Being apart of a real estate transaction is not something most of us do very often, maybe only a couple of times throughout our lives. But yet lots of us assume that we understand the world of real estate based on experiences of family and friends or things that we have heard or read. Real estate myths are often passed between buyers and sellers. Some of them have bits of truth, where others are outright falsehoods. Buying into these myths can hurt your chances of buying or selling the right home at the right price. Avoid this mistake by educating yourself on the fact and fiction of real estate.
Myth: Spring is the best time to sell
Real estate seasons have historically been tied to summer and the end of the school year. Typically, buyers and sellers with families wanted to move during the summer so their kids could start fresh in the fall. This is how spring became prime real estate season. And while it’s true that there are more homes for sale in the spring, this isn’t necessarily the best time to sell your home.
Reality: During and after the holidays is the best time to sell. Today, the demographics of home buyers has changed. More than half of home buyers are single and their decisions aren’t based around school schedules. Instead, the best time to sell has become November, December, and January. It comes down to a supply and demand issue. Most sellers assume that during this time, buyers aren’t looking seriously and therefore won’t even considering listing their homes. So from November – January, savvy sellers will face less competition with a strong pool of serious buyers, making it a great time to sell.
Myth: “For Sale by Owner” saves you money
When choosing to sell your home you have two options. One is to pick an agent who understands your requirements and will look out for your interests. The other is to put up a “For Sale by Owner” sign and handle it all yourself. By choosing the latter, many people believe they can save themselves money by not paying commission. There may be a few sellers who manage to pull this off, but there is more to the home selling process than meets the eye.
Reality: There are some people who do successfully sell their homes on their own, but they need specified skills. The majority of us aren’t trained in this type of negotiation or to successfully close a sale knowing that we saved money. Statistics have shown that “For Sale by Owner” homes tend to sell for about 15 percent less than homes sold through a realtor. On top of that, there are other obstacles that a seller without an agent might face. The home will have less visibility and avenues for advertising, there will be legal forms and disclosures to prepare, and you will need to take lots of time to educate yourself on the current market. By hiring a realtor, you will be saving yourself lots of time, energy, and stress. It just depends on whether that outweighs the cost of commission for you.
Myth: A cash offer trumps all other offers
There is an underlying assumption that when considering two different options, a seller will automatically go for the cash offer because there is less risk involved. Because of this, when a buyer hears they are competing with a cash offer they will assume they won’t get the home. At the same time, buyers with cash offers assume they can offer below the asking price and it will most likely be accepted.
Reality: Savvy sellers tend to be more attracted to a well-financed offer. Consider a seller with a home priced at $400,000. The seller has two offers: one is a cash offer of $380,000. The other is an offer for the full asking price, with 25 percent down, a bank pre-approval letter, and swift contingency periods. Upon learning that their client is up against a cash offer, a good buyers’ agent will arm the seller with information supporting their client’s finances or even arrange a phone call between the seller and the lender. Therefore, making their clients offer stronger than cash.