The Internet has certainly made a huge impact on the information available to home buyers and sellers about the housing market. However, these common myths of buyers and sellers exist regardless of how much information is out there. Here are some common myths from clients that I regularly hear.
- I should overprice my home to allow for negotiation –By far, the biggest mistake sellers can make in the current economy is to set their home price too high. Most people think this will start a negotiation process. Kevin Brown, JR, Regional Director of the National Association of Exclusive Buyers Agents says, “If you misprice it in the beginning, it can tend to languish, and you may end up selling it for less than you would have if you had priced it correctly to begin with.”
- I will save money by selling my home For Sale by Owner – Because most sellers do not know the right staging, right things to say, correct contracts to use, local laws, and current market conditions, listing your own home rarely saves you money. According to the National Association of Realtor’s 2013 Profile of Home Buyers and Sellers, the average FSBO sales price was $174,900, while the average price for a home represented by an agent was $215,000, a difference of $40,100. In fact, around 90% of For Sale by Owner homes end up listing with a real estate agent
- I will save money if I represent myself – The total real estate commission is built into the listing agreement with the seller and in the price of the home. If you do not have representation, the listing agent will receive the buyer’s agent commission.
- I will get every dollar back that I put into my home – Most improvements to a home will garner you less than a dollar return for a dollar spent. If there is something in your home that is glaringly wrong like a hole in the roof, water issue, damage to flooring or horrible paint job, you will likely get a great return on these items. All other improvements should be done for personal enjoyment and not with the expectation that you will get every dollar back out of the improvements.
- I need to find the lowest price mortgage at all costs – Finding a mortgage should not be just about numbers. It should also be about service and a person who makes you feel like you are a priority. Do not use any organization that makes you feel like you are just a number! I have seen many low priced mortgage options not be able to close on time which costs the purchaser money and fear to extend the contract to close. Ask your Realtor who they recommend, as you will get the best service and the best rates from that person.
- Real estate agents are just out for the highest price – Of course, real estate agents are typically paid as a percentage of the deal, so they do make more money with a higher price. However, good Realtors have a business model based on repeat business and referrals. Therefore, the type of Realtor you should be using should be focused on your long-term happiness and their long-term career.
In summary, do not try to invent the real estate process in your buying and selling. Use your common sense, avoid the myths, and you will find yourself in a much better position!