There is a lot of information out there surrounding real estate. Some good... some not so good.
It's important to keep in mind when scrolling through the un-ending information on the internet, that nothing is more informative than doing due diligence at a local level to whatever property you are considering to buy or sell. That is one reason why choosing to work with a local real estate broker is so important. They not only can give you real estate guidance in general, they have actual knowledge of the areas, history, sales data, market, homes and land characteristics that out of area agents or random websites just can't compete with.
Here are 10 real estate myths that I wanted to debunk that are specific to my area of East Texas.
"Buyers need 20% cash down to get a loan."
Not true at all. There are many different types of loan programs out there today that cater to lots of different buyer's needs, credit, and situations. Many buyers find out after talking to their lender, that they do not need 20% down to purchase a home. Depending on eligibility and lender requirements, some loan programs allow much smaller down payments. For example, there are VA, FHA, and USDA options from zero to three and a half percent down of the sales price, as well as conventional loans that varies to whatever that specific lender requires to make the loan work. Some programs can also be utilized in conjunction with a grant or secondary loan that can help buyers with down payment assistance. Some offer those amounts to be rolled into the loan, financed separately, or even forgiven if certain requirements are met.
"Whatever you spend renovating a house, you can just add to the list price."
Unfortunately, this one is false. There are definitely some areas where updating will show a higher number in the sales price, however there are some that just won't add anything, and I know that is hard to hear. The kitchen and bathroom area renovations can usually add some value depending on craftmanship of work and buyer demand, however that new roof you just spent $15k on is not going to yield another $15k right back in your pocket. As a matter of fact, most required or maintenance items won't equal a 100% return ever for what you pay for them. A couple of low-cost items that can help out with marketability is fresh paint, professional carpet cleaning, and even fresh mulch in the flower beds. Just doing a decluttering and deep cleaning works wonders, and that's very affordable!
"Always wait on the market to get better."
This one I just can't agree with and no matter what anyone tells you, the decision to sell or buy has to be what makes the most sense for your family and financial situation. No one can predict what the rates are going to do week to week, or year to year. Are there trends? Yes. The right answer still needs to be the one that is made in the best interest of your own situation and needs at the time, regardless of what the market is doing.
"You don't need to talk to a lender before looking at houses."
You really do. I get it... making an appointment, driving to the bank, digging out check stubs, W2's, and talking to your loan officer is a process. Have you considered however how much time you will save if you find out how much you are going to be able to spend on a home? What if you need to pay down your debt-to-income ratio a bit more or save a little more cash for your down payment? Trust me when I say this, it will save a lot of time, fuel, and hurt feelings if you make sure your finances are in place first. I have heard of buyers finally finding the "perfect" property and then they go to the bank... just to find out, they were not able to get a loan for that much. It happens folks, and it is heartbreaking for them. Extra tip! Some sellers will not allow showings to any buyer that doesn't have their pre-approval letter/proof of funds (if cash) for them to see. It cuts down on a lot of not serious and not capable people walking through their home. Also, if we already have that pre-approval letter in hand when you decide to make an offer, that pre-approval letter could be the very thing that the seller likes about your offer over others in a multiple offer situation and ultimately gets you that property!
"Real estate agents can only show listings that their company has listed."
Absolutely not true! If your buyer's agent is reluctant to show you the properties that you want to see just because they are not their listings or a listing inside their company... what does that tell you about who's best interest they have in mind? If I am working with a buyer client, I am going to show them whatever properties they or I find that could work for them and matches the criteria that they have given me. I would say 98% of the time, I am showing my buyer's other agent's listings. If a property is in their budget and has the details of what their family is needing... we are going to see it just as soon as possible!
"If you're selling, always start higher than what the market shows your property is worth."
You know, I don't have a problem trying a little higher for my sellers if that makes them feel more comfortable. Especially if we are all in agreement from the beginning once we try their number and if there's no interest, then we try my number. Where this one needs to be debunked however, is when comps show one price as a possibility to list at, then the seller wants to try $50k, $100k, or more over... that's a problem. For one, the property is going to get stagnant with little to no interest or showings. Two, let's just say a buyer comes along and says ok seller I'll get a loan for that, but then the appraiser comes out and it is nowhere near the agreed sales price. Now we're lowering the contract price anyway to where market was originally showing it to be at from the start, or even worse, the parties can't come to an agreement, and the deal falls through. Third, overpricing your home automatically puts a limit of the buyer pool looking at your property in online searches, which is never good.
"You don't need an inspection if a home looks good to you."
False! I recommend an inspection on every single home, no ifs, ands, or buts about it. Does that mean as a buyer you have to do one, absolutely not. It is the buyer's choice whether to have a home inspection or not. (Remember VA loans do have some required inspections for their loans, that they will require.) Keep in mind though an inspector should look at the roof, crawl under pier and beam structures (if they can fit), test all major systems, etc., which guess what... as a real estate agent, I don't do. Does that mean I agree that every little deficiency an inspector writes up should be panicked over and negotiated to fix immediately, no it doesn't. However, I have had buyers get reports back and something major was found that was not easily discoverable. I am wise enough to know I am not an expert septic professional, roofer, plumber, electrician, etc. I see issues with almost every property I show, and I will always point out the red flags I see, but ultimately, I stay in my lane and leave the explaining of defects and recommendations on repairs up to the professionals. I want my buyers making the most informed decision whether to buy a property or not, and I believe that an inspection helps my buyers do that way more versus not having one.
"You will save a ton of money if you don't use a real estate agent."
I won't say there has never been a time when a for sale by owner didn't get the price they wanted, or a buyer hasn't walked away with the exact property they wanted without an agent. What I will say though is I have gotten sellers more money for their homes than what they were planning after confirming what the comps and market showed their place could be listed at, and by negotiating for them. I will also say I have fought for my buyers to be able to terminate a contract and get all their earnest back when I dug into the property and found out non-disclosed issues that they would not have found until they owned it. I can also say, I have saved my buyers thousands on past transactions by negotiating repair items like new roofs, septic systems, etc., that they were going to accept as-is. Real estate agents are licensed, educated, and trained to tackle these issues every day.
"If you're buying, always throw out a low offer."
Please don't. If you seriously want a certain property, and you can see your family being there for a long time, don't low-ball and risk losing it. Be reasonable. Especially if your buyer's agent has pulled comps and has shown it is worth way more. Sometimes a really low offer is insulting to the owners, and they may choose not to bother with you moving forward even if you do become more reasonable at a later date. On the other hand, if a property is way overpriced compared to comps, or maybe you're always shopping for investment properties where it is not a big deal to lose out on one every now and then, by all means, throw out whatever number you like.
"As a buyer I will get a better deal if I use the seller's agent for buying their property."
That's actually farther from the truth than you know. The seller's agent has a signed employment agreement with the seller and a duty to represent the seller's interests under the applicable representation agreement and Texas law, negotiating offers, and ultimately getting their property sold. It would be in your best interest to have your own buyer's agent and your own full representation under a signed agreement, with advice which gives you the most protection. Always remember! - Any buyer can use an actively licensed agent from any company to help them purchase a listing that they want, but I would recommend at least using a local agent to the area you are purchasing in, so they are geographically competent to help you.
For more information that covers representation, mortgages, inspections, and the difference in agency, check out these additional blog topics -
Seller's Agent & Buyers Agent - What's the Difference
Real Estate Agent VS REALTOR® - What's the Difference
Answers to your Questions on Home Inspections
Hi there! My name is Melissa Summers, and I am the Broker & Owner of Country Roots Realty. I love helping buyers and sellers with all of their real estate needs here in the heart of the East Texas Pineywoods!
