Real Estate Myths

Just a couple years ago housing prices were sailing high but over the last year or so residential real estate in most U.S. regions has become a ‘buyer’s market’. If you’re tying to sell your home today you need to pull out all the sales tricks and tactics to find an eager buyer. So, let’s dispel a few myths that sellers (and buyers) generally believe about the housing market and financing that may be hampering your ability to sell your home or find a qualified buyer.

1. Myth: Your Real Estate Broker will try to get the highest price the market will bear for your home.
Reality: Most brokers just want to close a deal as soon as possible. For instance, if you’re selling a $300,000 home with a 6% commission of $18,000 it’s going to be of little incentive to your broker to try and find a buyer who will pay the highest price. The total increase in commission will only be a few hundred dollars (and even less in your broker’s pocket) if he gets an additional $10,000 or $15,000 for you. So, keep your eyes open and don’t let your broker talk you into a low-ball offer.

2. Myth: You can’t qualify for a mortgage if your FICO Credit Score is low.
Reality: Many factors are considered by lending institutions when processing mortgage applications. A FICO score is just one of them. The value of assets, present and expected future income, current liabilities in relation to that income or asset base, etc., etc. Even if your application is initially rejected, most lenders will make recommended changes that will get an approval. Often a slightly higher down payment, a shorter loan term or even including an overlooked source of additional income can turn a rejection into an acceptance.

3. Myth: Your home should look warm and personal for prospective buyers.
Reality: Put yourself in the buyers shoes. You want your home to look warm but prospective buyers want to be able to mentally place themselves in your home to see how it “fits”. Put away any personal or family photos that place you and yours in the home. If possible, don’t leave anything laying about that even hints that you are living there. In fact, unless you are showing the home yourself, buyers are more comfortable seeing a home with the owners absent. Also, visit a few show-homes at a nearby new home development and see how they furnish their models. You want your home to emulate these homes as much as possible.

4. Myth: You should only use a licensed real estate broker/agent to sell your home.
Reality: While the National Association of Realtors (a non-governmental national organization brokers and agents) would like you to believe that you need not just a licensed broker/agent but that a member “Realtor” should help you sell your home. The truth is that many, many owners sell their homes themselves every year. As housing prices have climbed and sales commissions have climbed along with them, several new organizations have emerged to help less knowledgeable sellers avoid the full expense of using a broker. For a relatively small fixed fee some groups will supply all the paperwork and closing help needed to sell your home yourself. A simple online search for FSBO (for sale by owner) will turn up a myriad of information.

5. Myth: Your home should be an immaculate show-place before you put it on the market.
Reality: In fact, making too many improvements may be detrimental to finding a buyer. Many buyers will want to redecorate in their own wall and carpet colors. For instance, offering a carpet allowance for worn carpets instead of replacing them can save the buyer the cost of replacing carpets that won’t match their furnishings. Remodeling a classic kitchen may devalue the antique charm older kitchen cabinets and trim may offer. Rarely can you expect to recover 100% of the money you put into improvements to help your home sell. It is best to limit improvements to improving the curb appeal and try to keep other improvements to a little fresh paint and cleaning if possible.

6. Myth: Mortgage rates are fixed buy the lender.
Reality: In today’s competitive mortgage market rates can change throughout the day as interest rate markets respond to the latest economic news. Often, the actual rate you will receive is not pegged until the closing date of the loan. Most mortgage lenders provide a ceiling for the rate for a period of time and often you can take advantage of a decline in rates that occurs before closing. You may also be able to customize your loan to, say a 25 year mortgage instead of the customary 30 or 15 years.

In conclusion, don’t go overboard with expensive improvements before selling your home and keep an eye on the costs and details throughout the entire sales process. If you are planning to sell your home yourself, check for some how-to information at your local bookstore so you can avoid the pit-falls. Here are a few helpful online For Sale By Owner publications.

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