Myths and Misconceptions in Real Estate

Misconception: When purchasing a home, the real estate agent is representing you in the transaction.

WRONG! In most cases, that agent is a sub agent of the listing agent and is bound to help the seller get the highest price possible. In the normal course of business, the seller's agent (Listing Agent) lists the property and puts it into the multiple listing service. Any Agent who shows the listed property works as a sub agent of the seller's agent and is required to negotiate on behalf of the seller, the highest purchase price and terms for the seller. The only way an agent can represent you alone, as a buyer, is for you to enter into a written agreement with the agent through a buyer’s agency agreement, written and distributed by the Texas Real Estate Commission.

Misconception: When a buyer purchases a home through a real estate agent, the buyer will see all of the properties that are available in the area selected.

WRONG! Many agents will show a buyer his own office listings first, followed by those of other Seller's Agents (Listing Agent) listings, so that he is assured of receiving a commission when the buyer purchases a property. Most buyers will never see the foreclosures, probated properties, or "for sale by owner" homes, because the agent is not guaranteed a commission from such sales. Many times the agent knows of the perfect home for the buyer but won't show it because the owner refuses to pay a commission. If you have a Buyer-Broker Agreement with an agent, you see all available properties because the agent knows that if you purchase a property, a commission or fee will be paid.

Misconception: The Buyer pays their agent’s commission.

WRONG!  A commission is not paid until the property sells.  If a buyer does not buy, there is no commission.  Per the listing agreement, the listing agent pays the buyer’s agent’s commission. Listing agents are bound by a Code of Ethics to pay a buyer’s agent’s commission if a commission is offered.  The commission is built into the price of the listed property.

Home Buying Myth:  I'll get the best deal on the house if I call the agent listed on the For Sale sign.

That agent represents the seller and is contractually bound to get the best deal for the seller. It doesn't mean the agent can't work with you in a fair and professional manner, but it does mean you should not disclose confidential information to the agent.

Home Buying Myth:  The agent told me I had to sign a Buyer Agency agreement before he would work with me, so I did, and now I'm unhappy with the relationship.

You might know you are a good match with an agent on the very first day you meet, but what if you aren't sure? If an agent asks you to sign an agency agreement before you feel comfortable about it, try one of these alternatives:

H    Ask the agent to work under a verbal buyer agency agreement for a short time. Some states allow this, giving you time to become familiar with the agent before you sign a formal agreement.

H    Ask the agent to write a buyer agency agreement that covers a very short period, a day or a week.

H    Find out if the agent can offer a non-exclusive buyer agency agreement. The agent would be your buyer's agent, but you would not be tied exclusively to her.

H    Let the agent continue to be a seller's agent--just don't disclose confidential information.

Bottom Line
If the agent will only work with you if you immediately sign a lengthy buyer agency agreement, you might be better off seeking another agent.

Hiring a Buyer's Agent

Home Buying Myth:  I can find more homes for sale by calling lots of agents.

Maybe--but maybe not. If you are home shopping in a specific area, and the agencies belong to Multiple Listing Services, it means they all have access to the same properties.

Ask agents what areas they cover. Small-town agents might work a multi-county area. Agents in a city might restrict themselves to certain neighborhoods or subdivisions.

If you sign agreements with more than one buyer's agent, make sure the contracts are worded so that areas and duties do not overlap. For instance, Agent X works for you only in County A. Agent Y works for you only in County B.

Bottom Line
Researching and showing properties is time-consuming, so you'll get better service if you find an agent you like (within a given area) and stick with that agent.

Home Buying Myth:  The agent with the most listings in town is the best agent to call.

Think about that. If an agent has that many listings to deal with, how much time do they have for buyers, especially buyers who might want to look at properties other than theirs?

Many top agents are turning to team systems, so time might not be an issue, but it's something to ask about when you interview an agent.

Bottom Line
A brand new (competent) agent can be every bit as effective as a seasoned pro. Someone working with fewer clients will have your needs in mind constantly. Hire the person, not a lineup of listings.

Buyer's Myth: I'll get a better deal if I just call the agent shown on the yard sign.

