5 real estate myths debunked
Real estate may be the only investment you can live in, but
this familiarity hasn’t stopped several real estate myths from taking root. Buying
or selling a home is an uncommon event for most people, and because of that,
it’s not fair to expect everyone to be a real estate expert. To help you prepare
for your next home purchase or sale, here is the truth behind five real estate
1. You can look up a home’s exact value online
Several popular real estate websites appear to publish
precise home values for just about every address in the country. Read the fine
print, however, and you’ll learn that these figures are just rough estimates
based on public information fed through computer formulas. These numbers may be
okay for getting a ballpark idea of the values of most homes, but for a more
reliable estimate, you should consult a local expert like a real estate agent
or home appraiser. These professionals will examine the home in person and compare
it to the recent sale prices of similar homes in the area to produce a more
precise estimate of the home’s value.
2. There’s no need to get a home inspection when buying a
At a typical cost of $200 to $500, it may be tempting to
skip the optional home inspection step when buying a home. Some homebuyers even
believe that a home appraisal covers the same points as an inspection (it
doesn’t). Getting a home inspection is highly recommended because it helps protect
you and your new investment. A home inspector will examine the home from top to
bottom to look for issues that might cost you money, put your safety at risk or
expose you to legal liability in the future. If any negative items are
discovered, you may be able to ask the seller to fix them, request a credit on
the sale price or back out of your purchase entirely.
3. Your only upfront homebuying cost is the down payment
With mortgage down payment options as low as 3% or even 0%
for qualified homebuyers, purchasing a home today can be very affordable.
However, your down payment is unlikely to be your only upfront homebuying expense.
Closing costs – the fees and taxes related to your purchase – can range from 2%
to 5% of your loan amount (for example, $4,000 to $10,000 on a $200,000 loan).
Thankfully, you may be able to negotiate to have the seller pay some or all
your closing costs, and special mortgage programs with down payment assistance
may also be available. Ask your real estate agent and your loan officer about
4. You should always bid low when buying and price high
Most home prices are negotiable, so it makes sense to try to
get the best deal you can. Therefore, it’s easy to assume that you should
always start with a lowball offer when buying a home and always ask for more
than you expect to get when selling a home. Sometimes, however, the opposite
strategies are best. If you’re trying to buy a home that’s already priced
fairly in a competitive market, you might need to make an offer near or even
above asking price to get the home. When selling your place, setting a lower
price usually results in a quicker sale – and it may be a way to get multiple
buyers to bid against each other and drive up the price. Your real estate agent
can advise you on which approach they recommend for your situation.
5. The first step of buying a home is looking at homes
You wouldn’t go grocery shopping without your wallet, and
you shouldn’t go home shopping without home financing. Your first step when
buying a home should be to get preapproved for a mortgage and a specific loan
amount. Your preapproval will help set your homebuying budget, show home
sellers that you’re a serious buyer and eliminate extra steps, paperwork and
stress once you’ve found a home to buy. Working with your loan officer to get
“mortgage-ready” early may even save you money by getting you into a better loan
Buying or selling a home is often an exciting
time, an important life event and a major financial transaction. By learning
the truth behind myths like these before you get started, you’ll have an added
edge in your home purchase or sale.