Have you ever wondered who starts myths and why? Sure, the old fairy tales and legends are harmless but what about those regarding real estate? These are far more dangerous, especially to your bank account.
It’s time for a little real estate myth busting.
1. I’ll make a ridiculously low offer. After all, it’s a buyers’ market
Yes, homebuyers have far more control over a real estate transaction when there are lots of homes on the market but few buyers. This doesn’t mean, however, that it’s bargain basement shopping time. If you find a home you truly want, you’ll run the risk of insulting the seller and, regardless of how badly he needs to sell, he may not sell to you.
Many homeowners have longtime roots in the neighborhood and a very real emotional attachment to their homes. Offering a lowball price will not endear you to him and, even if he counters your offer at a higher price, you’ve already insulted him and it will taint the entire transaction. It’s doubtful he’ll be amenable to future requests for payment for repairs, extensions of timelines or to changing other items in the contract.
Rely on your agent to apprise you of the home’s current market value and walk that line between ridiculous and feasible when determining how much to offer.
2. Short sales are easier on your credit than foreclosures
Guess what? Both a foreclosure and a short sale impact your credit the same. They are both reported to the credit bureaus as accounts “not paid as agreed,” according to Fair Isaac, the company that calculates our FICO scores.
3. It’s better to wait until the home prices hit rock bottom to buy a house
That sounds like excellent advice. But tell me, how will you know that prices have hit their bottom? When they start going back up, right? By then, the bottom of the market is in your rearview mirror. The best time to buy a house is when you have the money and you find a house you love.
4. I have to have a huge down payment to buy a home
If it weren’t for the media, this myth would’ve died a long time ago. Yes, you’ll have lower mortgage payments and you’ll get to skip the requirement to purchase private mortgage insurance if you put down at least 20 percent, but there are loan products on the market that require as little as 3 percent for a down payment. The USDA loan and the VA loan require zero down payment.
5. Buyers like negotiating on price so I’ll overprice my home to leave room for that
While this might work in a sellers’ market when there are few decent homes on the market and lots of buyers wanting to purchase, it’s the kiss of death in a buyers’ market.
Instead of attracting buyers, an overpriced home repels them.
Even if you should attract a buyer who offers what you’re asking, what are the chances the house will appraise for that inflated price? You most likely will end up having to drop the price to save the deal.
Always rely on the advice of your real estate agent to avoid problems with any of these real estate myths.