Fact: Not necessarily. The listing agent has a contractual and ethical obligation to get the best price for the seller. Even under the condition of Limited Agency the agent is not allowed to discuss price with you.

Buyer's Myth: I've got good credit and a solid job, but no savings so I can't buy a house.

Fact: There are community grant/loan moneys available to help qualified buyers into a home. I've used this little known secret stash for many buyers, and I can recommend several lenders who specialize in buyers like you.

Seller's Myth: I would like to sell my home and get something smaller but the capital gains tax would kill me.

Fact: The new tax laws allow a single home owner to profit up to $250,000 (couples up to $500,000) on the sale of a primary residence every two years TAX FREE. It just isn't going to get any better than this. Talk to your tax advisor for specifics.

Buyer's Myth: If I call an agent to help me buy a home they will try and sell me only their brokers listings.

Fact: All MLS Realtors® have access to all multiple listing service listings. An ethical agent would never limit your home selection to those of one brokerage. This is one of the reasons that choosing the right Realtor for you is so important. A good Realtor does not "sell" you a home but rather works as your agent, sifting through all the available homes, finding those homes that meet your requirements, and then negotiating a contract in your best interest.

Seller's Myth: If I sell my rental income property I have to perform a complicated and risky 1031 exchange or pay big time in capital gains tax.

Fact: Two thoughts: first, a 1031 tax deferred exchange is not that scary when handled by a real estate professional. Second, theoretically one could convert a rental property to your primary residence for two years and sell it paying no tax -- a loophole that may not last forever. (insert the painfully obvious "talk to your tax advisor" disclaimer here)

MYTH:  The Internet is taking over the role of the real estate professional in housing transactions.

Reality: Despite the increasing number of information sources accessible to consumers, including the Internet, home buyers and sellers continue to trust the experience and "know how" provided by real estate agents and brokers. According to the 2003 National Association Of Realtors® Profile of Home Buyers and Sellers, about 71 percent of homebuyers and sellers used a real estate agent to assist with the transaction. Moreover, about 40 percent of home buyers used the Internet as an information source during the real estate process, and interestingly, Internet-proficient home buyers were the most likely to use a real estate agent to complete their home search and close the transaction.

MYTH:  Home valuation and evaluation information available on the Internet is reliable.

Reality: This is not necessarily true. Most of the information available on Internet sites is drawn from public records, with no verification of the data. Too, public records are historical and may not provide a true indication of current trends that can affect a particular property or the property's specific characteristics when it is sold. In contrast, retaining the services of both a qualified appraiser and real estate agent (Certified Residential Specialist) in a given market will help ensure reliable, up-to-the minute feedback on local market dynamics and specific properties in question based on current, first-hand knowledge and professional experience.

MYTH:  Buying and selling a home is always a "gut wrenching" process.

Reality: Oftentimes, there's a lot of stress in both. On the other hand, a good Realtor®, aided by other professionals involved in the real estate transaction, can and should help the buyer and seller understand what to expect and sound moves to make, thereby helping to make the process relatively smooth and "pain free."

MYTH:  Assessed value should equate to market value.

Reality: While most states assume that assessed value approximates market value, this often is not the case. For example, differences occur when interior remodeling has been done and the assessor is unaware of it, or when properties in the vicinity have not been reassessed for a long time.

MYTH:  Market value should approximate replacement cost.

Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind, given that the land cost has not changed.

MYTH:  Appraised value and assessed value are the same.

Reality: Not so. Appraised value is a knowledgeable and researched opinion of a property's market value based on an appraiser's knowledge, experience, and analysis of the property and the community where it's located. Assessed value is the valuation placed on a property by a public tax assessor for purposes of taxation.

MYTH:  You generally can tell what a property is worth by looking at the outside.

Reality: Property value is determined by many factors - including location, interior and exterior condition, improvements, amenities and market trends.

MYTH:  If you put $15,000 worth of improvements into your property, you should be able to increase the asking price by that amount.

