Don’t believe everything you hear (or read on the Internet). There are many common myths about Real Estate, the market, agents, and buying or selling your home. Here are 5 Real Estate myths you’ve probably heard recently and the truth behind them.
Myth #1: Based on the current interest rate, it’s the wrong/right time to buy.
While national interest rates do fluctuate and can cause your mortgage payment to be lower/higher, all Real Estate is locally focused and each situation is unique. If you are financially and mentally ready to buy, you have a good credit score, you have saved enough for a down payment, you can pay a reasonable monthly mortgage payment on a home you want that fits your needs, you’ve carefully compared the pros and cons of renting vs. buying, then it might be a good time for you to buy. But even if interest rates are the lowest they have ever been, if you are not financially ready and don’t fully understand the sacrifices owning a home requires, it is probably not the right time for you. Look carefully at your financial situation along with interest rates to determine if it’s the right or wrong time to buy for you.
Myth #2: When making an offer on a home, never offer the full asking price.
While this strategy may have worked a number of years ago, times have changed. There’s no real strategy for making an offer on a home in today’s market. The seller may have deliberately overpriced or underpriced the home. A home that is priced right in its market can receive multiple offers, and some of them may be over the asking price. Working with an experienced Real Estate agent who understands the market can help you determine what to offer.
Myth #3: Selling a home For Sale By Owner (FSBO) will save you money.
In a recent survey asking sellers who successfully sold their homes FSBO, only 4 in 10 said they would sell their next home without the expertise of a Real Estate agent. It’s a lot of work to sell a home and takes expertise to truly understand the market and how to price a home. In many cases, FSBOs lose money. The home could be overpriced, causing it to remain on the market too long. The transaction could be mishandled. The seller could be inexperienced in negotiating. Hiring a Real Estate agent also saves you time. Agents show the home when you’re unavailable, they respond to inquiries from potential buyers and agents, and they are better equipped to handle various feedback from visitors.
Myth #4: Agents get kickbacks from lenders, title companies, and/or home inspectors.
This has been false since 1974, when agents were prohibited from receiving any kickbacks or favors from Real Estate vendors. It’s against the Real Estate Settlement Procedures Act (RESPA). An agent’s license would be jeopardized if any kickbacks or favors were accepted.
Myth #5: Sellers can expect to earn back the money they invested in remodeling projects.
The truth is that it’s extremely rare to get all the money back that you put into a remodel project at resale time. The highest return in a recent survey was a siding replacement of fiber-cement, and that return percentage was 84.3%. Remodeled kitchens and bathrooms are big selling points and can make your home more attractive, causing it to sell more quickly, but they will not necessarily provide a full return on your investment.