Now that the real estate market is significantly bounding, buyers and sellers are back looking for deals. They come into the market with assumptions about how the real estate market works.
Their assumptions may come from TV reality shows or watching their parents’ house-hunting experiences. Maybe they’ve learned about real estate from a co-worker’s recent home buying or selling experience. The trouble is, their assumptions are sometimes based on outdated or generalized “real estate myths.”
Myth: Spring is the best time to sell a home
Real estate seasons used to be based on the summer and the end of the school year. Families were the typical buyers or sellers, and they wanted to move during the summer so their kids could start anew in their new school. That’s how spring became the prime selling season because buyers typically take 3 – 4 months to purchase from the time they start looking. There are still more homes for sale in the spring, but, that is not necessarily the best time to sell a home anymore.
Reality: The best time to sell is Winter
Today, more than half of buyers aren’t married, so their decisions aren’t based upon school schedules. So spring isn’t as relevant as it used to be. Instead, the best time to sell a home is in November, December, January and February.
The real estate market is your typical supply and demand economic theory. Most sellers assume buyers aren’t seriously looking during the winter. There are fewer homes on the market in the winter so buyers have to hunt harder to find the home of their dreams. It is a sellers paradise season to sell their home.
Myth: There is only one dream house for me
Once you’ve finally found that perfect house, the inclination is to think you won’t find another that you like nearly as much. Be very careful here and don’t let your heart overrule your financial capabilities. Just because you can get a loan for a certain amount doesn’t necessary mean you should.
Reality: There is always another house
If something doesn’t feel right or the price is too high, don’t be afraid to wait for the next one. As long as you have realistic goals, no house will ever be truly one of a kind. Every house has different strength and weaknesses. If you cannot afford it or it does not met your “must have” attributes, keep looking.
Myth: I need perfect credit
We highly recommend going to a lender first to get pre-approved so you will know how much house you can afford and that you have the ability to purchase. With the recent housing bubble came a wave of lending restrictions and loan tightening. Most people assume that they have to have stellar credit to get a loan these days, but that’s not always the case.
Reality: Shop around for a reputable lender
Lenders are often willing to work with buyers who have less-than-perfect credit. If you’re concerned about your credit, you may want schedule an appointment with a lender and find out the status of your credit and if it is not up to par they can assist you with ways to improve your credit score. This is a step that is commonly skipped before you buyer enter the real estate house hunting process. It is true that people with higher credit scores are offered the lowest interest rates on mortgages.
Myth: Start with a low offer
There is no tried and true strategy for making an offer on a home. The best thing you can do is hire a full time seasoned Realtor to assist you with this process. The seller could have overpriced or underpriced the home on purpose. Most buyers assume a full price offer is just nonsense. But times have changed.
Reality: Low offers may get you nowhere fast
A buyer in a seller’s market (when there are fewer houses on the market or in a particular price point than buyers) today are wasting their time making low offers right from the start. It’s likely a home that’s priced right and shows well can receive multiple offers, sometimes even over the asking price. It is also possible you will offend the seller and they will refuse to sell you the house. Again, choose a Realtor that is familiar with the market you are looking to buy in that is knowledgeable. They will assist you in putting together a fair offer that will get you into your dream house vs writing offer after offer after offer.
Myth: The cash offer is the best
There’s an assumption that a seller, considering two different offers, will always go with the cash offer because there’s less risk. As a result, many buyers who hear they’re competing with a cash offer assume they won’t get the home. They may not even make a formal offer. At the same time, many cash buyers assume that because they’re paying cash, they can make an offer below the asking price, and it will likely be accepted.
Reality: Savvy sellers might not care
Consider a seller with a home priced at $250,000. The seller receives two offers: One is a cash offer of $225,000. The other is an offer for the full asking price, with 25 percent down, a bank pre-approval letter and swift contingency periods.
A good buyer’s agent when learning their client is competing with a cash offer will arm the listing agent with financial data supporting their client’s finances, such as a credit report and verification of income or assets. The agent might even arrange a call between the seller and buyer lender. Cash is not always king. The bottom line is.
Source – Zillow, Credit.com