Reality: If your improvements have simply brought the property up to standard, you have only made your home more competitive, not more valuable. Some home remodeling, in particular kitchens and bathrooms, can equal or exceed the cost you invest. On the other hand, adding an amenity such as a pool could provide only a 30 to 40 percent return on your investment. However, the rates of profit vary from one marketplace to the next. It's best to consult with a CRS-designated Realtor® in your area before you begin a major remodeling project to find out which improvements offer the best returns on investment.

MYTH:  You can realize a tax-free capital gain on the sale of a primary residence just once, at or beyond age 55, and must reinvest the proceeds in another home within a certain time period.

Reality:  These were the regulations prior to the 1997 tax law, but the rules changed. Now, if you have owned and occupied your primary residence for at least two of the past five years, you can enjoy tax-free appreciation of up to $500,00 on the sale of the home if you're married and up to $250,000 if you're single. You don't need to re-invest the proceeds in another home and you don't need to be age 55. What's more, you can legally do this every two years if you so choose.

MYTH:  As a buyer, you should first find the home you want and then explore your borrowing options.

Reality: It is best explore your borrowing options and secure a mortgage pre-approval from a lender before you go searching for a home. This "upfront" information provides a reality check that you'll be looking in a price range you can afford. Moreover, when you make an offer on a home and it is accepted, all you'll likely need to go forward with the financing is an appraisal.

MYTH:  In the view of sellers, they gave their home away; in the view of buyers, they paid too much.

Reality: In point of fact, all transactions reflect a meeting of the minds. If the buyer and seller are mindful of what the market is telling them and they have good, professional representatives who negotiate skillfully on their behalf, they will respond accordingly.

MYTH:  As a move-up buyer, I should put my existing home on the market first and then look for a new one.

Reality: Not necessarily. It depends on factors such as general market conditions, market conditions in your particular geographic area, the kind of equity you have in your home and your general financial picture. If your existing home is very marketable, many finance programs are available that will enable you to take that home's equity, use it as a down payment to buy your next home, then put your existing home on the market and be reasonably confident that things will work out well for you.

MYTH:  As a seller, if I don't get more for my home than I paid for it, it means I overpaid.

Reality: Not necessarily. All sellers hope to realize a gain on their investment. But there are no guarantees. While a purchase price may be a very good deal, the market can shift downward in ways that are unforeseeable.

MYTH:  As a buyer, if I retain a buyer's agent to represent me, I'm responsible for the commission.

Reality: While some buyer's agents do have retainer or hourly fees, it is more typical for the seller to pay for the commission when the house is sold. According to the 2003 National Association Of Realtors® Profile of Home Buyers and Sellers, in 52 percent of the cases, the home seller fully compensated the real estate agent serving the homebuyer.

MYTH:  As a buyer, it makes more sense to come in with a low offer on a property, reserving he right to raise it.

Reality: Not necessarily so. You run the risk that the seller will not even bother to negotiate because you're so far apart. As well, unless the house is very overpriced, the offer will most likely be rejected.

MYTH:  All real estate agents as well as mortgage lenders, home inspectors, appraisers, real estate attorneys and other key players in a residential real estate transaction, do business in essentially the same way.

Reality: Absolutely not. The scope, quality and cost of services provided by individual providers can differ significantly. So given the financial magnitude of a real estate transaction and to help ensure the most problem-free transaction, consumers owe it to themselves to do their homework - on the Internet, by asking for friend/family referrals and/or otherwise - before selecting a particular provider.

MYTH:  Because only 4 percent of residential realtors carry the CRS dsignation and must exceed higher levels of experience and education than do other Realtors®, they charge a premium for their services.

Reality: Not true. However, CRSs have proven experience in real estate, and can offer better service and more extensive knowledge than the average licensed real estate professional. In addition, CRS designees can be found in every U.S. marketplace. Go to www.crs.com and look them up under "Find a CRS."

MYTH:  I can save thousands of dollars by selling my home myself (FSBO) and cutting out the agent.

