“It is difficult to separate, at times, the myth from the truth.”
The real estate industry is often tainted by misinformation, causing confusion and the exploitation of buyers and sellers. As a Realtor, I strive to dispel real estate myths whenever possible. Have you heard any of these myths or seen others perpetuating them?
Don’t Believe These Real Estate Myths
Myth: You cannot purchase a home with bad credit.
Reality: Many conventional loans will be hard to acquire with bad credit, but the mortgage industry has many types of programs available. Even the FHA has loan programs that can approve borrowers with a credit score under 600. It is possible to buy a home with less than stellar credit.
Myth: Mortgage companies require 20% down to buy a home.
Reality: A substantial down payment can open up more mortgage options. But many mortgage companies now offer conventional loans with only 5% to 10% down. Just remember, if you put down less than 20%, be prepared to pay private mortgage insurance (PMI). If 5% down is too high for you, it may be time to consider an FHA loan where down payments can be as low as 3.5%.
**Are you struggling to procure that down payment? There are over 2,200 down payment assistance programs across the United States. Popular sites like Down Payment Resource can help you find and apply for down payment assistance.
Myth: You don’t need to talk to a lender until you have found a home you want to buy.
Reality: One of my first recommendations to buyers is to find a good mortgage company. Knowing how much and what you are pre-approved for will make house hunting easier. Give yourself the negotiating power of a strong offer.
Myth: Schools don’t matter if you don’t have kids.
Reality: Good schools tend to be part of good neighborhoods, and good neighborhoods raise homes values. Even though you may not have family using the schools, a good school near your home can be an asset to increasing the value of your home.
Myth: A home inspection is a waste of money.
Reality: Get an inspection! You are making the biggest purchase of your life. Even if you will have a home warranty, that does not replace the need for a proper inspection. Hidden problems can often be the most costly. It is not worth saving a few hundred dollars to risk thousands of dollars in repairs.
Myth: A cash offer is king in real estate.
Reality: Cash offers can be very appealing to home sellers. I can not stress enough that, when selling a home, the seller must look at the whole offer not just the price. A pre-approved buyer offering more money and less contingencies can often be better than a cash buyer. Contrary to popular belief, cash isn’t always king.
Myth: Price your home above the amount you want to receive to leave room for negotiations.
Reality: How people still believe this myth is beyond me. Over 80% of buyers start their search online. This means they have access to current information and will know if your home is overpriced. An overpriced house will turn off buyers well before you get a chance to negotiate. Don’t play games. Price your home according to the market value in your area.
Myth: You’ll earn back what you spend on renovations.
Reality: It has been shown time and time again that renovations like a new roof or HVAC system can help sell your home faster. Just don’t expect them to increase the value of your home. The same goes for many renovations. Even kitchen and bathroom renovations may only add 70% of what you spent to the value of your home. Make sure that you’re renovating for yourself. Any increase in property value can be considered a side benefit.
Hopefully, I helped dispel some of these real estate myths. If you come across others, and believe me there are more out there, share them with me in the comments. I will give you the real truth.