A generation ago, buyers didn’t have the luxury of the Internet to research and investigate real estate. Today, of course, many enter the real estate market with statistics and information gathered online. Or the best one is always well we seen them get a really good deal on HGTV. Despite all this data, many people, especially first-timers, have only a cursory understanding of how to be a successful buyer, how to negotiate, and how to approach the home-buying process. And they often develop pre-conceived notions about buying real estate, either from what they’ve read online or seen on TV, what their friends and family have told them, or all of the above. So let’s debunk the Home buying Myths that many home buyers have.
Home Buying Myths
Working directly with the listing agent will get the buyer a better deal
Many people today figure that with real estate listings published online, the buyer’s agent’s role is irrelevant. By searching and researching independently, buyers going directly to the listing agent assume they can negotiate a better deal by cutting out the middleman—the buyer’s agent.
The role of the buyer’s agent was never solely about accessing listings, of course. A good buyer’s agent has always had their feet on the street and keeps a finger on the market’s pulse. They know the comps and the other agents, so they can add an incredible amount of value simply through sharing their experience and knowledge.
Buyers, left to their own devices, “don’t know what they don’t know.” A good buyer’s agent can step in, track the buyer’s process and help uncover some of the unknowns about a particularly house, an agent or the market in general. A good agent has years of market and transaction experience in their head.
Buyers should never offer full price
It’s impossible to have an across-the-board strategy for pricing and negotiating real estate. For starters, every real estate market is different, as is every seller’s approach to pricing. In many parts of the country, for instance, it’s a red-hot sellers’ market. Many times, sellers will purposely price their property right at or just below market value to get multiple buyers interested. When buyers try to offer, say, 5 percent under market value when everyone else is offering full price or more, they might be looking for a home for months.
Also, if a listing is brand new, the seller may expect not a penny under asking. The first two weeks to a month are when the seller sees the strongest activity. When a buyer offers too far under asking out of the gates, they’re likely to lose out.
Spring and fall are the best time to buy
Many years ago, real estate markets revolved around school cycles and summer. People wanted to move during summer so their kids could be settled in and start school by September. For this reason, spring has always been seen as the main selling season. Summer was usually slow, so the fall brought a second opportunity for buying and selling.
Some buyers (and sellers) still organize their activities around this myth. They pull away in the summer as well as during winter. With so much information online today, however, markets move much faster and a buyer can look at real estate 24/7 from a mobile device on their couch. As a result, serious buyers are in the market all the time. (The not-so-serious buyers come and go when it’s convenient.) Homes listed in November or January could be listings of highly motivated sellers. Some buyers have their hands in a real estate transaction all the way up to Christmas, and a seller who has a home listed then must be pretty serious about selling.
Always leave room for negotiation after inspections
It’s common to think that the seller has left room on the table for future price negotiations after the property has been inspected. Therefore, as the myth would have it, a buyer should also leave room to negotiate after the property is inspected. Every buyer goes through this thought process when negotiating the home purchase. But when they follow this approach, they’re bound to get burned.
Many of today’s sellers go through the motions of getting their home in top shape before going on the market. This includes fixing the leaky water heater, replacing or repairing the roof or completing a list of “fix-it” items prior to listing.
Sellers want a sure thing with their buyer. A good agent will work with them to make sure the home is foolproof prior to listing. If the buyer leaves $15K on the table with hopes to negotiate afterwards and the inspection comes out flawless, they will be in trouble. A seller with a solid home and a clean inspection isn’t likely to negotiate with that buyer again. In a strong market, a buyer who tries to renegotiate won’t be taken seriously.
A buyer must put down 20 percent to get a loan
Traditionally, a buyer got a 30-year-fixed loan and put 20 percent down. But times have changed.
With higher home values have come creative loan products. These aren’t necessarily the types of loan products that got people into trouble 10 years ago, however. Today, there are government-backed loans such as those from the Federal Housing Administration (FHA) that allow for as little as 3.5 percent down. These loans are a little more difficult to obtain and require a few extra layers of approval. But they’re available to borrowers with strong credit and income. With interest rates still at 20-year-lows, a smart buyer today will leverage the bank’s money to work for them.
A buyer with a loan can’t compete with a cash buyer
With all the recent talk of cash buyers and big investors swooping in and buying real estate, a lot of first-time buyers assume that if they have to get a loan, they can’t compete. Many times this thinking keeps a would-be buyer on the sidelines.
Many home sellers, particularly long-term homeowners, like to know that someone will be living in the home and that there’s a real “person” behind the offer. When a seller is faced with two similar offers— one from a cash investor and the other from a person who really wants to live in the house and makes that known—a buyer with a clean, solid offer may beat out the all-cash investor.
Buying real estate guarantees appreciation
For a few years during the last decade, homes in all parts of the country were appreciating upwards of 15 percent year-over-year. We all know that the housing market came to a halt when the credit crisis happened a few years later.
Even though the real estate market is back in many parts of the country, things are different today. A generation ago, a buyer would purchase a home and plan to live there for 30 years and pay off their mortgage. Over time, this home did appreciate and it was a great investment for that buyer.
Today’s buyers are different and the world is different. With access to information, technology and the global economy, people are not staying put for as long as they used to. Also, people aren’t marrying and settling down as early and therefore may own one or two homes before settling down.
Educating a buyer is part of our job
Knowledge and experience can truly differentiate a real estate agent. A seasoned agent who has helped buyers and sellers in all types of markets (up, down, and in-between) has a lot to offer. We help our buyers by sharing our knowledge and experience with you. This helps you realistically understand the challenges you face, the problems to avoid, and the type of home you can afford. When we do this, our buyer is better positioned for a successful real estate transaction.
Hopefully we have assisted in dispelling some of these common Home Buying Myths for you. Nick & Cindy Davis can make your dreams come true and assist you in finding your new home. We are always just a click here or call to 813-300-7116 away.
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