Top 10 Myths Shared by First Time Homebuyers
August 18th, 2009
Categories:Home Buyer Education
This morning I came across an article listing the top 10 myths shared by first time homebuyers. While I don’t believe all of these are as common as they would have us believe, these are some excellent and very valuable myths to discuss.
Here are the Top 10 Myths:
- All real estate agents are the same
- The agent on the for sale sign will look out for my interest
- I can find all properties for sale on my own
- If i just wait long enough, I’ll find the perfect home
- I’ll improve the odds of finding the house i want if I work with more than one agent
- Buying a house is as simple as agreeing on a price and signing a few papers
- Foreclosures are the best deal
- Getting a mortgage should be quick and easy
- All mortgages are essentially the same
- If something appears on the inspection report the seller has to fix it
Myth #1: All Real Estate Agents Are the Same
I actually feel pretty bad for my friends and family, because they have certainly heard me beat this topic in the ground. I’m very passionate when it comes to changing the standards and expectations for Realtors. The problem is becoming a real estate agent is very easy in Arizona, the costs are low and the education is minimal.
When it comes to the minimal barrier to entry, its just like buying a home. If you don’t have an investment in the home (down payment) you won’t be as concerned with caring for and maintaining the home. Same goes for Realtors that jump in and start selling homes with very little investment in themselves or the homebuyer’s needs.
On the education side, Realtors get 90 hrs of education and none of it is practical knowledge for when it comes to helping people buy and sell homes. Its really more a flaw in the system than the individual’s fault. However continued education does exist. For those interested in learning the ins and outs of this business they can look to obtaining the following designations: CRS, ABR, and GRI. Here’s another article of interest: Are Realtor’s an Educated Crowd?
Myth #2: The Agent on the For Sale Sign Will Look Out for My Interest
I think this is a simple misunderstanding of how the industry works. Simply put, the agent on the For Sale sign has been hired by the home owner and therefore has a duty and responsibility to sell the house for the highest dollar amount.
The agent selling the home does not represent the homebuyer. As a result they do not have the duties and responsibilities a Buyer’s Representative would have. What does that mean? It means no comps to determine the actual value of the property, no home inspection, no negotiations, no, no, no and no some more.
Homebuyers simply miss out on too much by not having a qualified real estate agent represent their needs and their needs alone.
Myth #3: I Can Find All Properties For Sale on My Own
As a matter of fact YOU CAN!!! This is a terrible notion that many Realtors hold on to. Back in the dinosaur age (when the internet wasn’t around), Realtors walked around with massive books containing all the homes for sale. The thought of it gives me chills thinking about how much paper was wasted on those books.
Anyways, back then the Realtor’s “value” was all about their magic book. Nobody could see what homes were for sale if they didn’t have a real estate agent. To say the least, the internet changed the game for Realtors and some of them just won’t let go of the old ways.
Here are my quick tips and thoughts for you buyers out there:
- The important information about the home is RARELY correct. But the details are normally pretty accurate
- Check out Dwellicious.com – If you would like some tips on using it, send me an email.
- Realtors no longer find homes, they should be helping you select your home. The rest of our value comes in guiding you through the process and getting you to the finish line (which isn’t easy)
Myth #4: If i just wait long enough, I’ll find the perfect home
8 out 10… that’s the rule of thumb. This technique along with some wisdom will save homebuyers a lot of headache and stress.
The Technique: Start by writing down your top ten needs/wants (note: needs comes first). Really, take a minute, write them down. I’m waiting, patiently…
The Wisdom: You’ll only get 8 of the 10 on your list. I’m sorry, but its true. Start your home shopping with that in mind, and you’ll find more homes that fit your needs and you’ll have the opportunity to be more aggressive and get better results when it comes to the negotiations. Why? Because you won’t be too emotionally attached to the home.
Bit of Reality: When you find your home and move in, look back at your original list of needs/wants. You’ll often find many of them have changed a good deal.
Myth #5: I’ll Improve the Odds of Finding the House I Want if I Work with More Than One Agent
When you start the home search it is understandable and common to want to get out and see as many homes as quickly as possible. By using multiple agents, you might find your home sooner. But when it comes time to write the contract, will you be working with the best agent for your needs?
