Real estate is riddled with myths and misconceptions that often mislead buyers and sellers. Real estate myths can result in missed opportunities, wrong decisions, impaired and misinformed decision-making, and jeopardized real estate goals. Below, we debunk the common real estate myths and shed light on the truth behind them so you can make informed decisions while navigating the real estate market.
Myth #1: Selling FSBO can save you money
Many homeowners entertain the idea of selling their property without the help of a real estate agent, engaging in what is commonly known as a For Sale By Owner (FSBO) transaction. While it is true that selling FSBO allows you to avoid paying agent fees, it is less cost-effective than you might think. First, regardless of whether you opt for FSBO, you still have to pay the buyer’s agent their fee. More meaningfully, realtors contribute invaluable market knowledge, negotiation skills, and extensive networks, enabling them to secure better deals and sell homes faster. Their expertise often exceeds their fees and is well worth the investment.
Myth #2: Home improvements generate an equal ROI
There is a prevailing belief among homeowners that every dollar spent on home improvements will yield the same return on investment (ROI). However, this is only sometimes the case. Particular renovations, such as kitchen remodeling and bathroom upgrades, might add value to your home. Other renovations, pool installations, for example, or extensive landscaping may not provide a substantial ROI or even decrease ROI. To maximize your sales profit, it is essential to research and focus on improvements that align with current market trends and buyer preferences.
Myth #3: You need a 20% down payment
A common misconception that deters aspiring homeowners is the belief that a 20% down payment is required to buy a home. While a higher down payment can result in better loan terms and lower monthly mortgage payments, it is by no means an absolute requirement. Several loan programs offer low down payment options, such as FHA (Federal Housing Administration) loans with down payments in the single digits.
Myth #4: Getting pre-approved dooms your credit score
Contrary to popular belief, obtaining a mortgage pre-approval does not harm your credit score, at least not by much and certainly not in the long run. When you request pre-approval, the lender will perform a credit check to assess your creditworthiness. This check necessitates a slight ding to your credit score, granted, but the minor deduction vanishes after a year. Regardless, pre-approval provides a valuable understanding of your borrowing capacity, allowing you to set helpful expectations when searching for a home. It is a beneficial step in the home-buying process that empowers you as a buyer.
Myth #5: Winter is the worst time to sell
Another prevailing myth in real estate is that winter is the worst time to sell a home. While the spring and summer months tend to be more active in the real estate market, there are advantages to selling during the winter. With fewer homes on the market, your property will stand out more and will likely attract serious buyers ready to make a purchase. Additionally, relocations, career changes, and life events can occur regardless of the season, creating opportunities for sellers throughout the year.
Myth #6: School districts only matter if you have kids
Some buyers, particularly those without children, may believe that school districts are irrelevant when purchasing a home. However, the quality of a school district can significantly impact property value and resale potential. Even if you do not have children, prospective buyers may highly value a good school district, affecting demand and property value. It is always wise to consider potential buyers' long-term implications and preferences when making real estate decisions.
Myth #7: You can only buy a home with good credit
Owning a home is not limited to individuals with perfect credit ratings. It may seem like a no-brainer, but those who can pay with cash obviously step around any credit-related considerations. For those seeking financing, while better credit terms may be available to buyers with good credit, mortgage options still exist for individuals with suboptimal credit scores. Programs such as FHA and VA loans (for veterans) have more flexible loan requirements, allowing people with lower credit scores to become homeowners. Ultimately, it is advisable to explore various loan options and speak with a lender to understand the possibilities available to you.
Myth #8: Real estate always appreciates in value
Real estate is often regarded as a safe investment due to the perception that it always appreciates. While historically, property values have risen over time, it is essential to recognize that local market conditions, economic factors, and other variables can influence property values. Real estate markets can be volatile, and property values may decline or stagnate for extended periods. It is crucial to conduct thorough research, analyze market trends, and consider specific location and demand factors before assuming that property values will consistently rise.
Myth #9: Renting is always cheaper than buying
A common myth is that renting is always cheaper than buying a property. While renting may appear more affordable in the short-term due to the absence of initial or maintenance costs, the long-term financial impact may differ. Rent payments contribute to a landlord's investment, while mortgage payments allow homeowners to build their wealth over time. Additionally, renting provides little control over future rent increases — which can jump dramatically and disastrously — while owning a home stabilizes monthly housing costs. When comparing the prices of renting and buying, it is essential to consider factors such as local market conditions, rent rates, mortgage rates, and long-term living goals.
The value of a quality team
Navigating the complexities of the real estate market can be daunting, but you do not have to go it alone. Working with a reputable real estate team like the Marion Filley Team can make a significant difference in selling your home or finding your ideal property. Their expertise, market knowledge, and dedication to customer satisfaction can guide you through the process and ensure optimal results. Contact the Marion Filley Team today to embark on the journey to your dream home.