7 Common Real Estate Myths

7 Common Real Estate Myths

  • Maven Realty Utah
  • 05/5/23

In the real estate industry, there are a number of myths and misconceptions when it comes to buying or selling properties. Whether you're gearing up for your first home purchase or preparing to sell, understanding the truth behind these common real estate myths can help you make more informed decisions about what works best for your lifestyle and financial goals. Read on as we debunk seven of the most popular beliefs out there. 

You'll save money by selling on your own

For sale by owner (FSBO) is an attractive solution that allows homeowners to save money on agent commissions. Thus, it may be tempting to go this route. However, listing with an agent still yields higher profits than going it alone, even after factoring in the commission fees.

Experienced agents understand how to market listings effectively online and through their personal network in ways that amateur sellers may not be aware of, resulting in greater visibility among potential buyers who are seeking a home just like yours in their desired price range. An agent is well-versed in negotiation strategies and marketing techniques that generate more interest and higher offers.

Home improvements generate an equal ROI

Whether you're looking to increase the sale price of your current home or upgrade a fixer-upper, renovations tend to offer varying degrees of return on investment (ROI). Sellers should be aware that not all improvements yield equally high returns, and some projects may even decrease market value when prospective buyers discover them. Roof repairs, for instance, can often net positive results, but adding a swimming pool will likely make closing escrow more difficult, as many buyers shy away from the maintenance costs of a pool.

Before making any upgrades to your property, look at recent sales prices in surrounding neighborhoods and review local real estate trends so that you have realistic expectations. Your agent can help you determine which upgrades will be worth the effort and give tips about what those changes might mean for buyer appeal.

You need a 20% down payment

The housing crisis of 2008 led lenders to tighten their purse strings about conventional loan offerings, which required larger down payments for borrowers with shaky credit histories. Since then, many government-supported programs have emerged, offering alternative solutions with lower down payment options, such as FHA loans, VA loans, and USDA Rural Development Mortgages. Even Freddie Mac and Fannie Mae have introduced reduced borrowing costs initiatives that are designed to help qualified applicants secure financing compromising their financial situations.

In addition to offering reduced borrowing costs initiatives, Freddie Mac and Fannie Mae also provide resources to help borrowers understand their options and make informed decisions. These resources include educational materials and tools to help borrowers compare different loan products.

Freddie Mac and Fannie Mae’s reduced borrowing cost initiatives are an essential step in helping qualified applicants secure financing without having to deplete their bank accounts. By providing access to low-cost mortgage products and other resources, these initiatives can help borrowers make the most of their financial resources and get on the right path to homeownership.

Getting pre-approved ruins your credit score

Getting pre-approved before looking for a home is wise, as it allows you to accurately set expectations about what type of house fits your budget. It helps demonstrate financial stability for sellers. The misconception is that doing this will hurt credit scores; however, the opposite is true. A lender pulls what's known as "a soft query" during the pre-approval process, which doesn't affect your personal credit standing.

Having a pre-approval letter at the ready allows you to swiftly proceed when you discover the ideal house. When submitting an offer, the seller often requests a pre-approval letter. This shows the seller that the buyer has the financial means to purchase the home, indicating they are serious about it. Additionally, it can give the buyer a leg up over other buyers who have yet to be pre-approved. Since the seller knows the buyer is approved, they can move forward in the home-buying process without hesitation.

Winter is the worst time to sell

Yes, fewer buyers are actively searching in the fall and winter compared to spring or summer, but savvy shoppers may be willing to overlook slow seasons if they can score substantial discounts on their new homes. In addition, mortgage rates can remain low during these periods, meaning those who do decide to purchase property at this time often take advantage of more favorable borrowing costs. Furthermore, homeowners don't have to deal with high levels of competition from other listings, thereby decreasing anxiety associated with selling.

School districts don't matter if you don't have children

While many parents prioritize school districts when shopping for real estate (and rightly so!), it doesn't mean that non-parents should ignore education. The quality of local schools often significantly impacts the appeal of an area, promising higher returns when it comes time to sell someday.

You can only buy a home with perfect credit

Lousy credit can complicate the loan approval process, but avenues are still open for individuals whose scores could be better. Besides government-backed mortgages, applicants can sometimes secure financing through private lenders or accepted buyer programs (though interest rates vary). In addition, some sellers may be willing to work directly with buyers, circumventing pre-qualification protocols altogether by allowing the owners to finance their properties. However, remember that these paths involve additional risks, whereas traditional lenders offer more protection against financial defaults via escrow services.

Ready to get started?

Navigating the real estate process is never easy, but with accurate information on your side, buyers and sellers can make decisions more confidently than ever! Whether you're selling your beloved home or evaluating your credit score, the key is understanding where the myths end and facts begin. Don't let popular misconceptions dissuade you from making sound investments in the future. Reach out to the team at Maven Realty Utah for expert guidance and answers to all your questions.

*Header photo courtesy of Shutterstock

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