Good agents are hard to come by and you certainly don’t want to be stuck with a less than quality Realtor when the time comes to negotiate on the contract, do the inspection period, renegotiation along with all the troubleshooting that goes on to keep the contract together.
Myth #6: Buying a House is as Simple as Agreeing on a Price and Signing a Few Papers
Buying a home especially in today’s market is not an easy task. While I tell my buyers this an excellent time to buy and home prices are amazing, I also tell them it won’t be an easy journey.
In today’s market, it is very common to have multiple offers on every home you look at. Foreclosures are often a lot of work and won’t qualify for financing. While short sales can be a roll of the dice.
Here’s another post that might be of interest: The 8 Phases of Stress for Homebuyers
Myth #7: Foreclosures are the Best Deal
Foreclosure homes may be priced well below the market, but you get what you pay for. As you start looking at foreclosed homes, start adding up the amount of money it would take to repair the home to your standards. Factor in the cost of the time involved and you’ll most likely find the savings in the price is a wash.
Also, with the bidding wars that have been going on for months, it is very common to find a foreclosed home sell for a good deal above the list price. If the home is in decent condition it normally won’t last more than a couple days.
Myth #8: Getting a Mortgage Should be Quick and Easy
In today’s market the requirements involved with obtaining a loan continue to get more challenging everyday. Its not uncommon to have the FICO requirements change last minute and have a buyer loose his ability to obtain a mortgage. It is very important to work with a quality loan officer who knows their industry and their job.
The difference between a good loan officer and a poor loan officer could easily be the difference of loosing your ability to finance a home at the last minute. Not to mention it can be tricky to find the best mortgage product for every buyer. A good loan officer will be extremely comfortable with the mortgage product (loans) available on the market.
Myth #9: All Mortgages are Essentially the Same
Today I cringe when I hear someone say this, but I do understand where they are coming from, as I once thought the same thing.
Here’s some food for thought. If you get an amortized loan (common form) today for $250,000 at 5.5% interest and for a term of 30 years. At the end of the 30 years, you will have paid off your home/loan amount and you will have paid $261,010. in interest. That is a lot of money to be gambling with. Change the interest rate to 6% and you’ll pay an additional $28,00 in interest. But that is not the only variable that will determine how much you pay over the life of your loan.
Some of the variables for a mortgage include: interest rate, the type of loan, the loan program, the term (length), pre-payment penalties, mortgage insurance and more. All these variable and the ones only a loan officer could ramble off are reasons to take your time when you select your mortage.
Myth #10: If Something Appears on the Inspection Report the Seller Has to Fix It
During a normal market sellers typically know they will receive some money at the time the home sells. As a result asking for repairs is normally not a big deal. Nevertheless, you still need to be reasonable.
In today’s market that situation no longer applies. Banks know they are already loosing money on a home and flat out refuse to do any repairs on the home. With short-sales, the homeowner are already upside down on the home and the bank won’t let them short-sale their home unless they are broke. So again, there is no money available to be spent on repairs.
In this market, what you see is what you get. And sometimes the house is in bad enough shape, the bank won’t loan you money to buy it.
Informed Buyers Make Informed Decisions
Some real estate agents wonder why I put so much information on my website for homebuyers to read and educate themselves. Simply put, I believe informed buyers make informed decisions. Informed decisions are ones they will be happy with for years to come.
I never want to hear a homebuyer tell me they regret their decision to buy a home. I believe that can only be done if they make informed decisions about the home buying process. There are no sales tactics here, just good solid information to help homebuyers with their home buying decisions.
If you have any questions or comments, don’t hesitate to send me an email or leave a comment below.
Related posts:
- 3 Myths vs Realities in the Home Valuation Code of Conduct
- The 8 Phases of Stress for Homebuyers
- So Many Types of Loans, How Does One Choose?
- One Step Back, Three Steps Forward for Homebuyers
- 4.5% Home Loans Help, Hurt or Just Silly?
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