COMMON REAL ESTATE MYTHS EXPLAINED
Whether you are a first-time homebuyer or not, there are many common misconceptions surrounding the real estate industry. We here at Home Clicks Realty pride ourselves on helping the public better understand the home buying/selling process. Here are some of the most common myths circulating through the industry:
#1 ALL REAL ESTATE AGENTS ARE THE SAME
This couldn’t be further from the truth. Real estate agents have different skill sets, different experience levels, and different traits, just like in any other profession. Some agents have more experience in commercial properties, others residential. If you’re buying a home, you want a buyer’s agent. If you’re selling, a seller’s agent. First decide what you need in an agent and then find someone who matches that profile. And you always have the right to check your agent’s credentials
#2 OPEN HOUSES SELL HOMES
According to the National Association of REALTORS®, only 2% of homes are sold from open houses. Given the statistics, you’re probably wondering why agents go through the trouble of an open house
. Open houses may not sell homes, but they provide a great opportunity for agents to pick up more clients. Most of the time, the people attending open houses are casually looking, window shopping, or just plain curious.
#3 A HOME EITHER PASSES OR FAILS AN INSPECTION
The home inspection
is designed to report the condition of the property; it is not a pass or fail. Think of it more as an assessment or a check-up. The home inspection is a summary of the key systems in the home: plumbing, electric, HVAC, and roof. The inspection gives an estimate of the life remaining on those systems and identifies any potential problems.
#4 TRUST THE ZILLOW ZESTIMATE
In 2016, Zillow’s CEO, Spencer Rascoff, sold his home for 40% less than the “zestimate.
” The Zillow zestimate is not an exact valuation tool. It is more of a starting point. Think of it this way: Zillow calls it a zestimate, which is a play on the word estimate. An estimate is just that—an educated guess based on current market information, but Zillow doesn’t send an appraiser to your home, so they can only rely on comparable sales and market info.
#5 START WITH A LOW OFFER
This is a tricky one. Generally speaking, you shouldn’t start with a low offer. If the home is priced right, you won’t be taken seriously as a buyer. Furthermore, if the home is priced correctly based on the current market, you probably won’t even get a counter offer. If you really want the home, you need to look at the facts. Is the home selling for a comparable price as other homes in the area? If you want the home and it’s priced correctly, make an appropriate offer and wait until the home inspection before renegotiating (if there’s a problem).
#6 REAL ESTATE AGENTS MAKE A LOT OF MONEY
The typical commission on a home
sale is 6% (typically, but this is negotiable). The commission is split between the buyer’s agent and the seller’s agent. So now your agent makes 3%, right? That still seems like a lot of money, but the brokerage the agent works for usually takes half. Now the agent is down to 1.5%. Out of that 1.5% comes all the agent’s out-of-pocket expenses: health insurance, car expenses, marketing, continued education. Yes, real estate agents can make a lot of money, but that takes years of hard work and a great deal of upfront costs to the agent.
#7 THE MORE YOU PAY, THE MORE THE AGENT MAKES IN COMMISSION
Although this is essentially true, think about what this looks like in actual numbers. The agent makes about $150 for every $10,000. So the difference between a home that’s $300,000 and $310,000 is only $150. This myth comes from the idea that agents want you to pay as much as possible so they make as much as possible. An agent isn’t going to jeopardize a sale for that little extra he or she will get from even a $10,000 -20,000 increase.
#8 HOME IMPROVEMENTS PAY FOR THEMSELVES
It’s a common misconception that a home improvement
will increase the value of your home enough to both recoup the cost of the improvement and make a profit. The truth is most home improvements only recoup an average of 64% of the cost of the work. There are some improvements that come close to paying for themselves, but unless you’re renovating the entire house, most improvements aren’t worth the expense
#9 FOR SALE BY OWNER SAVES MONEY
Many people believe For Sale By Owner (FSBO) saves a great deal of money because the seller doesn’t have to pay 6% in commission to an agent. With an FSBO sale
, who is going to screen potential homebuyers, do all the marketing for maximum exposure, handle inquiries and showings during work hours, negotiate, deal with home inspections, etc. You may save 6%, but the average FSBO home sold for $60,000 LESS
than an agent-assisted sale. You get what you pay for. Is 6% savings worth the $60,000 loss in the sale price?
#10 GET PRE-APPROVED FOR A MORTGAGE AFTER FINDING YOUR HOME
Many people begin searching for a home before getting pre-approved for a mortgage. Always get pre-approved for the mortgage before even beginning your house hunting. Not only will a pre-approval give you an idea of your budget, it gives you bargaining power. If you and another buyer are both interested in the same home, your pre-approval status acts as a guarantee that you qualify for the mortgage. In other words, you are taken more seriously as a buyer.
If you have any questions or are looking to sell or purchase a home, please don’t hesitate to reach out. Happy house hunting from all of us at Home Clicks Realty