There is SO MUCH conflicting information out there. It is incredibly frustrating. Unfortunately, a big part of my job in helping buyers and sellers accomplish their goals is preparing expectations on market realities, what is working, and what is not working. I do not show up to consultation appointments with the intention of changing anyone's mind (that does not work). People can believe whatever they want to believe. I do, however, have an obligation to provide the real, no BS, scoop on what is going on and how to win in any market. 

There are a handful of real estate myths that I hear again and again. We hear them all the time in conversations, in the media, and from social media charlatans. All of these thrive on clicks and negativity gains attention far more effectively than objective analysis. 

1. The National Association of Realtors settlement and what it means for consumers

Settlement changes are now live and the world of residential real estate brokerage has not imploded. Griping and complaining aside, it feels like business as usual. 

Does this media/influencer template sound familiar?

1) NAR cartel holding commissions at 6% rate busted

2) Commissions going to come down 30% to 50% in the next year

3) Correspondingly home prices will decrease by that amount

4) Buyer agent role diminished by advent of search portals  

There are two relevant changes to brokerage compensation.

1) Buyer Agent Commission no longer can be offered through the MLS
2) Buyer agents are required to have a formal agency relationship with their client before the first showing

The goal of class action lawsuits was to decouple commissions and make it so that each party pays their own fees. In theory that was accomplished. The realities are very different. The other recent change is that Section 4.3e was added to the Real Estate Purchase contract for buyers to directly negotiate seller coverage of their buyer agent fees. On purchase contracts and the Multiple Listing Service the mechanics of agent compensation look different. On a Settlement Statement (final numbers when you sell a house) you wouldn't know there is a difference.

More info on this here:

NAR Settlement - What it means for Agents. What is means for Consumers

Here are the two huge changes: 1) Compensation offers moved off the MLS. 2) Written agreem...

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2. The residential real estate market is about to crash

We have all heard this, for varying reasons, since 2012. 

If you believe the market is about to crash, great, place your bets, I would love to help you sell your current real estate holdings. The market crash bet, and holding off on buying your first home is effectively making this bet, is betting on the unlikely scenario. 

Lets stick to the simple. There is A TON on this subject available in the blog posts available here from the past 2 years. 

The realities are that there are not enough available homes to satisfy demand. When demand exceeds supply it pushes prices up, not down. 

The majority of home owners have at least 50% equity in their home and either own their home free and clear or have a mortgage interest rate under 4%. 

Now let me blow your mind. There was a crash in real estate since mid 2022. That crash was in transaction volume. Nationally, annual home sales dropped from roughly 6 million units to roughly 4 million units. A big drop. Prices increased, just at a much lower rate than during the boom years, but they were upwardly mobile.

Homes are not similar to stocks. If you sell, you need to move somewhere else. The alternative of renting a home or apartment, even if it is a big step down in your living situation, is a much more expensive alternative for almost all home owners. And what about landlords that own multiple properties? Rental rates are increasing. No right minded person fire sells their increasingly lucrative asset.  

Much more on this here: 

Blog | Salt Lake Realty Group

Learn everything you need to know about the Salt Lake City real estate market....

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3. Foreclosures are high and about to get higher

Ditto everything above. As of 8/21/2024, .11% (roughly a tenth of a percent) of the current available inventory in the Wasatch Front MLS is a foreclosure. That is 12 available foreclosure properties out of the total of 10,795 available residential properties. 

If a home owner is in a tough situation they sell their home. Very likely for a profit. They do not just hand it over to the bank. 

4. The internet eliminates the need for buyer agents

If you want to go directly to the listing agent, you should, go for it. You have always had that option. 

Buyer agency is a massively valuable service, that is hired conditionally without a retainer, and is not going away. Buyer agent role does not end at home search. 

5. Real estate agents are overpaid, and now for the first time, you can negotiate their fee.

Commission compression happens in hot markets when homes are easy to sell. Commission expansion happens in slower markets when homes are difficult to sell. Commissions have always been negotiable and they vary widely. Media coverage of residential real estate brokerage in recent months focuses on the lack of competition in this industry and collusion to fix commissions above market equilibrium. My experience is that this business is competitive to the point of being cutthroat, commission rates vary widely, and discounters expand in boom markets and contract in tough markets. 

Commissions have always been negotiable. In my 14+ year career more than two-thirds of the consumers that I meet in person attempted to negotiate my fee. People are smart and they do not need disclaimers in bold on a state approved contract to know their options. Great agents have their fee structure and can clearly articulate their value proposition. There is always someone that will do it cheaper. If that is what you are looking for, give me a call, and I will give you pro tips on how to grind weak agents down.  

Something to keep in mind
When you hire an agent they work for free, without retainer, and the agent only gets paid if the house sells. Put another way, your agent takes all of the marketing/servicing financial risk and effectively work for free and then when your house sells they charge a brokerage fee that we have earned.

Unpopular opinion
A great agent is an incredible bargain that is worth so much more than their conditional fee. Ever wonder why there wasn't much downward pressure on commission rates in the last two decades since listing data became publicly available? It wasn't an NAR cartel that maintained rates, it was the free market. 

6. The internet eliminates the need for listing agents

For Sale by Owner has always been an option. I encourage you to try it and welcome you to research the statistics on how many FSBOs sell, how mush less those sell for, and how many FSBOs ultimately end up hiring an agent. 

The reality is that selling a home in the last two decades since the release of listing IDX portals like Zillow is more confusing, not less confusing. Agents used to be gate keepers to information and now you have listing IDXs like Zillow giving you listing information on demand. The job of the real estate agent has changed. I recommend viewing your hiring decision as hiring an agent that creatively sells, has the audience to do so, handles agents and offers with skill, mitigates your legal risk, and solves problems before they ever become problems.