Common knowledge is a great thing, but sometimes things called “common knowledge” are actually fallacies and myths. In real estate, these myths can hurt buyers and sellers both. Experience can help weed out these falsehoods, and members from Forbes Real Estate Council recently wrote about their pet peeves when it comes to Real Estate Myths.
20% deposits for first-time buyers
There is a bit of common knowledge out there that claims any person or couple seeking to buy their first home needs 20%, in cash, to put down as a deposit on their dream home. This is not true, in all cases. There are housing programs available that offer rookie buyers an option to save up to $5,000 on their deposit, and other programs will match the buyers’ deposit dollars, even up to double! These savings are non-taxable, which is like icing on the deposit cake! This information comes from Susan Leger Ferraro, of Peace, Love Happiness RealEstate.1
Single-family homes = weak investment option
The myth is that it takes too much time to manage multiple different properties without a strong enough “ROI,” or return on investment. However, if owners are creative, there are good returns to be had. Instead of keeping single-family homes as single-family only dwellings, savvy owners can jump into the world of vacation rentals via groups like Airbnb and VRBO. Renting out on a daily or weekly basis generates a much higher cash flow than renting a single-family home to tenants by the month. This is according to AliJamal of Stablegold Hospitality.2
You can skip the home inspection
SohinShah, of InstaLend3 says, “In an appreciating housing market, buyers tend to get more competitive and in some scenarios waive contingencies, or protections, in order to expedite closing. The right to get a full, professional home inspection, and have the closing be contingent on no discrepancies in inspection, is crucial. Waiving a home inspection means you get the home as-is, including any problems that come with it.” In other words, always insist on the professional home inspection so you know what you are getting into before you sign.
You can focus primarily on the online stats and demographic information
Engelo Rumore, from List’n Sell Realty,4 does not think everything about this technology age is a great idea. “There are too many home-buyers or investors who are getting caught up in the stats and demographics that they read online. Too many times those stats or demographics are incorrect, so it’s better to have the personal touch of someone living and breathing the market every day, as it’s more accurate.”
Buying a home is always a headache.
A lot of the new technology and traditions are aimed toward reducing stress in both buying and selling homes these days. Sean Black, of Knock,5 appreciates this new focus. “This progression will remove the obstacles and challenges that have plagued this industry since the dawn of real estate, making it a much less stressful process for people.”
You have to have cold hard cash or good credit to jump into real estate
Kent Clothier, of Real Estate Worldwide,6 is very adamant about crushing this myth. “The myth that I would like to banish is that you need your own money or credit to get involved. There are multiple techniques and strategies available to help people ‘get in the game’ with very little money out of pocket. Using these techniques, they can effectively control a real estate transaction, create income, create momentum and begin their entrepreneurial journey.”
There is one “right” way to buy and sell
These are Real Estate Myths that really don’t not cause as much trouble as it used to, but it does still generate some confusion to rookies to the industry. Joshua Hunt of TRELORA7 says, “The formality of traditional real estate has gone out the window, thanks to technology-driven real estate brokerages that offer new ways to buy and sell, like offering flat fees or direct, buyer-to-seller communication.”
Most anything you see on reality television are Real Estate Myths
“The home-buying process isn’t glamorous,” says Lisa Fettner, from Referral Exchange8. “Buyers especially need to be prepared to act quickly and have all of their ducks in a row before they make an offer. Get pre-approved by a lender, work with your agent to write the perfect letter to go along with your offer and be flexible.”
Many of these myths are variations on a theme, but the devil is often in the details. Use your own common sense, and ask around before you make any final decisions on how to go about your home buying or selling process.