top of page
  • Writer's pictureDavid Hildebrand

Top 5 Real Estate Myths Debunked


Hello blog readers!

The purpose of this blog post is to debunk common myths that people believe about real estate and explain what the reality is. These are the top 5 myths that I have come across so far, but feel free to contact me if you have any myths you think are more common than mine!


Myth. The same sales representative can represent both parties in a transaction, but this representation has its limitations. In real estate, this situation is referred to as multiple representation. In multiple representation the agent can advise both parties about what would be beneficial for their interests in terms of clauses, closing dates, chattels, etc., however, the agent is not allowed in any way to give advice

regarding the price that a seller should accept or the

price that the buyer should offer.

Multiple representation extends further than just one agent representing both parties, it also applies when the listing agent and selling agent ARE FROM THE SAME BROKERAGE. For example, let's say both Joe and Steve work for ABC Realty Inc. If Joe is representing the seller and an offer comes in from Steve, this is multiple representation. Even if Joe and Steve do not know each other, they are not allowed to advise their clients on price because they both work for the same company (ABC Realty Inc.). This is something to be aware of any time that you are selling or buying a home. Although multiple representation is not ideal, I have been in many situations where it did not drastically affect the transaction.



Myth. Although money generally holds the most power in a bidding war, it is not the only factor a seller will take into account when review multiple offers. Other factors that a seller will take into consideration are:

- Conditions: A seller may be more interested in a lower offer if that offer does not have any conditions attached to it. The reason for this is that to a seller, sometimes having a firm deal is worth more than money because a conditional offer carries a risk that the offer could fall apart.

- Closing Date: Some people need to have a quick closing or a longer closing depending on when they have purchased another home, or based on other personal situations. A buyer that offers to meet the seller's needs in regards to a closing date could win the offer even if it is a lower offer.

- Who is buying the house: Sometimes people that have loved their home want whoever buys it to love it as much as they do. If a buying agent presents the offer in person with a personal letter from his or her buyer, there is a chance that the sellers will take their offer because they want those buyers to have their house. For buyers, I would recommend writing a personal note to the seller and having your agent present the offer in person with the letter; it may give you a leg up on the other competition.



Total myth! The minimum down payment required for a house is 5% for houses under $500k. The reason people believe 20% is necessary to buy a house is because at 20% you don't have to purchase mortgage loan insurance.

Premiums for a mortgage loan insurance premium can range from 0.6% to 4.5% on the amount of your mortgage. This rate is directly related to the percentage you put down; the bigger the down payment, the less you will pay in mortgage loan insurance. These premiums can be added to the mortgage loan, or paid up front in a lump sum. When the premium is added to the mortgage, interest will also be paid on the premium just as it is for the interest rate on your mortgage.

Although there is a cost to having under 20% down, waiting for a 20% down payment could prove harmful for a buyer. Let's draw up a hypothetical situation. Let's say we are in a buyer's market and a buyer has a 10% down payment and decides to buy the house and pay for mortgage insurance. The next year, his house has increased in value by $50,000. Let's also say that he pays around $30,000 for mortgage insurance over the term of his mortgage. This buyer has pocketed $20,000 by getting into the housing market when he could, even though he has to pay for mortgage insurance. Ultimately, any amount of home equity is better than no home equity, so if it makes sense financially for you to get into the market with less than 20% I would highly recommend it!

For more information on down payments and further scenarios surrounding down payment structure, visit:



A higher commission can entice Toronto agents to bring their buyers to your home

Myth again. To start let me say how commission is normally structured. The seller and his or her agent will agree to a commission percentage, and that commission will be split evenly between the agent representing the seller and the agent representing the buyer. THE BUYER DOES NOT NORMALLY PAY ANY COMMISSION TO THEIR AGENT. So if the commission is 5%, that commission is split and 2.5% will go to both agents.

In today's market, Toronto has become unaffordable for many families and they have decided to move to Niagara and save money on housing. Many of these "Torontonians" have agents from Toronto, where the standard commission rate is 2.5%. If they have a client looking to move to Niagara, many Toronto agents won't even consider sending their client to a property that offers less than 2.5% because it is not worth it to them. By increasing your commission rate to 5% (2.5% to both parties), you are providing a greater incentive to Toronto agents to bring their buyers to your door.

The reality is that Toronto buyers are normally the ones that will pay the most for a property because they are generally the ones with the most money. I am not saying that everyone who pays a higher commission will make that money back, but to say that you will always save money by paying less commission is definitely not true. Drawing buyers from Toronto increases the pool of buyers for your home, which generally translates to more money in your pocket at the end of the day.



Myth. As someone who owns a home, I totally understand the desire to price high and get the most money that you can. The problem I see day in and day out with overpriced listings is that they grow stale in the eye's of buyers and the longer the house stays on the market the less buyers want to buy it. When you price your home too high, there are two things will happen:

1. You will have to reduce the price, which takes you from a position of strength to one of weakness as a buyer's agent will be able to see if the price has been reduced on MLS.

2. Your home will stay on the market longer, and buyers will bring lower offers the longer it sits.

Buyer's are smarter than ever, and they know when a home is overpriced and when a home is priced right. We are in a very balanced market right now, so houses priced high will sit and houses priced right will sell quickly. The best approach therefore is to get opinions on what price you should sell your home for from multiple realtors who sell in the area. From there, pick the realtor you want to go with and price the home at a price you and the realtor agree will be a good price that will draw buyer's interest and sell quickly.



I hope this blog has proved helpful and has changed your perspective on some of the myths around real estate. I am passionate about bringing knowledge to consumers and helping you in any way that I can as it pertains to your real estate needs. If you think the content from this blog will be helpful for someone you know, please share it! Additionally, if you have topics you would like me to cover just contact me and I will be sure to do a blog about it!

24 views0 comments
bottom of page