FACT: The majority of  "For Sale By Owners" eventually list with a real estate agent.  Why?  The owners have failed to realize the complexity of selling a home. Before you decide to sell your home by yourself here are some things to consider: 1) Setting the right price. Do you have access to all of the sales records for your neighborhood so that you can accurately price your home?   2) Do you have all of the proper disclosures and documents required by law.  Yes, you as an un-represented owner still have to follow Texas Real Estate Law and if you fail to have the required documents you can be sued.  3) Are you available 10 hours a day, 7 days a week to show your home to prospective buyers like an agent would be or do you work?  4) Are you screening your buyers first or are you just letting anyone walk through your home.  5) Do you have your home on the MLS so that millions of potential buyers can see it, or do you just have a for sale sign in your yard for a few buyers to see  6) Are you skilled and knowledgeable in negotiating real estate contracts and do you know which forms to use?  7) Are you licensed and insured in case you make a mistake in the paperwork that the buyer could sue you on?  8) Do you have hundreds of potential buyers calling you looking for homes?  Be smart, use a professional real estate agent.

MYTH: Since tax rates keep going up and many people are protesting their property taxes, the "Market Value" listed on the tax appraisal web site is too high and the home is worth less.

FACT: The "Market Value" listed on the tax appraisal web site has nothing to do with the actual market value of a home. In fact, the value listed on the tax site is usually much lower than the actual market value of the home. The only way to know the TRUE market value of a home is to ask an agent to run a CMA (comparative market analysis) on the neighborhood. The agent will view all of the sales records for the neighborhood through the MLS (multiple listing service) and can accurately tell you what homes are really selling for. You could also hire a home appraiser to come out and do an appraisal on the home, but that costs money. If you are buying or selling a home you should NEVER use the tax "Market Value" as a guide to how much the home is worth because 9 times out of 10 it is not even close.

MYTH: If you have bad credit, you cannot get a loan on a home

FACT: Times have changed and so has the lending process. The majority of people today have had credit problems at one time or another, yet most people own homes. You have probably heard that credit problems stay on your report for 7 years, and for the most part that's true, however that doesn't mean that nobody will still loan you money. Most lenders know that people must have a place to live and will usually make their house payment before any other payments, or risk losing their home. Even with bad credit, most lenders will be willing to work with you on a home loan. The catch is, the worse your credit is the higher your interest rate and/or down payment will be. While most homeowners today are getting below 6% interest rates, you may get a rate between 8%-13%. Yes, that's a lot higher, but if you make your payments on time and clean up your credit, you can refinance later at a lower rate. Also, there are many grant programs out there to assist homeowners with closing costs. Your lender should be familiar with these programs and be able to help you qualify (even with bad credit). So you see, almost anyone can get a home loan.

MYTH:  If I sell my home and make a big profit, I will have to pay taxes on the profit

FACT: Although this may be true in some cases, for most homeowners in the Greater Houston Area there is no capital gain tax. The 1997 Taxpayer Relief Act contained a big break for homeowners. If you sell your home, you may exclude up to $250,000 of your capital gain from tax. For married couples filing jointly, the exclusion is $500,000. The law applies to sales after May 6, 1997. To claim the whole exclusion, you must have owned and lived in your residence an aggregate of at least two of five years before the sale (this rule is called the "ownership" and "use" test). You can claim the exclusion once every two years. There are some rules that apply to home office deductions, divorce etc. so follow this link to see if you qualify http://www.nolo.com/encyclopedia/articles/re/re19.html?e=em2f

MYTH:  Real Estate Agents cannot help me in finding a "NEW" home because they only list and show previously owned homes.

FACT: Some agents "specialize" in new home sales. Most builders fully cooperate with agents because they want to sell their homes quickly and they know that most people looking for homes will have a buyer's agent anyway. The builder pays the agent a commission for providing a buyer. In fact, many agents can actually help you negotiate a lower price on the home or get some upgrades for free because of their relationship with the builder. The agent can also advise you on the area and the builder and assist you with the contracts, etc. just like he would on any other home.

MYTH:  You will be able to sell your home for a lot more money if you make many upgrades and improvements to your property.

