Drew Peterson

Welcome to our blog series on the Top Ten Realtor Myths. On Monday we busted myth six, that all Realtors charge about the same commission. That means we're on to myth number five.

Myth: Realtors are generalists, and can sell anywhere.

Fact: Realtors can sell anywhere in the state they are licensed, but are rarely effective outside their area of specialty.

This is one of the most common Realtor myths we encounter. We constantly hear people say they'll sell their home with a friend who is a Realtor. Or, they'll call a friend and ask for a referral. The assumption is, as long as that agent is a Realtor, they can sell the home regardless of location. Although that's technically true, the reality is much different.

We'll start with the licensing of agents in Florida. To become a real estate agent, you must take a class on real estate law and pass the state exam. Once you pass the exam, you are licensed to sell throughout the state.

To become a Realtor, you must join the National Association of Realtors, the Florida Association of Realtors, and a local Realtor association (in our case, the Orlando Regional Realtor Association). By joining the local association, you are granted access to the Multiple Listing Service (MLS) and given an electronic key used to enter lockboxes. Here's where the first limitation on a Realtor's ability to sell anywhere comes into play.

Each local Realtor association can make its own rules (to a certain degree), have its own MLS, and have its own way of using electronic lockboxes. Each local association also charges its own fees. So, just because we are Realtors, we don't necessarily have access to the MLS in Miami. We'd have to join that board, pay the fees, and adhere to their MLS rules. As a matter of practicality, the vast majority of Realtors stick to their own local board.

Fortunately for us, the Orlando Regional Realtor Association has an agreement with neighboring boards that allows us to use our key to enter properties listed by members of their board. Also, the Mid-Florida Regional MLS is a massive MLS that covers a sizeable portion of Central Florida. That means we can sell anywhere in Central Florida, right?

Once again, technically the answer is yes, but practically the answer is no. For a Realtor to be truly effective at his job, he must know the area in which he sells. And, by area, we mean a very specific area of town. Not the entire city or county.

We simply cannot emphasize enough how important it is to find a Realtor who specializes in your area. He or she will know which neighborhoods are in decline, which have excellent investment opportunities, which have active Homeowners' Associations, and so on. This is knowledge that can only be gained by living in the area or selling multiple properties in the area.

The bottom line to this myth is simply that Realtors can sell anywhere, but rarely will they be truly effective outside their area of specialty. So, when you interview a Realtor to represent you, ask specific questions to test his knowledge of the area. Ask when he last sold a property in the area. If he cannot answer to your satisfaction, call another Realtor.

*Another quick disclaimer (big surprise, right?). Depending on the size of your city, county, or community, there might be Realtors who can cover the whole area effectively. However, in the greater Orlando area, it's extremely unlikely.

Within the next couple of days, the Orlando Regional Realtor Association should be releasing March's sales numbers. Therefore, we will be holding off on myth number four until we have completed our monthly Market Update. Please check back soon!

Welcome to our blog series on the Top Ten Realtor Myths. The last two installments of the series involved myth seven, that a listing agent or buyer's agent can "sell" a home to a potential buyer. With the myth busted, we can move on to number six.

Myth: All Realtors charge about the same commission.

Fact: There are many different commission models out there including full service, discount, limited service, and MLS entry only.

This myth actually isn't as prevalent as it used to be. The recent increase in companies offering alternatives to the traditional commission model has garnered consumers' attention. We'll touch briefly on each of the models, explaining how they work and listing their advantages and disadvantages.

1.) MLS Entry only - A relatively new commission model is actually not based on commission at all. Instead, the brokerage charges a flat fee (e.g. $500) to list the property on the Multiple Listing Service. The homeowner is responsible for the rest.

Advantages: Low cost

Disadvantages: No support or service after the up-front fee is paid

Bottom Line: This model is only for the experienced home seller with plenty of time. Negotiation, showing the home, pricing, contracts, marketing, and legal will all be up to you.

2.) Limited Service - This model is similar to the MLS entry only model in cost, but offers some additional services. Therefore, you might pay $1500 instead of $500 and receive the MLS listing, sign, lockbox, and basic marketing.

