Top 10 Real Estate Myths: Debunked!
The age of technology and social media means information travels fast. That’s great most of the time, but, unfortunately, not all the stuff we read on the internet is firmly rooted in facts. Some of it is total hogwash, but that doesn’t mean it doesn’t spread to the eyes and ears of many people worldwide and suddenly become a widely-held belief.
So, today, we’re listing the Top 10 Real Estate Myths and debunking them, so you know what’s true and what’s a tall tale. Read on!
Myth 1: Getting Preapproved Affects Your Credit Score
Getting preapproved is an important step in the home buying process.
Not only does the bank or other loan provider let you know exactly what you’re able to afford given the state of your finances, it shows the sellers that you are taking the process seriously and that an offer from you is the real deal.
What getting preapproved does not do is negatively impact your credit score, or impact your credit in any way for that matter. The lender does a soft pull to determine where you’re at before you begin the buying process, but inquiries like these don’t reduce your score.
So, your lender knows what you should realistically be able to afford given your finances and credit history, you know what you can afford based on the preapproval, the seller knows you’re a legitimate buyer, and your credit stays totally fine!
It’s a win on all sides, so don’t skip this crucial step when buying a home, especially if it’s because of this pesky and incorrect myth!
Myth 2: Lead With a Low Offer To Leave Room for Negotiations
The savviest sweet talkers love a good chance to haggle, but the real estate market is not a flea market. In recent years, there’s been less inventory and higher demand, meaning the sellers are regularly walking away with their asking price and, in some cases, more.
Going in with a lowball offer holds several disadvantages:
It wastes time: The seller may entertain you with a counter offer, but today’s market is competitive and, more likely, someone with a better offer will beat you to the punch.
It hurts your credibility: Most sellers want to know they’re negotiating with someone who seriously intends to purchase the property. A comically low offer communicates that you may be in it for the wrong reasons.
It disrespects the seller: Fair is fair. We should always go in low if the seller has grossly overvalued their home, but, if the asking price is in line with comparable properties in the area, undercutting the going rate significantly can be interpreted as a sign of disrespect and could ruin your chances completely.
Instead, make a fair offer based on the local market and follow the recommendations of your local real estate experts. They will know when you are getting a deal and when someone is trying to take you for a ride.
Myth 3: You Don’t Need an Inspection If Everything Looks Fine
You’re in love with the place, it’s within your budget, and the seller wants to close immediately so they’re ready to take the money and run. Not so fast! Sellers who push to skip the home inspection often have something to hide, and it’s not always apparent to the untrained eye.
Some of the most common problems uncovered during the home inspection include:
Faulty wiring
Roof problems
HVAC issues
Plumbing issues
Poor drainage
Cracked foundations
Radon in basements
Finding out about these things first hand doesn’t only put you and your family in harm’s way, but also could mean you’re shelling out to cover costly repairs that should’ve and could’ve been discussed before closing. Once you close, that burden is on you.
So, no matter how good it looks, don’t waive the inspection.
Myth 4: Renting is a Waste of Money
Buying holds many advantages over renting, namely in the fact that your mortgage payments go towards building equity and eventually a juicy return on your investment. That said, renting still makes more sense for some people, both logistically and financially. Despite the stigma, it’s not just “throwing money away.”
Renting remains cheaper in most major cities in the United States. That means a little extra dough in your pocket to use as disposable income, but, more importantly, it means less of your wealth is tied up in an investment and free to grow in other markets.
Renting also gives you more flexibility to pick up and go whenever the mood strikes. This is great for jetsetters, bent on experiencing much of what this great wide world has to offer, and ambitious career professionals, who may be asked to move across the country at the drop of a hat to take on a larger role in their companies.
Purchasing a starter home and investing in real estate are both great options for many people, but it’s dismissive to think that renting is not a great option too.
