Nobody really knows who starts myths, whether of the classic Greek variety or the modern real estate type. While the former are harmless enough, common real estate misconceptions may be dangerous – especially to your pocketbook.
Like a game of telephone, facts become lost in the translation and misinformation conflates with fact. It’s time for a little myth busting.
1. I’ll make a Lowball Offer so we can Negotiate
While it’s true that the buyer is typically in the driver’s seat during a slow market, he still shouldn’t exceed the speed limit, run stop signs or insult sellers. And that is the risk you take by offering an absurdly low price on a home.
Homes are full of emotional attachments for most owners. Offering a rock bottom price may be offensive to the seller who takes pride in the home. Even if the seller counters the offer, giving you a chance to come in higher, the damage may already be done. The seller doesn’t like you, and the transaction, if there is one, may be tainted.
What happens if you determine the house needs some repairs? After dragging the homeowner’s price down and offending him in the process, it’s doubtful he’ll be amenable to making repairs unless absolutely necessary.
Figuring out how much to offer on a house involves walking a fine line between insultingly bargain-basement offers and maintaining the possibility of future negotiations.
2. I’ll buy when the Market hits the Bottom
Trying to time the real estate market is an exercise in futility, yet daily I hear homebuyers say they want to wait to purchase until prices are at rock bottom.
Unless you have a crystal ball, how will you know when the market hits bottom? Even the experts are only able to offer educated guesses as to when a market has reached its lowest level.
Consider this: the only way you will know that the market has reached the bottom is when it starts to go back up. By then, it’s too late and you’ve missed the best buying opportunity.
3. I need to wait until I have 20 Percent to Put Down
We can probably blame the media for this myth. For years now we’ve been hearing about how the mortgage debacle that got the housing market into such a pickle has resulted in more stringent lending standards. While that is certainly true, the facts have been greatly exaggerated.
Sure, it’s preferable to have a large down payment – you won’t be required to purchase private mortgage insurance and you’ll get a better interest rate on your loan – but folks are still buying homes without one. Veteran’s Administration and USDA loans still require no down payment for qualified borrowers. There are lots of options to buy with possible $0 down payment.
From large national real estate sites giving out bogus home values to myths you’ll pick up from friends and family, the real estate process is riddled with misconceptions. Rely on your real estate agent for the facts and buying a home will be much easier.