The proliferation of real estate websites and blogs has certainly helped to educate consumers on world of real estate. It is amazing to me how readily available information is in this day and age. To this day, I still get emails and calls about a column I wrote three years ago about multiple layer roofs and how challenging they are to insure. What a trip!
Even with all of this information at our fingertips, there are still several real estate myths that exist today that need to be debunked.
So let’s get started.
1. We should price our home a little higher than fair market value to allow for negotiations. False. Pricing a home over fair market value only reduces the desirability and marketability of your home while at the same time reducing your buyer pool. On average, only 30 percent of the buyer pool is willing to consider a home that is 10 percent overpriced. That means by overpricing your home, you have eliminated 70 percent of the buyer pool. How many buyers do you think would be willing to consider a home that is priced at fair market value? Many more, right? The more demand that you have for your home typically means that you will earn top dollar when it is sold. Isn’t that the goal? The only market that allows for slight (and I mean slight) overpricing is a strong seller’s market where demand is outpacing inventory. In this case, sometimes appreciation will catch up with you and justify your over fair market price. This scenario is not present in today’s market, however.
2. We just need to find the right buyer. False. Yes, it only takes one. But if you plan your marketing and pricing around only one specific buyer, you are probably excluding someone. Usually I hear this statement when a seller would like to overprice their home or not address a condition challenge. Or it could come up after a home has been on the market for a period of time and a price adjustment is warranted. Although it only takes one, I think the goal should be to find more than one. When you only have one buyer, you have to negotiate with only them and you don’t have much leverage. When you have more than one interested party, you have a lot more options. And you have the leverage. Price and condition must be in line with one another to set yourself up for a high demand sale.
3. A Realtor’s job is to show me every home out there in my price range. I need to see them all. False. This statement could not be further from the truth. When you go to the doctor with a medical problem, would you rather the doctor ask you a couple of questions and then give you a list of possible cures based on his limited information, or would you rather he ask you lots of questions and then thoroughly diagnose the problem and provide the cure? The latter right? Of course. A Realtor’s job is to schedule a thorough buyer’s consultation with you in which they will dig deep to find your motivation and what it is you are truly looking for in a home. Then they will have the information they need to show you only the best the market has to offer. If your Realtor signs up to be a glorified tour guide and just shows you everything out there, it is going to become a frustrating endeavor for the both of you. We always say that most Realtors ask a few questions and then show you 50 homes hoping to find the right one for you. Our team would rather ask you 50 great questions to ensure that we find you the right home and only show you the best the market has to offer.
4. Once I find the right home, I will get pre-approved with a lender. False. Proper financing must be in place before you start looking for a home. The pre-approval process helps to determine what price range you are comfortable with based on an estimated mortgage payment. This gives you the confidence that you are looking in the right price range based on your budget. In addition, pre-approval positions you to compete. If you find the right home for your family and then you have to take a pause to get pre-approved, you may run the risk of someone else seeing what you see in the home and writing their own offer. Then all of a sudden you are in a competition, or you may just lose out all together if you don’t move fast enough. Finally, an offer without a pre-approval isn’t worth the paper it is written on, so please take the time to secure your financing before you step into your agent’s car.
This post originally appeared in 2015.