Things aren’t always what they seem, especially in real estate. Let’s bust some of the most popular real estate myths! Here are the 20 biggest real estate myths, some will explode and others will crumble.
The first choice in the home buying process: To actually decide to buy a home! Lots of people are renting and that percentage is rising. Don’t let these myths about renting v. buying fool you.
1. It’s always better to buy than rent.
There are so many variables that play into this one such as how secure is your job, price range, how long you would stay in the home, etc. It’s hard to predict the future, so it’s safe to say that buying is not always better than renting. It depends where you are financially and mentally.
2. Renting is cheaper than buying
The thing about this myth is it is actually possible to rent cheaper than buy. Thanks to supply & demand, in some cities, the rental rate is higher than others. We suggest tossing this myth out the window because with all things considered (like taxes), buying can often easily be the cheaper option.
3. Real Estate is the best investment.
“Best” is your key word here. Real estate is a solid investment for most people. There’s a quote that states 90 percent of millionaires use real estate to get there. There is some truth to that, but it’s rarely the highest performing portion in the portfolio. Before investing. Check to see what the real estate in that city appreciates for before making a final decision.
So now let’s say you’ve officially decided to buy a home. There are a lot of pitfalls along the way. Don’t let any of these financing myths give you the slip.
4. My salary is too low to buy a house
The best answer here is that all of your finances will factor into the equation. If you have a low salary, you could qualify even with low debt, a decent credit score, and a sufficient amount of savings. Lenders look at the whole picture, not just your salary.
5. I have too much debt to buy a house.
How much is too much? Is it student loan debt or credit card debt? Each of these is a variable that gets plugged into a spreadsheet from your loan specialist before the verdict is given. It is possible that you do have too much debt, but you never know until you ask.
6. My credit score is too low to buy a house.
Again, this is just one piece of the much larger pie. Certain scores are too low, but the majority of people are above these. Before writing yourself off, check out this Quicken Loans article about the average credit score needed to purchase a home in 2020. You could be in much better shape than you thought.
7. I don’t have enough down payment to buy a house.
To avoid PMI insurance, 20 percent down is generally required. But without that 20 percent, you still have some options. Check out these homeownership assistance programs for South Carolina. Depending on the variables, you could get some money issued towards your down payment. Find a reputable lender to show you all the different ways you could go.
8. All I need is the down payment to buy a house.
This statement is completely false! There are these things called “closing costs” and they are made up of prepayments towards taxes/insurance, title fees, attorney fees, taxes, and some other items. Closing costs can be anywhere from $2,000-$6,000 depending on the price of the home and the characteristics of your loan.
9. As long as I can make monthly house payments, I’m good!
This one is often mistaken for fact. There’s so much more to owning a home than you think. First, you have to consider if there are Homeowners Association (HoA) dues. Don’t forget your water/sewage bill that is frequently included in your rent for apartments. Other potential costs include trash pickup, landscaping, and home maintenance. Be proactive and total everything up to make sure you’re good with the final number.
10. The 30-fixed mortgage is the best deal.
Sometimes, but not all the time. It may be your best option, but that doesn’t mean it’s the best deal. The shorter you can make the term of the loan, the less interest you will pay overall. So, if you can handle the 20-year or the 15-year, go for it! Those saved dollars really add up in the long term.
11. Pick the loan company that offers the lowest rate.
Yes, interest rates are important, but they aren’t the only factor that makes up your loan. There will be fees and possibly basis points. Your loan specialist will have all the best options and will recommend one that works the best in your current situation.
12. Pre-qualification is the same as pre-approval.
Don’t be fooled: These documents are meant to give the buyer some financial credibility when putting down an offer. One does this well. The other? Well, it’s often not worth the paper it’s printed on. A pre-qualification is a quick & easy look at your general financial makeup. Pre-approvals dig deeper and come after completing the mortgage application.
Now, let’s take a look at the actual buying process and the myths that fool people every day.
13. I don’t need a real estate agent to buy a home.
Technically, this is correct. Of course, you can buy a home on your own. But should you? Absolutely not! Why? An agent’s service is valuable and free for buyers. Why wouldn’t you take advantage of that. I know, I know some will say they can get a better deal without using a Realtor, and it has happened. I’m not saying it’s never happened, but if you believe that’s true, well…good luck.
14. The agent that sells the most homes must be the best.
Real estate agents who sell the most homes make the most money for themselves. That’s without a doubt. But, do their clients get the best service? Do clients get the lowest price on the home they’re buying? Or…is the agent in a rush to get to their next closing? There’s actually an optimum point on the spectrum where experienced agents have the correct amount of time to accomplish all of their clients’ goals.
15. I’m building a house, so I don’t need a Realtor.
Here’s a doozy for you. We hear this all the time and the lure is the idea that some people believe they will get a better deal without having representation. Actually, this is impossible to prove. Building a home is a complicated process, and a consumer can’t know if they are getting a better deal on new construction by not having a Realtor on their side.
16. My agent has to do everything I tell them.
A Realtor has a fiduciary responsibility to work in the best interest of their client. They are also small-business owners who need to make a living. The buying relationship is an agreement where the client has certain requirements of behavior, and so does the agent. Either can cancel the arrangement at any time in the process, but a real estate agent is not required to do whatever the home buyer wants.
17. If I keep looking, eventually I ‘ll find my perfect house.
There is no such thing as a perfect house. Let’s say it all together shall we, “There is NO such thing as the perfect house!” We aren’t sure why people believe this is the case, but every home has flaws. Every house has features we wish were different. Don’t believe the myth that if you continue house hunting you’ll find perfection, because that’s like hunting for Bigfoot.
And now a few myths about selling your home. These fool people every single day and we are her to tell you why they are not true.
18. If I sell the home myself, I’ll make the most money.
Selling without an agent only makes sense in a very small number of situations. The majority of the time, home sellers will make more (even after commissions) and have quicker turnaround with less stress if they hire a professional. In all of life, the more complicated the process, the more it pays to have a professional guide you.
19. Always price your home above market value to allow for negotiation.
This is a very prevalent myth, even among some real estate agents. The key here is “always”. There are times when it is better to price your home at (or sometimes below) market value to attract buyers, increase competition, and force the price higher. Also, depending on your next move, there are times when it’s more valuable to sell the current home quickly than it is to take longer and sell for the higher number.
20. Don’t spend money updating, just drop the asking price.
Dropping the price is easy, obviously, but it does not always work. Markets are moving in favor of “move-in-ready” properties. If your home needs some updating, it may benefit you to get the work done and sell at a higher asking price. As is the case with most real estate myths, all the relevant factors need to be considered before crafting your best plan of action.