Have you ever heard “don’t believe everything you read on the internet?” Believe it or not, it’s true, there is lots of real estate misinformation swirling around out there that you can’t afford to now know. It seems like everyone has an “expert” opinion, yet their expertise comes from having only owned their own home. Granted, homeowners learn valuable lessons through their home ownership, but their real estate knowledge is not on the same level as someone who’s owned, say, 50 houses. And it can be hard to tell fact from fiction, to debunk real estate riddles. But all is not lost! Here are the top 5 real estate myths to know that will pay off big.
What’s in it for you
There was a time when it seemed like everyone who bought a home put down 20% of the purchase price. But, if you’re in a hot real estate market – or a market where homes are worth much more than the average cost of a home in the U.S. – 20% could easily run north of $100,000.
Sure, the costly housing myth of putting down 20% is a great way (it’s the only way, actually) to avoid paying private mortgage insurance (PMI). But before you go and sell your signed Michael Jordan rookie card, consider paying as little as 5% down. Since real property is an illiquid asset, if you funnel all your cash into your home’s down payment, you expose yourself to future financial risk; mainly your money is not working for you to make you even more money. What if you instead made a 5% down payment and invested the remaining 15% in a mutual fund which tracks the S&P 500 index? You would be $23,000 richer in just 10-years. Can you afford to make this costly housing mistake?
Now that you know the first expensive myth of real estate, guess what? You are almost guaranteed to run into unexpected expenses after buying your house. Home repairs, home improvements, and moving costs are all expenses homeowners must consider, and should plan to have extra money set aside. Don’t forget about upfront home closing fees either! These are costs required to process your mortgage and often include extra expenses like appraisals, lender fees, home inspection fees, and other third-party service fees. You may be able to get the seller to cover upfront closing costs by agreeing to give you a closing cost credit, but don’t count on it. Count instead on having a cash reserve in place to avoid the shock of the real estate myth of your upfront home ownership cost is only your down payment.
This is a costly real estate myth for 3 reasons. First, there is no legal means preventing property owners from owning two homes - or however many you want - at the same time. Second, if you have the financial means to own 2 or more houses at the same time, you’ll have the added benefit of avoiding a temporary living situation, you can avoid a rushed home purchase, and you’ll have a vacant house to easily accommodate showings. Third, depending on your home’s equity position, your old house could and should be used as a rental property to generate extra income while living in your new home. It’s entirely a real estate myth that you must sell before buying your next home. In fact, holding on to your old home as a rental is literally like having another retirement account.
If your home isn’t ready for an episode of MTV Cribs, that’s okay! It’s true some remodeling projects can increase the value of your home. But if your home is outdated or needs major repairs, it doesn’t mean no one can buy it. There are companies like Good Vibes Homebuyers who want to buy homes that require major home renovations and updating.
Our job is to pay homeowners the most money possible all while guiding sellers to steer clear of costly real estate mistakes. So, if your home needs work or if you’re interested in selling, check out the top-rated home selling solutions that no one other than Good Vibes Homebuyers can provide.
If you’re looking to get the biggest bang for your buck, you can’t afford to not know the real estate myth - asking for more than your house is worth often backfires and can eliminate your best potential customers: qualified buyers with a sense of urgency to buy your home. Smart, qualified buyers do their research and have seen dozens – even hundreds – of online listings before they make an offer. If you overprice your home, there’s a good chance they’ll pass on even making you an offer. That’s a risk you can’t afford to take as a homeowner looking to sell.
If you set your sale price too high, don’t be surprised when your house sits on the market for a long time. The longer your house sits, the less leverage you have and the only way to regain some of your leverage is to lower the home’s asking price. And don’t forget that you must still make your monthly mortgage payments while your house sits unsold.
Conversely, if you set your home’s purchase price at, or even just below, market value, get ready for a bidding war! Anxious buyers will likely send you multiple offers to choose from (and quite possibly love letters or promises to name their next child after you), which gives you all the leverage, and most likely a sale price ABOVE your original asking price. Setting a high home sale price is a costly real estate myth all homeowners must avoid!
Don’t let conflicting real estate information lead you down a wrong and costly path in your search to buy or sell a home. It always pays (literally) to go straight to an expert source by contacting highly rated real estate investors Good Vibes Homebuyers. If you’re looking for an honest, dependable, and local real estate company who can give you unbeatable offers to sell and who can even help you buy your next home, reach out to Phil and Will today!
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