5 Biggest and Most Damaging Misconceptions Homebuyers Have
December 28, 2018
There are a lot of assumptions about the housing market, but some of those beliefs could be causing you to miss out on great real estate opportunities. If homeownership or a new property is a goal – be it in 3 months, 6 months, or 2 years – then educate yourself now on some of the biggest, and most damaging, misconceptions of homebuyers.
The more informed you are, the more opportunities you open up for yourself. According to the following infographic from the California Association of REALTORS®, these are the misconceptions to look out for in 2019 before you start your home search.
1. Assuming You Need 20% Down
Truth: About 60% of buyers put down less than 6% when they purchase.
If you’re waiting to buy until you have 20% down, you may be missing out. Putting down 20% is best if you have the funds to spare, but it by no means is a hard and fast rule. Tons of buyers purchase with less money down. The trade off with a lower down payment is that you will have to pay private mortgage insurance.
A lender will require private mortgage insurance (PMI) as an added insurance policy to protect themselves in the event that you can’t pay your mortgage.
2. Refusing to Consider Homes That Don’t Have Everything on Your List
Every buyer has a home wish list to help guide the home search. But compromise is likely for some features. Making your wish list is an important first step, but understanding what your non-negotiable amenities are is even more important.
If an in-unit washer and dryer is must-have, then don’t settle until you find it. But if you’re willing to compromise on the garage if there are assigned parking spots, then keep your options open. You might be surprised by what you can find once you lift just a few restrictions.
3. Judging on Price Alone
Don’t forget to factor in fix-up costs when you’re searching. You may find an appealing home that’s under your budget, but if it needs some serious TLC, it can quickly jump right back out of your budget. Cosmetic problems that you can live with until you have the money to fix are ok, but structural issues that cost big bucks upfront can break your budget.
4. Believing Every Online Home Value Estimator is Fact
Online estimators like our property valuation are a great starting point, but they can only provide a ballpark value for your home. A true pro will be able to take into consideration all of your home’s upgrades, current market conditions, and more.
If you are going to sell your current home before purchasing a new one, take your online valuation to a local real estate agent to use as a jumping off point for determining the best, most accurate price for your home. Don't get married to a value you see online before consulting with a professional.
5. Fixating on a Few Grand
Never forget the bigger picture. If you and the seller are a couple of thousand dollars apart on the sales price of the home, do the math on what it will actually add to your monthly payments. In the grand scheme of things, a few thousand dollars could merely add only a few dollars each month to your 30-year mortgage payment.