Whether you are looking at buying your first home, selling your first home or purchasing your next home you’ve probably come across some common Real Estate myths during your time on the property ladder. Whilst some of these may be harmless, others may have changed the way you have gone about buying or selling your home. Here are some common Real Estate myths debunked.
Many people will begin looking for a home without speaking to a lender first, as they believe it will damage their credit score. Some people may also believe that pre-approval doesn’t take place until they have found their home. However, in reality most offers will not be accepted without lender approval and there is not much time to gain pre-approval once you have made an offer.
Gaining a preapproval letter from a lender of your choice is actually a great first step in securing a home and should be done before you begin even looking at houses. It will allow you not only shop within your price range and therefore focus your search financially, but it will also ensure you are ready to make an offer on that dream home when the time is right. Many people may be making offers on the same home at once, and without pre-approval you aren’t ready to commit to that home.
It can be devastating to fall in love with a home, only to be denied a mortgage for it later. In regards to your credit score, Yahoo finance writes: ‘getting prequalified is only a soft hit on your credit, causing absolutely no impact. Once you apply for preapproval of a mortgage, it shows a hard pull on your credit. However, credit scoring models take into account that you might be shopping around and only count several mortgage applications within two weeks to 30 days as a single inquiry, according to Experian.’
Depersonalizing your home before an open house
You may think that you do not have to clear away personal items to sell your home but doing so can actually sell your house. Tidying up goes without saying, but removing personal items as much as possible and providing a nicely ‘staged’ home can help to sell your house as a ‘blank canvas’ allows others to visualize themselves living in that space. Personal items and your own personal style may get in the way of that, if it takes center stage.
Further, it is also a common myth that open houses guarantee to sell homes. The National Association of Realtors actually estimates that only 2% of home are sold through open houses.
A common pitfall for first time buyers especially is to assume that the down payment is the only upfront cost. Understandable considering 10-20% of your homes cost can be a hefty saving. However, there are other fees involves with buying a home, including closing costs. Yahoo Finance writes: ‘Don’t get sticker shock when you head to the escrow company to sign your final papers. Your down payment doesn’t cover things such as a home inspection, termite inspection or closing costs, which can range from 3% to 6% of the purchase price.
Many closing costs are negotiable, so you can ask the seller to pay them. If you need to finance closing costs, ask your lender about an FHA loan where some closing costs can be added to the loan.’ If you are unsure on what costs will incur when purchasing your home, talk to your Real Estate Agent or a trusted advisor to help answer your questions.
Pricing and offers
There are several misconceptions around pricing a home and making an offer on a home. Firstly, some may believe that they should price their house higher to leave room for buyer negotiations. Nowadays, this may actually act as a deterrent to many buyers who won’t even consider a home that is overpriced or out of their price range. With the internet at almost everyone’s fingertips, it is easy to see if a home is overpriced and it can be very frustrating for both seller and buyers.
It may actually lead to your home being on the market for longer than necessary. On the other side of this, when making an offer to purchase a home, making a low-ball offer can be at best frustrating and time-wasting and at worst offensive. If the home is priced reasonably and the seller has not deliberately overpriced, everyone will know. Many Realtors now suggest to offer as close to, or at the list price. It may be advisable to offer over the list price in some markets, but consult your Realtor for the best strategy, as their expertise would be an asset in this area.