Myth 5: You Can’t List Until You Fix and Renovate Everything
We’ve had an unprecedented seller’s market for some time now, making it more and more difficult for hopeful homeowners to find available properties to purchase. So, that means there’s an emerging niche for more affordable homes.
You may stand to make some extra money on the sale if everything is modern and pristine, but you’ll have to pay for these repairs upfront in both time and money in order to accomplish that. Meanwhile, you may have many would-be buyers in your area that would be happy to save you the hassle and do these repairs themselves.
So, instead of committing yourself to a whole makeover, focus on a few high-value quick fixes like decluttering, painting, and staging. This alone will help you present the home in its best light and help you get a great deal without having to undertake costly home improvement projects.
Myth 6: You Should Price Your House Higher Than It’s Worth
Property values are on the rise, so you feel like you may capitalize on the growing market by inflating the price of your home. Besides, the buyers will want to negotiate anyway and bring it down anyway, so you may as well lead high to take advantage and make the most profit.
You may reel in some poor soul with this tactic, but it’s never been easier for buyers to shop around and see what other properties in the area are going for. If your home is much higher than the other local listings, they may avoid you altogether and let your house sit and sit and sit.
Don’t put yourself in a position where you need to explain to hopeful buyers why your house sat on the market so long. Chances are it will work against you and ultimately diminish your overall profit rather than improving it.
Price the house fairly so buyers are interested in seeing it and making offers.
Myth 7: The School District Only Matters If You Have Kids
Properties in great school districts are often pricier, so buyers with no children may feel they can get a deal if they make this sacrifice during the house hunting process.
On the one hand, you can find some pretty great properties in lower-performing districts and they will be priced better than comparable properties in the better districts. That said, you’ll be stuck looking for another buyer who’s willing to make this compromise when it comes to the resale.
Buying in a good school district protects your investment, resulting in greater resale value and a wider net of possible buyers when the time comes to sell. You’ll set yourself up for an easier time down the line if you keep this in mind.
Myth 8: You Have to Sell Your Home Before Buying
Selling your current home is exactly what most people do when moving, but that’s not necessarily the only option.
For one, you can negotiate a closing date, depending on the seller’s timeline, that allows you to list and sell your own home after you’ve already selected and negotiated the contract for your new home. With the way inventory has been moving in the market, a fairly-priced home with few issues may move quickly, eliminating the need to leave a buyer on the hook while you firm up your own sale on the other end.
Some people with a little extra cash on hand may also consider holding onto their old property to use as a rental property. With the right strategy, this asset can become self-sufficient, with a tenant’s rent payments paying off the mortgage, until it eventually becomes pure profit.
If you’re interested in this avenue, consider discussing the requirements with your local real estate professional and lending institution. There may be some legwork involved upfront, but the dividends down the line will make it well worth the effort.
Myth 9: You’ll Make Less Money If You List Low
This one must be a joke, right? How could someone make more money starting with a lower listing price?
According to the National Association of Realtors, it can be done and it’s not an uncommon strategy. Listing low attracts more buyers and leads to more offers, meaning buyers, who have now envisioned themselves moving into what they perceive to be the perfect property at the perfect price point, will be more inclined to engage in a bidding war.
Once you get a good bidding war on your hands, you stand to make more money than if you listed it higher in the first place. It’s not the best strategy for every property or market, but it can be quite successful if implemented in the right situation.
Myth 10: You Don’t Need a Real Estate Agent
The tech revolution has made navigating the real estate world more manageable for the layman, but hiring an experienced real estate professional is still the best way to get a great deal on your dream home. They have knowledge and expertise to lend at every step of the way, whether you’re trying to price your home fairly and competitively, looking for the best properties in your neighborhood, or trying to come up with strategies that’ll get you what you want in less time.
Plus, they make the whole process so much less stressful and, in today’s hectic world, who needs yet another thing to deal with?
So, do yourself a favor and hire the best real estate agent you can find for your next home buying or selling experience. You won’t regret it!