FACT: Some improvements will improve resale value, however many times you will not get your investment back if you make unnecessary improvements or expensive improvements. For example, if your home is in desperate need of painting and you spend $400 painting it yourself you will probably increase your chances of selling the home and thus recoup the $400 cost. However, if you spend an extra $3000 having the home framed with 2x6's instead of 2x4's and then add imported tile, a water softener, and a waterfall pond in the back yard, you may have increased the resale value of the home but not as much as you paid to have all of that stuff done. If the homes in your neighborhood average 2100 square feet and the sales range from $59-$64 per square foot, you cannot assume people will pay $70 per square foot just because your home has these improvements. Often times swimming pools are a bad resale improvement because you will pay maybe $10,000 for the pool but you won't find buyers willing to pay $10,000 more for your home just because it has the pool. Regardless of the improvements that you have made, your home will still be marketable for what buyers are willing to pay in that neighborhood.

MYTH:  Sellers routinely list their homes for thousands of dollars more than they are worth so that they will have room to negotiate a lower offer from a buyer.

FACT: Although some sellers will overprice their homes , smart, market-savy sellers will list their home at its true market value and will have already accounted for repairs. The listing agent will assist the sellers with the neighborhood comps and use them as a guide to setting the price. If similar homes are selling for $120,000 it would be ridiculous to list your home at $130,000 in hopes of getting more. Most likely you will turn off buyers that have already looked at the similar homes that were correctly listed at their market value. They will think that you are greedy and not willing to negotiate fairly. If 2 identical homes are listed for different prices the potential buyer is going to ask why. Granted, if there are substantial improvements and upgrades in 1 of the houses that would warrant the price difference. A "Buyer's Agent" will know how to correctly value homes and give the buyer a CMA (comparative market analysis) on the homes that they are looking for. So you see, if the seller has listed his home way over its value, the smart buyers will know this and just pass on through resulting in NO SALE for the seller. Sometimes even when a home is priced right the seller may have to reduce the price because for 1 reason or another his house is not drawing interest and is not selling. If that is the case, the seller should ask his listing agent about the feedback that buyers and their agents have given him about the house.

MYTH:  The agent showing me the house represents me and my interests.

FACT: Unless you have signed a "Buyer's Agency" agreement with that agent, the agent MUST put the interest of the seller first. Texas law requires an agent to give prospective buyers a form called "Information About Brokerage Services" at the first face-to-face meeting with a prospective buyer (unless it's an open house). This form explains that an agent either represents the seller OR the buyer. Even if you call an agent that is NOT the listing agent, that agent still represents the seller as a subagent until you sign a Buyer's Agency agreement asking him/her to represent you. Normally, Buyer's Agents do not charge any fees for their services (a few will ask you for a retainer) because they are paid by the listing agent through Co-Op on the MLS. A few agents, like Silver Star Realty, will even give you rebates at the closing. For more information about Buyer's Agency click here.

MYTH:  If you offer the listing price for a home, the owner must accept it

FACT: As with all contracts, there must be an offer and acceptance. In real estate transactions the contract must be in writing. In today's seller's market it is quite common to receive multiple offers on a property for more than the asking price. The owners can sit back and wait for the best offer to come in. On a "hot" property, numerous buyers are fighting for the chance to get the home and will try to make their offer the best. Keep in mind that this does not apply to all properties. Even today, some homes can sit on the market over a year before someone will make an offer. This is why it is important to have a "Buyer's Agent" representing you who knows the area and what the homes are selling for and who is skilled at negotiating contracts. If you would like to see (or download) a contract used for home purchases go to http://www.trec.state.tx.us/ , this is the web site of the Texas Real Estate Commission.

MYTH:  The agent that has sold the most homes in the area is always the best choice to sell my home.

FACT: Approximately 10% of homes are actually sold by the listing agent. Which means 90% of the time, some agent that you don't even know will be the one who sells your home. In some cases there are agents who have over 100 homes for sale at the same time. Do you really think that YOUR home is getting the individual attention that you expected when you listed? What is really important is that you choose a knowledgeable, professional Realtor who cares about you and your needs. Not all agents are the same, nor do they offer the same services and fees. Make sure that your home will be on the MLS and that your agent will take the time to properly market YOUR home and not the other 100+ homes in his inventory.

MYTH:  A "discount" broker can do just as well and save you money.

