of assumptions about real estate agents, and it’s understandable where some of them come from. Most people only see portions of what an agent does during a transaction. So let’s look at seven common myths together, clear up what’s happening behind the scenes, and give you a better idea of what you should expect from the professional you choose to represent you.
MYTH #1 – EVERY LICENSED REAL ESTATE AGENT IS A REALTOR®
They’re not quite the same thing. A real estate agent has met the licensing requirements in a particular state. REALTOR® identifies a real estate professional who is also a member of the National Association of REALTORS® and subscribes to its Code of Ethics.
There can also be differences in the property information available to real estate professionals and consumers. Depending on local MLS rules and participation, authorized MLS users may have access to detailed listing information that isn’t displayed on public websites. Much of the information is distributed publicly, but not necessarily every field or detail. In some markets, delayed-marketing listings may even be visible to MLS participants and subscribers before they’re distributed through public IDX and syndication. That gives me another useful resource when I’m helping you understand what’s really happening in the market.
- REALTORS® pledge to follow the National Association of REALTORS® Code of Ethics in addition to applicable licensing laws and regulations.
- Depending on the local MLS, participants and authorized subscribers may be able to provide clients with property information and listing details beyond what appears on consumer-facing websites.
MYTH #2 – AGENTS DON’T HAVE TO WORK VERY MUCH
One of the attractions of real estate is flexibility, but that flexibility often means working when clients need you rather than following a traditional schedule. Behind a showing or closing can be hours spent researching, preparing pricing information, coordinating appointments, marketing, reviewing contracts, negotiating, following up with lenders and other professionals, and solving problems. Evenings and weekends frequently become part of the job because that’s when many clients are available. What you see your agent doing is often only one part of what’s being done on your behalf.
MYTH #3 – REAL ESTATE AGENTS ARE NOT EDUCATED
Agents must satisfy state-specific education and licensing requirements and generally complete continuing education to maintain their licenses. But I think the more useful question is what an agent does after meeting those minimum requirements. Markets change. Contracts change. Technology changes. Laws and practices change. Continuing to learn matters because the more I understand, the better prepared I am to explain your options and help you make informed decisions.
MYTH #4 – IT’S EASY TO BE A REAL ESTATE AGENT
Getting licensed and becoming an experienced real estate professional are two very different things. Licensing requirements vary by state, but after earning a license, an agent still has to build relationships, find clients, manage a business, keep up with the market, maintain professional knowledge, and learn how to guide transactions through the problems that inevitably arise. There is no guaranteed paycheck waiting at the end of the week. A lasting career is built over time, one client, one transaction, and one relationship at a time.
MYTH #5 – REAL ESTATE AGENTS ARE PAID A SALARY FROM THEIR BROKER
Many agents work as independent contractors rather than salaried employees. Under a commission-based arrangement, an agent may work with someone for weeks or months before a transaction closes and compensation is earned. Agents may also pay many of the costs required to run their businesses, including licensing, professional memberships, MLS access, technology, transportation, insurance, marketing, and continuing education.
Important note about compensation: Broker compensation is not set by law and is fully negotiable. Buyers working with an MLS participant generally enter into a written agreement before touring a property so both the buyer and agent understand the services being provided and how the buyer’s representative will be compensated. Depending on the negotiated agreements in a transaction, that compensation may come from the buyer, may involve an agreed seller or listing-broker payment or concession outside the MLS, or may be handled through another lawful arrangement. I’ll discuss those terms with you so you understand them before moving forward.
Brokerage compensation can look confusing from the outside because the amount associated with a transaction isn’t necessarily what an individual agent earns. The listing brokerage and buyer brokerage may be compensated under separate negotiated agreements, and each agent’s compensation depends on the arrangement with that agent’s brokerage. Business expenses and taxes come from the agent’s portion as well. Once you understand those pieces, the picture becomes much clearer than simply looking at a percentage attached to a sale.
The graphic below gives us an easy example to work through. The percentages are deliberately simple so the math is easy to follow. They aren’t intended to suggest what any brokerage should charge or what anyone should pay. Fees are negotiable, payment arrangements vary, and agent-broker splits differ from one brokerage relationship to another.
HOW MUCH DO REALTORS® MAKE?
(Illustration only: This example uses a $300,000 sale price, a 3% listing brokerage fee, a 3% buyer brokerage fee, and 75/25 agent-broker splits simply to make the math easy to follow. These figures are examples, not standard or recommended fees. Brokerage compensation is fully negotiable and actual arrangements may differ.)
MYTH #6 – REAL ESTATE AGENTS GET KICKBACKS FROM OTHERS
If I recommend a lender, title company, attorney, inspector, or another professional, it’s completely reasonable for you to ask why I recommend that person. In transactions involving federally related mortgage loans, RESPA generally prohibits giving or accepting a fee, kickback, or other thing of value in exchange for referrals of settlement-service business. It also restricts splitting settlement-service fees when actual services haven’t been performed.
There are legitimate arrangements that RESPA permits, including compensation for actual services, certain qualifying affiliated-business arrangements, and certain cooperative brokerage and referral arrangements between real estate agents and brokers. Affiliated relationships can also carry disclosure requirements. What matters to you is understanding the relationship. If I’m recommending professionals who may become part of your transaction, I want you to know why I believe they can help and understand any relationship that could affect that recommendation.
MYTH #7 – MOST AGENTS HAVE ABOUT THE SAME SKILL SETS
A license tells you an agent has met the state’s requirements. It doesn’t tell you how that agent communicates, negotiates, solves problems, uses technology, understands a particular market, or responds under pressure. Those differences can be substantial.
That’s why I think choosing an agent should begin with a conversation rather than simply selecting a name. Ask how the agent works. Talk about your expectations. Discuss communication, experience, strategy, and what happens when something doesn’t go according to plan. You’re not just choosing someone with a license. You’re choosing the person you’ll rely on to help you understand your options and work through important decisions.
You can also verify licensing information through your state’s real estate licensing authority and ask an agent about relevant experience or references. Take the time you need to make that decision thoughtfully. The right professional should be willing to answer your questions and help you understand what you can expect before you decide to work together.
A real estate license may open the door to the profession, but the relationship you build with the person behind that license is what matters. Find someone you can communicate with, ask questions of, and trust to help you understand your choices. That’s when an agent becomes more than someone involved in the transaction — and becomes someone truly working alongside you.