6 Myths Buyers Actually Believe
Even with the plethora of real estate information and advice on the internet these days, many buyers are still misinformed when it comes to the home-buying process. As soon as you tell someone that you are contemplating on buying a home there is no shortage of good and bad information given by your friends, family, co-workers, and real estate TV shows. Be careful listening to these people because there is a pretty good chance that most of them don't have the experience or knowledge necessary to be giving advice.
Myth #1: Your Down Payment Must Be 20%
This might have been the case years ago, but now your down payment depends on many factors including your choice! Currently, there are some loan programs that require a down payment as low as 3%.
Myth #2: You Do Not Need a Home Inspection
While home inspections are optional, you should always opt to get one. This can be useful because it can uncover underlying issues that are not visible during a walkthrough. The average home inspection costs between $300-$500 and it is well worth the expense as it can save you from costly repairs down the road. Additionally, this can also help with negotiations with the sellers to have repairs completed or reimbursed before you close on the house. This will not only save you time, but it will also save you money.
Myth #3: The Bank Will Send Someone Out to Tell Me If I Am Paying Too Much
Not exactly. The lender doing your mortgage loan will send out an appraiser to conduct a valuation of the property for the bank that will be providing the loan. The appraiser will not tell the buyer what to pay for the house.
Depending on the contract, if an appraisal comes in at less than the price you are paying for the home, that does not obligate you to buy the house, but at the same time, that does not mean the seller must sell it to you at the appraised value.
This is where negotiations come into play. The parties can agree to split the difference, the seller can decide to bring down the price or offer other concessions such as paying for part of the closing costs, etc.
If it’s an absolute seller’s market and the property is in high demand, then the buyer may just pay out of pocket for the difference (which is what was happening in Austin earlier this year).
Myth #4: The First Step is Looking for a House
While browsing is fun to look at houses hoping to find your dream home, when it comes to serious home-buying work, there are a few things to do such as making sure your credit is in good shape and most importantly, schedule a conversation with a real estate agent 6 to 12 months in advance to get a good idea of the home-buying process.
Most real estate agents including myself, will provide you with a buyer’s guide which can be used as a resource. We can also connect you with lenders, and other professionals if needed to get you ready to embark the home-buying journey.
Myth #5: The Only Up-Front Cost is a Down Payment
I’ve been in Austin long enough to remember people saying “I bought a house and all I had to pay was $1000 to get in!” That is not the case anymore. You must consider having savings for closing costs, inspections fees, hazard insurance, loan origination fees, etc. A mortgage consultant can provide you with a loan estimate for you to get an idea on how much more you’ll need once you get to the closing table.
Myth #6: Realtors are Paid a Salary and the Commission is “Extra”
Perhaps this can change in the future but right now real estate agents only get paid at the end of the transaction through a commission. This adds a tremendous amount of motivation to find our clients the perfect home for them.
The process usually entails several trips to show buyers homes, finding answer to their questions by talking to the listing agent, county and/or city, researching public records, communicating with the mortgage lender, coordinating to make sure everyone is on the same page and all the other little details that are involved in a transaction.
We must spend time with our clients explaining how it all works, write offers, etc. All of that is done without a paycheck the day the agent starts working with the buyer. If the buyer decides to purchase and purchase through that agent, and only if that transaction goes to closing table will the agent get paid.
How long the process takes from end to end is anyone’s guess, and could range from a couple of months to years, depending on the buyer.