TRUTH:  Successfully marketing a property in the competitive marketplace takes skill and resources. All of the promotional costs such as photos, brochures, printing, signs, advertisements, MLS fees, direct mail, etc. are all paid for by me. How will a discount broker offer such a complete marketing campaign?  Do they have a proven track record of success, or are they just using the lower commission to try to win your business?  Do they have the expertise to guide you through the problems that often develop during the closing process?

Remember that you only actually pay a commission if and when your property sells. Many sellers have found that their commission with a discount broker was really zero, because their property never sold!

It is interesting to note that a discount broker does not have a dominant market share in any major city in the country.

MYTH:  I should select the agent that suggests the highest list price.

TRUTH:  This is the oldest scam in real estate sales: Tell the seller what they want to hear, compliment the home, and agree to list it at an unrealistically high price just to get the listing. Then, after you have the listing for a few weeks, start telling the seller that they need to reduce the price.

I don't play any games. I will provide a well researched computerized market analysis to determine the true realistic price that your home will bear in today's marketplace. The decision of which agent to list with and what price to ask are two completely separate decisions. Select your agent based on their credentials and track record, and then decide on price.

NEVER SELECT AN AGENT BASED ON THE PRICE THEY SUGGEST!

MYTH:  Property condition is not that important to buyers.

TRUTH:  WRONG! A property in superior condition will sell faster and for a higher price than a home in average condition. Buyers purchase properties that are most appealing, and a home in great condition with a reasonable asking price always tops the list. Sellers that invest in necessary repairs and keep their home clean and fresh always reap the rewards!

MYTH:  Empty homes are harder to sell than occupied homes.

TRUTH:  Vacant homes often sell faster for several reasons, but again it all depends on condition. A vacant home that is clean, in good repair, and priced fairly will usually sell fast because the rooms will appear larger without furniture and clutter, buyers can easily visualize their furnishings in the home, and most agents prefer to show vacant homes because they can go anytime without worrying about making appointments, etc.

MYTH:  Pricing a home for sale is a mysterious process.

TRUTH:  Your home will sell for what the market will bear. To determine the range of value for your home, it takes a solid knowledge of the market. And because every home is unique, your home will sell more near the high or low end of the range depending on its specific attributes like location and condition. I utilize a computer database along with years of experience to help you decide where to set the price. It is not simple, but it isn't mysterious either.

The first offer is always the best. It may turn out that way, particularly if buyers have been looking for a long time and want to avoid losing a purchase, says Fred Carmean, a salesperson with Coldwell Banker Residential Brokerage in Chicago.

But exceptions abound. In many parts of the country overheated markets spur multiple buyers to bid above the listing price, so it may not be wise for sellers to accept the first offer, says Nicole Sassaman, a developer who's seen this happen in her hot Beverly Hills, Calif., turf.

Some buyers may also want to test sellers' motivation by low-balling a bid, says Kenneth W. Edwards, GRI, broker and author of Your Successful Real Estate Career (American Management Association, 2003). He advises sellers to do the same and counteroffer high to find out how serious buyers are.

The key, adds Rob Henderson, CRS®, GRI, a broker-associate with ERA Shields Real Estate in Colorado Springs, Colo., is for sellers to avoid being insulted by a low bid and view it as a starting point to negotiate upward.

MYTH:  Lower commissions mean a higher net to sellers.

It sounds logical, but it's not always true. You get what you pay for, says Henderson. "A lot of sellers like the idea of a discounted commission until they learn that the salesperson won't do much marketing, advertising, or negotiating," which means the sellers might not reach their ideal outcome on the sale. So if you're competing against a lower commission, be sure the sellers understand all that full and discounted service implies.

MYTH:  If a house sells in a few days, it was underpriced.

Not necessarily, says Mark Nash, broker-associate with Coldwell Banker Residential Brokerage in Evanston, Ill., and author of The Original New Agent's Guide to Starting & Succeeding in Real Estate (Thomson South-Western, 2004). A quick sale may mean the house was priced correctly for its market and that buyers did their homework. He suggests showing clients higher-priced, active comparables that are still sitting to confirm that the sellers hit a pricing bull's-eye.

