Myth Busters: Real Estate Edition

Myth #1: You need to put down 20% as a down payment.

I made this Myth #1 because it is truly the biggest myth of them all.

There are soooo many options that don't require you to put 20% down and I will ALWAYS scream that from the rooftops!

Most conventional loans require as little as 3% down, FHA loans require 3.5%, and there are some loans that require 0% down such as VA loans for all my veterans out there, and USDA loans which are eligible in some "rural" areas.

Myth #2: It's better to get pre-approved after you find the perfect home to buy.

Let me ask you a question that will tell you why this is false.... How do you possibly know what price range to look in if you haven't spoken to a lender to see what you can get pre-approved for....?

YOU DON'T!

It is so so important that you speak to a lender and get pre-qualified before looking at homes. It is basically the first step in buying a home. You need that pre-approval letter to put in an offer, and you need to know what you can afford before even searching for homes. Looking at homes before getting that pre-approval is just simply a waste of time. For everyone. Period.

Myth #3: Always start with your lowest offer when buying a home.

In a competitive market like we have today, your lowest offer might just get ignored when facing multiple offers.

It is important to speak with your Realtor and get their opinion of the situation when wanting to put an offer on a home. Like I said, it is a really competitive market right now, and most of the time I would suggest putting in your highest and best offer right off the bat!

Myth #4: It's better to price your home on the high side when selling.

False. A home that is priced correctly and competitively will likely sell much quicker than a home that is overpriced.

I know a lot of sellers believe if they go ahead and price their home higher, then they are more likely to get that number but that's just not the case. When you are pricing your home, it is best to speak with a Realtor that can provide you with a full Comparative Market Analysis that will give you a market value for your home while taking into consideration what your home will appraise for.

You are honestly more likely to get MORE for your home when it is priced competitively because it will likely attract multiple buyers, resulting in multiple offers, resulting in higher priced offers.

Myth #5: Renovating your house will definitely net you more money when you sell.

Some renovations may be necessary, but in a competitive market like today, your home will likely sell just the way it is.

I would suggest speaking to a Realtor so they can advise you on what projects are necessary and which are not.

Updated kitchens and bathrooms are main selling points to a home, but complete renovations are often expensive projects that you will not get all of your money back in a sell... do the math with a Realtor, see if it will benefit you financially, and go from there.

Myth #6: It's safe to skip the home inspection if the house looks good.

A home inspection is a very important step in the home buying process. It is necessary to figure out what you are getting into before purchasing a home. You need to know if there are underlying issues in the home before purchasing it!

I understand in this market, waiving that due diligence period is a popular tactic to winning out in multiple offers, but there are options such as right to inspect and ask for repairs, that can still give you that insight on the home, without completely throwing out the home inspection all together.

Myth #7: Zillow Zestimate is what my home is worth.

When was the last time Zillow physically walked through a property, pulled relevant comparables, did specific adjustments and established an on-point range of value?

Never.

Zillow’s Zestimate gives you a general idea of the value of a home — the company calls it a “starting point” — but by no means is it an exact valuation tool. Zillow can’t discern the difference between why homes on one street or in a particular area may be different value-wise versus those just two streets over.

Myth #8: The highest price is always the best offer.

Many people believe this. Especially in today's market. And why yes, most sellers do want to make the most possible off their home, but they also want the deal to go smoothly and actually get to the closing table.

There are many different factors, besides purchase price, that go into an offer...all things that seller's consider. Make sure to talk with your Realtor to write a creative offer that will get you that home in a multiple offer situation, without completely draining the bank.

Myth #9: You need perfect credit to buy a home.

Does anyone really have PERFECT credit...? If you do, kudos to you. If you don't, that's okay you can still buy a home.

There are different mortgage options that have different credit requirements and some only require 620-640 credit scores.

Your credit score is only one factor when you are trying to purchase a home. Many people believe it is the only factor. While it is important and will make the process simpler if you have higher credit, it is not required. You can still become a homeowner with that 650 credit score!

Myth #10: Selling as For Sale By Owner will save you money.

Wrong again! Sellers believe that selling their home as “for sale by owner” (FSBO) will help them save money on transaction/agent fees.

Selling a home isn’t easy, especially if you’re trying to do it yourself. With an agent, the house can be listed in the MLS (where other agents look for their buyers), the home will be marketed well, the home will be accurately priced, and negotiations and communications on the seller's behalf will be taken care of.

There will still be fees if you do FSBO – closing fees, possibly a seller’s fee to pay the buyer’s agent, and they may still end up on the hook for appraisal fees and any repairs necessary after a home inspection.

There’s also a lot of legal things in real estate transactions, so unless they know how to understand the contracts, it’s best to use a real estate agent. A home can be sold as FSBO, but it ends up taking far more time, and the seller will likely lose money by not being able to negotiate a fair price.