There are a lot of myths and misconceptions in real estate. With so many out there, it becomes difficult to decipher what’s true and what isn’t. We decided to address a few of them and debunk some of the most common myths out there. Keep reading on to get all the details.
YOU DONT NEED AN AGENT TO BUY OR SELL A HOME
I mean sure, there are For Sale by Owner listings out there so technically, you could sell it on your own, but people often overestimate the value of a real estate agent. From their expertise, to their real estate knowledge, to the connections that they have, you’re getting more than just a sales professional to buy or sell your home. You’re also getting a negotiator when your dream home already has multiple offers on it, you’re getting someone that will take your wants and needs and find the right homes for you to save time, you’re getting someone that can act as the middle man for all of the people you need to talk to in the home buying or home selling process, and so much more. In the long run, you’ll be happy that you worked with a real estate agent that had your best interest in mind, and not to mention, they could become a permanent confidant to assist you with all of your future real estate needs as well.
LOOKING AT HOMES IS THE FIRST STEP
Although this sounds like the first step, real estate agents typically won’t take you out to see homes until you’ve completed pre-approval. This is because a pre-approval is a good indicator of what you could get approved for when you apply for the mortgage, so that you won’t waste your time looking at a 400K home when you’re only pre-approved for 250K. This pre-approval also helps the real estate agent narrow down the search and find your ideal home without having to worry about if you can afford it.
YOU NEED A 20% DOWN PAYMENT PLUS CLOSING COSTS
This is a very common myth that causes people to wait a very long time before purchasing a home. FHA loans for example, only require 3.5% down, and the seller could take on the closing costs, so paying for a home doesn’t have to be as daunting as you think it is. Of course, the seller paying the closing costs isn’t guaranteed, and there are other fees at closing, so to cover everything, saving around 8-10% should put you at a good spot.
PRE-APPROVAL WILL HURT YOUR CREDIT
With credit, there are hard inquiries and soft inquiries. Getting pre-approved is only a soft inquiry to your credit, meaning it won’t impact or ‘ruin’ your credit. When you get multiple ones in a 30 day period, the credit bureau will qualify this as “shopping around” and won’t factor all of the inquiries into your credit, so don’t let this myth scare you away from this vital first step.
LIST YOUR HOME FOR SLIGHTLY HIGHER FOR NEGOTIATING PURPOSES
At first, this may seem like a great idea. Get more for your buck right? Wrong. Next thing you know, the home isn’t getting any leads because it is priced too high, the home is on the market for 30+ days and you’re forced to lower the price more than once to get some kind of traffic. Then because of this, buyers are weary of it because it has been on the market for so long. What you want to do instead is sell it for the price that it appraises for, or slightly lower. This way you will get more leads in the door and let’s say you get multiple offers. Buyers will in turn bid higher than the asking price because of the competition, and you will still get more for your buck in the end, especially since we are currently in a super seller’s market.
YOU NEED PERFECT CREDIT TO BUY A HOME
Maybe you have subprime credit, which can easily discourage you from looking into purchasing a home. We get it. Just know that you have options. Invest in a credit repair company or specialist to assist you in improving your credit. From disputing possible errors to paying off collections to paying down your credit cards to less than 30% usage, taking certain steps can raise your credit significantly in a short amount of time. A credit specialist can also request a rapid rescore if you are getting a home very soon, to shoot up that score quicker than the normal amount of time it takes to reflect changes.
Now if it’s a situation where you don’t want to go through the steps of improving and want to go ahead and get a home with your credit as-is, you can qualify for an FHA loan with as little as a 580. Granted, they look at the whole picture when it comes to your credit history, and if you are right at the minimum and qualify, expect high interest rates. At the end of the day, hiring a real estate agent to give you advice about this is going to be your best bet. Their expertise and experience will add so much value to your decisions.
There are so many myths that exist in real estate. From common misconceptions to people sharing their experiences that qualified as special cases, it can be difficult to know right from wrong. Make sure to empower yourself. Don’t be afraid to do your research. The internet is your friend and that, combined with a trusted professional, will give you great insight on making the best financial decisions and getting into your dream home!