MYTH:  If you don't want to make repairs, lower your price.

Not the best idea, says Henderson. A house that doesn't look its best may attract few or no offers, particularly if it's in an upper bracket where buyers' expectations run high, he says. "Condition remains critical to getting top dollar and moving a property fast," says Sarah M. Funt, a salesperson with the Bethesda Gateway office of Long & Foster, REALTORS®, in Maryland.

Although it can be difficult to decide which repairs to tackle, Henderson advises sellers to focus on those that offer the quickest payback, such as fixing a leaky roof. If sellers continue to balk at making changes, suggest they at least clean, touch up peeling paint, and add lighting both inside and out.

MYTH:  Attorneys add an unnecessary complication. 

Attorneys and practitioners can clash over what's a red flag. Yet an attorney might spot something a salesperson might not. Example: A developer's contract for new construction includes different points than the typical board-approved contract and may throw some curves, says Nash. An attorney may be best able to protect the buyer's legal interest. Some buyers also may appreciate the extra attention an attorney brings to transaction contracts.

Does this mean an attorney is always needed? No. Whether an attorney is required depends on state law. In most cases, you don't need Joe Litigator," Nash adds.

MYTH:  You don't need a real estate practitioner.  

Since a home typically symbolizes family, hearth, and security, selling or buying a home often becomes an emotional roller-coaster. It's also often the biggest purchase buyers will make. Having an involved but objective third party helps buyers and sellers stay focused on important business issues and advocate for their best interest. Remind consumers that REALTORS®, members of the National Association of REALTORS®, bring special value to the transaction because they subscribe to a strict Code of Ethics.

MYTH:  Buyers lose interest if sellers are present at showings. 

It's better for sellers not to be on the premises so buyers can discuss concerns freely with their salesperson. But the sellers' presence generally won't derail serious interest, says Edwards. If sellers won't leave, they should maintain a low profile, he says.

MYTH:  Don't buy stigmatized property.  

Rather than letting buyers dismiss the property outright, help them evaluate the stigma in light of their needs and budget. A death in a house can be overlooked, particularly for the right location and price, says Funt. Also remind buyers that a stigma today may not be a stigma tomorrow: Time can assuage some psychological stigmas. But know your state law regarding which stigmas, if any, you must disclose and keep in mind that even if your buyer is willing to accept the stigma, others may not, which may adversely affect the value of the property on resale. 

MYTH:  30-Year fixed-rate mortgages are best.

Recent U.S. Census Bureau data show that 46 percent of Americans sell their homes within five years of buying it. Obviously, most homeowners don’t stay tied to a particular mortgage for an extended period of time. First-time homebuyers might want to consider other options, such as adjusted rate mortgages or shorter terms. “A 30-year fixed-rate mortgage will actually cost consumers money they could be saving toward a down payment on their next home,” Walters says.

MYTH:  Paying off mortgage early is always a good idea.

Think of it as forced savings, like buying a bond: Early mortgage pay-off may not be a good way to go for people who haven’t fully funded a 401K or have high credit card debt that they want to eliminate.

MYTH:  You have to pay private mortgage insurance if you can’t put 20 percent down.

That used to be true, but not anymore. PMI protects lenders if a borrower defaults on a loan. Yet, that means extra dollars in every mortgage payment which don’t add to the equity nor to the amount of the home that is tax deductible. In many cases, homebuyers can put down as little as 5 percent and still avoid PMI. One way to avoid the extra cost is to combine two loans, piggybacking a second mortgage on top of a first.

MYTH:  Term/payment schedule on mortgage has to be what is stated on mortgage document.

“Not true,” says Walters. Consumers can set up any type of payment schedule they want. Try bi-weekly payments, a little extra each month or one extra payment each year.

MYTH:  You can’t build equity with an interest-only loan.

Critics of interest-only programs say that individuals can’t build equity in their home this way. The majority of a homeowner’s equity is built through home price appreciation, not by paying down their mortgage.

Although there's a grain of truth to many myths, most are too generalized to be taken at face value. Teach your clients not to jump to conclusions but to weigh their concerns in light of all factors.