Advantages: Low cost, basic marketing provided

Disadvantages: No service after the up-front fee is paid

Bottom line: Once again, this is a model only for the experienced home seller with plenty of time. If you're not tech-savvy, the basic marketing packages that are usually internet-based might help. Negotiation, showing the home, pricing, contracts, and legal will all be up to you.

3.) Discount - The discount broker charges a commission, but it's discounted in comparison to the full-service broker (e.g. one or two percent savings). Discount brokers typically provide pricing analysis, perform some marketing, handle showings, negotiate the contract, and are generally available to provide additional support.

Advantages: Moderate cost, offer a basic variety of services and support

Disadvantages: Less individual attention, typically lack specialized knowledge

Bottom Line: Don't be fooled by discount brokers who say they are "full-service". Simple economics dictate that, in order to make money, they need to sell more properties. Typically, that means they have a large number of listings and do not specialize in one type of client or one geographic area. Therefore, discount brokers are an excellent choice for the homeowner who needs to save some money and doesn't mind the decreased personal attention.

4.) Full Service - This is the traditional model. Although the exact amount charged varies by region, a full-service Realtor charges the market average or higher. In exchange, the client receives the full-range of services.

Advantages: Everything is handled by the Realtor

Disadvantages: Higher cost

Bottom Line: Don't be fooled by Realtors charging full-service rates without providing the service to back it up. A true full-service Realtor will help prepare your home to sell, conduct extensive pricing analysis, market the home, handle showings, provide feedback, negotiate the contract, and get the contract to close. This model is for the hands-off homeowner looking for a specialist.

Discount and full-service are the primary models in today's market. No matter which you choose, make sure the Realtor is experienced and provides value for the commission he charges. And, remember, commission is only paid when the house sells.

*Quick disclaimer. The descriptions of the various models are only intended to be general outlines. They are by no means comprehensive reviews.

That does it for the six myth in our series. Check back on Wednesday for the next installment. As always, we appreciate any feedback you'd like to provide.

Welcome to our blog series on the Top Ten Realtor Myths. On Wednesday, we discussed part one of myth seven, that a listing agent can "sell" a house to a potential buyer. If you missed the blog, you can catch up by clicking here. Now, let's move on to the second installment.

Part two of myth seven says that a buyer's agent can "sell" a home to a potential buyer. Unfortunately, this is less of a myth than we would like. Let us explain.

Stories run rampant in the real estate industry of buyer's agents steering clients toward, or away from, certain properties. Sometimes this is done for solid, ethical reasons. Sometimes it's not.

Studies done by independent research companies have found a disturbing trend among some real estate agents. When showing property to minority buyers, some Realtors have been found to steer these clients into areas where their ethnic backgrounds prevail. Often this is done using "the quality of the schools" and "the quality of the neighborhood" as supporting arguments.

Within the industry, we all know Realtors who refuse to show homes where the commission offered is lower than they are willing to accept. We all know Realtors who only show listings within their own office, or only show listings that offer the Realtor a "bonus". We've all heard stories of agents pushing a particular property because it offered a higher than normal commission.

Now, there is an exception to the above examples. If these Realtors disclose to their clients that they are not, for example, going to show any homes that offer a two percent commission, that's ok provided the client agrees.

So, the myth that a buyer's agent can "sell" a home to a potential buyer actually has some truth to it. Therefore, we're going to adjust it slightly. The new myth is that a buyer's agent should "sell" a home to a potential buyer.

If you as a buyer are working with a Realtor, and that Realtor tries to convince you to see or purchase a home that you do not want to see or purchase, question his or her motives. Ask if he or she will receive any extra compensation or benefits from selling the home. It's a perfectly reasonable question, and the answer you receive might help you determine whether the agent's motives are pure.

The bottom line, however, is the best buyer's agents will not push you in directions you are hesitant to go. Instead, they will listen to your wants and needs, show you only homes that match those wants and needs, and ask you how much or how little participation you would like them to have during the showing process. They'll stick to the facts, only occasionally offering opinion, and they will only try to gently dissuade or persuade when they genuinely believe you might be making an error in judgment.

That's all for myth seven. Check back on Monday, when we'll bust the number six myth on our Top Ten Realtor Myths. As always, we appreciate any feedback you'd like to provide.

