Thinking about entering into a real estate deal? Chances are you’ve done some research online and picked the brains of your inner circle to get some advice. While it would be great if all real estate advice were on the mark, many people believe some pervasive myths about real estate that can trip you up as your deal starts to progress.
At Adirondack Premier Properties, our many happy clients will tell you that our experience and expertise goes a long way in helping you navigate a successful deal. Read our advice below and prepare to let go of some of the myths about real estate that you may have picked up from friends, media or other sources.
Fact Check – 10 Myths About Real Estate
1. Selling Your Home By Yourself Will Save You Money
While this may be true for a few, it is generally not true for the average home seller. Selling a piece of real estate can be a full-time job, particularly if you are in a market or location that is very competitive. Finding the right real estate agent and agency that is knowledgeable about the subtleties of your market could be very beneficial.
Using an agent can often make you more money, even with the commission taken out. An agent can also help your property get more visibility due to increased showings. A full-time agent is available throughout the day when you might be at work or unavailable. They can save you time and get your property more exposure by taking care of showings that conflict with your own work or life obligations.
2. Price Your Home Higher So You Have Room To Negotiate
Another of the myths about real estate that needs to be busted is that pricing your property a little higher than realistic current market value can land you more money. Asking for more could seem like a good idea to trick the buyer into feeling good about the price by negotiating down. However, it’s easy to overprice your home by too much and bring on negative consequences.
Ultimately, pricing too high often scares away potential buyers. This could leave your property to sit, and the longer it sits on the market, the more fearful buyers become that there is something wrong with it. A knowledgeable agent can help guide you on a price point that avoids these complications.
3. If You Renovate Your Home Before Selling, You Will Get a Dollar-For-Dollar Return
Renovating definitely adds curb appeal to your property and can interest potential buyers. Believing the “renovate for big return” myths about real estate can lead you astray. Many sellers buy into this mentality and consider renovating everything before listing. However, dollar-for-dollar return on your investment may not pan out.
Whether you make your money back depends on the current market, your location overall property characteristics. During a buyers’ market, many homes are available for sale. Even though your home may be newly renovated, a similar home that is only missing a few of the renovations, could be priced lower and look more attractive to potential buyers.
Certain situations may also lead to a limit on what you can realistically expect to get for your property. Building or renovating a large home in a less desired area can lead to losses due to lack of interest in the area. The property in general might not be at value, even with renovations.
Size and layout can also factor in. If the home is a small one-bedroom home with an undesired layout on a small lot, selling could be tough. Even with renovations, you might not reach the number that you are looking for.
Understanding what buyers can afford as well as what they are currently looking for is important. Considering these factors before you renovate increases your chances of coming out in the positive and can also save you extra renovation work.
4. Setting A Low Price Means You’ll Make Less Money
Setting a low price does not mean you will make less money. The wonderful thing with real estate is that prices can always fluctuate up and down.
Setting a lower price could actually bring you more buyer interest in the property. Listing lower can even end up making you more profit due to escalation clauses or best and final offers.
Real estate agents often see homes they believe to be priced right on the mark for the current market come out higher. Receiving multiple offers can often include a few higher offers for the property, especially in a competitive market. This can lead to a “fear of missing out” moment for buyers that drives up their offers. You could end up with a rush on your property, landing you the number that you wanted, or higher.
5. There’s Plenty Of Time For Pre-Approval
Believing that you can drag your feet on pre-approval is one of the myths about real estate that can really trip up your process. If you are interested in purchasing a home, getting pre-approval on a loan is one of your first and most important steps. Take care of this well before getting too deep into the purchasing process.
Yes, there is time for pre-approval, but many agents and homeowners want to know if the person who is showing or viewing their home is a serious buyer. The pre-approval reassures the seller that you are seriously in the game.
The pre-approval also gives you an idea on how much home you can afford. You don’t want to waste your real estate agent’s time by looking at $700,000 homes when you are only pre-approved for $300,000. This knowledge can also help you determine what financial steps you need to take to gather the funds needed to meet your dream home’s purchase price.
6. You Should Never Offer Full Price
Whether to make a full price offer on a home you want to buy really comes down to how badly you want the home. The current real estate market and how long the property has been on the market must also be considered.
