Unless you have a real estate agent in the family or have been through several moves together, you may only see a small part of what agents actually do. That’s probably why a few myths about the profession have been around for so long. Let’s clear up seven of them — because understanding the person you’re trusting with a major life decision is always worthwhile.
MYTH #1 – EVERY LICENSED REAL ESTATE AGENT IS A REALTOR®
The words are often used interchangeably, but they don’t mean exactly the same thing. A real estate agent has met the requirements for a state license. A REALTOR® is also a member of the National Association of REALTORS® and subscribes to its Code of Ethics.
There may also be more happening inside the professional property-search process than you see on a public website. Depending on local MLS rules and participation, authorized MLS users may see additional listing information that isn’t displayed publicly. Much of the MLS information reaches consumer-facing websites, but not necessarily every detail. And in some markets, certain delayed-marketing listings can be available to MLS participants and subscribers before they’re distributed publicly through IDX and syndication. That’s one of the reasons having someone actively helping you search can feel different from simply searching by yourself.
- REALTORS® pledge to follow a professional Code of Ethics in addition to the laws and regulations governing their real estate licenses.
- MLS participants and authorized subscribers may have access to property information that helps them give their clients additional context beyond a public listing page.
MYTH #2 – AGENTS DON’T HAVE TO WORK VERY MUCH
You may see your agent at the showing, inspection, open house, or closing. What you probably don’t see are all the conversations and details happening in between. There can be research before you meet, phone calls after you leave, negotiations late at night, paperwork over the weekend, and follow-up with lenders, attorneys, inspectors, appraisers, title professionals, other agents, and everyone else helping move the transaction forward. Real estate offers flexibility, but clients don’t always need help between nine and five.
MYTH #3 – REAL ESTATE AGENTS ARE NOT EDUCATED
Agents complete state-required education and testing to become licensed and generally continue their education to maintain that license. Many go much further with specialized training, certifications, designations, technology, contracts, negotiation, and market knowledge. But some of the most valuable education also comes from experience — learning how to recognize a problem, explain it without creating unnecessary worry, and help a client work through it.
MYTH #4 – IT’S EASY TO BE A REAL ESTATE AGENT
Getting a license is only the beginning. Building a career means earning people’s trust, finding clients, staying current, managing expenses, learning from every transaction, and being available when someone is depending on you. And because many agents aren’t paid until a transaction closes, there’s no guarantee that the hours spent helping someone today will result in income later. The relationships may be rewarding, but building a lasting business around them takes work.
MYTH #5 – REAL ESTATE AGENTS ARE PAID A SALARY FROM THEIR BROKER
Many agents are independent contractors rather than salaried employees. In commission-based arrangements, an agent may spend weeks or months helping someone prepare, search, negotiate, and work toward closing before compensation is earned. Agents may also pay many of the expenses involved in running their businesses, from licensing and MLS access to technology, insurance, transportation, education, and marketing.
Important note about compensation: One thing I never want you to feel confused about is how your agent gets paid. 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 that explains the services being provided and the compensation arrangement. Depending on what is negotiated, compensation may be paid by the buyer, may involve an agreed seller or listing-broker payment or concession outside the MLS, or may be handled through another lawful arrangement. Ask questions until you’re comfortable with what you’ve agreed to — you deserve to understand it.
It’s also easy to see a commission amount associated with a home sale and assume that’s what an individual agent takes home. It usually isn’t that simple. Brokerages may receive compensation under separate negotiated agreements, and agents are then compensated according to their arrangements with their brokerages. From the agent’s portion come the expenses and taxes of running a business. The number you see at the beginning of the calculation and what ultimately becomes income can be very different.
The graphic below is simply an easy way to show how those pieces might fit together. We used uncomplicated percentages so the math is easy to understand, not because those percentages are standard or expected. Fees are negotiable, who pays them can vary, and the arrangement between an agent and brokerage may look very different from this example.
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 because those numbers make the math easy to understand. They aren’t standard, required, or recommended fees. Brokerage compensation is fully negotiable and actual arrangements vary.)
MYTH #6 – REAL ESTATE AGENTS GET KICKBACKS FROM OTHERS
When your agent says, “I know a lender,” “I know a great inspector,” or “Here’s a title company I’ve worked with,” it’s reasonable to wonder whether there’s something in that recommendation for the agent. In transactions involving federally related mortgage loans, RESPA generally prohibits paying or receiving a fee, kickback, or other thing of value in exchange for referrals of settlement-service business. It also restricts splitting settlement-service charges when actual services haven’t been performed.
There are legitimate payments and relationships permitted under the law, including compensation for actual services, qualifying affiliated-business arrangements, and certain cooperative brokerage and referral arrangements between agents and brokers. Some affiliated relationships also require disclosure. But a good referral should ultimately be about connecting you with someone the agent believes can take good care of you. And you should always feel comfortable asking why someone is being recommended and whether a business relationship exists.
MYTH #7 – MOST AGENTS HAVE ABOUT THE SAME SKILL SETS
Every agent with a valid license has crossed the required threshold to practice real estate. But the people behind those licenses can be very different. Some have handled hundreds of transactions; others are building experience. Some communicate constantly; others have a different style. Agents vary in market knowledge, negotiation, organization, technology, creativity, responsiveness, and how they handle pressure.
And sometimes you don’t discover how important those differences are until something goes wrong. That’s when having someone who listens, communicates clearly, stays calm, knows where to find answers, and keeps working toward a solution can mean the most.
So when you’re choosing an agent, give yourself permission to choose the person, not just the license. Ask questions. Talk about what matters to you. Learn how that person communicates and works. Verify licensing through your state’s real estate licensing authority, and ask about experience or references when that would help you feel more comfortable.
Buying or selling a home is personal. The agent beside you should understand that. Knowledge and experience matter, but so do responsiveness, communication, trust, and knowing that someone is paying attention to the things that matter to you. A license tells you an agent can do the job. The relationship helps you decide who you want doing it with you.