Welcome to our blog series on the Top Ten Realtor Myths. In the last blog we debunked the #8 myth, that a buyer's agent just puts people into her car and drives them around. With that myth busted, it's time to move on to number seven.

Myth: A Realtor, whether the buyer's agent or the listing agent, can "sell" a home to a potential buyer.

Fact: No amount of selling is going to convince a buyer to purchase a property he doesn't like or that doesn't match his criteria.

This myth is actually one of the most frustrating because it deals with unrealistic expectations. Essentially, there are two sides from which to view the myth. The first is from the perspective of a listing agent, and the second is from the perspective of the buyer's agent. We'll start with the listing side.

The myth that a listing agent can convince a buyer to purchase his listing generally comes into play when that listing agent is providing feedback to his clients about a showing. The conversation typically starts with the Realtor telling his clients why the buyers decided against purchasing the home. Or, it might also start with the Realtor telling his clients why the buyers liked the home, but thought the price was too high to make an offer.

Once the agent is finished with the feedback, the homeowner under the influence of this myth will probably say something along the lines of, "Well, can't you call them back and tell them about the great neighborhood, upgrades we completed, new paint, etc. That should make them like it/pay more than market value." Depending on the disposition of the Realtor, this is where he either explains why this tactic won't work, or says he'll do it, all the while knowing full well that it's a waste of time.

There are two reasons why a listing agent has virtually no influence over a buyer's decision. First, the listing agent can only talk to the buyer's agent, not the buyer directly. The vast majority of buyer's agents don't pass along attempts at persuasion. Who can blame them? Their job is to find something their clients like, not convince them to purchase something they don't.

The second reason a listing agent has little influence over a buyer centers around the time lapse between when the buyer sees the home and when the listing agent gets the feedback. Typically, a buyer's agent will call with feedback from a showing anywhere from 24 to 48 hours after the actual showing takes place. Therefore, if the buyer didn't like the property or thought it was overpriced, he or she will have mentally checked that home off the list. It's extremely difficult, especially over the phone, to convince anyone to buy a home he or she has already mentally eliminated.

Frankly, as a homeowner, you stand the best chance of convincing a buyer to purchase your property. Start by pricing it competitively. Then, do whatever necessary to make the exterior and interior shine. Keep the house clean and de-cluttered for showings. Nothing a Realtor can do or say will have a greater impact.

That does it for part one of the seventh myth. On Friday, we'll continue our discussion by addressing the buyer's agent's ability to "sell" a home. As always, we appreciate any feedback you'd like to provide.

Welcome to our blog series on the Top Ten Realtor Myths. In the last blog we debunked the #9 myth. This two-part myth says, number one, that the company a Realtor works for determines his or her skill and, number two, that when you hire a Realtor, his or her company works for you as well. With that myth busted, it's time to move on to number eight.

Myth: A buyer's agent just puts people into her car and drives them around until they find a house they like.

Fact: Although showing homes is one of a buyer's agent's many responsibilities, it is far from the most prominent.

Unfortunately, this is one of the more common Realtor myths. For whatever reason, a good portion of the public, when they think of a Realtor, thinks of someone who drives people around and shows them various homes for sale. The truth, however, is that a Realtor's true value is tested long before they ever begin to show property.

The primary responsibility of a buyer's agent is to listen to you, the buyer. That means asking tons of questions, getting clarification when needed, and exploring your future plans. By the time your first meeting with your Realtor is completed, he or she should be able to list all of the features of your dream home.

The Realtor's next responsibility is to take the information you gave him and identify properties that match, or closely match, your criteria. Sometimes this is relatively simple, sometimes it proves extremely difficult. Either way, when your agent shows you the homes he identified, you should not be disappointed. If you are, there's a serious problem.

Although a buyer's agent really shines in the pre-showing stages of representation, she does have one major post-showing responsibility. Once you have chosen the right home for you, your Realtor should assist you with crafting the offer. That assistance typically includes researching the value of the home, physically writing up the offer, and making recommendations during the offer-writing process. For an explanation of how to best prepare to work with your Realtor on an offer, visit our blog, "No Market For Unrealistic Buyers II".

That concludes our discussion of myth #8. Check back on Wednesday, when we'll bust the #7 myth, that a Realtor can "sell" a home. As always, we appreciate any feedback you might have!