If you really want the home, putting in a full price offer should ensure that you get the home. However, know that this can be different in a hot market. Buyers often offer above the current price in a hot market if they really want the property.
During a hot market, homeowners generally won’t even entertain lower than list offers, unless it’s a cash no contingency offer where closing will happen quickly. Also, if the property is new, the homeowner often takes your offer into consideration, but will hold off on accepting to see what other offers they receive.
Length of listing is also a factor to keep in mind. The longer the property has been on the market, the more likely a seller will accept an offer that is below list price.
7. Professionally Staging A Home Will Sell It Faster
One of the myths about real estate that has taken off is that hiring a stager will sell your home fast. Staging a home can draw interest from potential home buyers, but it does not mean that the home will sell faster. Staging provides an idea of what the home could be, but home buyers always have their own taste and idea on layouts.
At ADKPP, our experienced agents generally advise our homeowners to focus on a minimalistic look. A space that is not empty but that has some items to help a homeowner vision is ideal. This helps potential buyers imagine what life would be like living in that home with their things.
8. Agents And Agencies Are Interchangeable
Every real estate agent and agency has its own feel and personality, so it comes down to the home buyer and home seller to find the right one for them. If you are selling, smaller non-branded real estate agencies will not be able to offer the same amount of marketing and reach that you will find from a larger branded group.
As an example, Berkshire Hathaway HomeServices network offers its clients an international reach. At ADKPP, our affiliation with Berkshire Hathaway HomeServices benefits our agents and clients daily as evidenced by our excellent performance.
If you are buying, larger agencies generally will have more agent listings that come through the office. This gives buyers and sellers a better conversion rate.
9. Agents Just Want To Make A Sale
Of course agents want to make a sale. Selling your home is their job. However, the best agents in every region are also there to support and care about you.
The Berkshire Hathaway HomeServices Forever Agent mentality really resonates with our office and agents. Our ADKPP agents want to support you throughout your real estate processes.
They will help connect you with the home comforts and amenities you are seeking in the Adirondack region, as well as make lasting working relationships. At ADKPP, we value long lasting client relationships instead of just quick sales. We believe this sets us apart from the other agencies in the area.
10. Real Estate Is Easy And You Will Make A Ton Of Money
This is probably the biggest of the myths about real estate out there. Real estate is strenuous, frustrating, time consuming, and can be tight financially, especially at the beginning. It is not easy for any party involved, and we further explore some thoughts that may relate to your personal situation below.
One of the big myths about real estate is that it’s easy to be an agent. Anyone who is looking to start in real estate should connect with current agents to do some research and hear about a typical day in the business before taking on the job.
Many new agents opt to be part time. This allows the keep the stability of another job and weather the variable income of a real estate agent. Sales and commissions are not guaranteed and income can really vary when first starting out.
Working part-time offers a good learning period to work on networking, marketing, and hosting open houses at in office listings to find new clients. Doing this leg work helps new agents become stronger in their role and understand the ins and outs of real estate.
With only one or two real estate deals common in the first couple years of being a new agent, it is not a get rich quick situation. During the slower seasons or down markets, this becomes even harder. For new agents and seasoned full-time agents with only a few listings on the market, it becomes a competition between all agents in the region to find and get any new listings.
It Is Strenuous, Frustrating And Time Consuming
As a real estate agent, you will be putting in a lot of time. From showings to networking, the days are full. Marketing yourself alongside helping your clients through the real estate process makes for long hours. Agents often work over 40 hours per week to provide for their clients.
Many of these hours are not paid so it can become strenuous on the agent. Not knowing when the next sale will be with bills coming in each month can cause strain. If a deal falls apart when an agent is relying on that money to survive, stress levels can go pretty high.
While a sale can lead to a large commission check for an agent, a significant portion of that is often used to recoup money spent in the sale process. Agents have expenses related to showings, driving, etc. that they must absorb. The rest of that big check is often stored away to hedge against the next dry spell in sales. So a big sale doesn’t often result in the windfall for an agent that some people expect.
As discussed above, there are plenty of myths about real estate out there that you may have been holding onto without even knowing it. At ADKPP, we like our buyers and sellers to be fully informed throughout the process with good advice and the most current information. Contact us today and we’ll help guide you through your next real estate deal. You won’t be disappointed!