MYTHBUSTERS: Home Buying Edition
Hello truth seekers! We are glad that you are back as the Ask Cathy Marketing Group dispels the common real estate myths as it pertains to home buying. In our last episode, our heroes shot some big holes in those common misconceptions of selling a home. This time, we forge ahead with the quest of helping homebuyers know the truth behind the transaction. What will today's adventure bring? Read on!
The Myth: Getting preapproved is done after you find your perfect home
The Truth: Frankly, looking at homes without a preapproval is the worst decision EVER. There are many reasons why waiting to get preapproved is simply a very bad idea.
- First and foremost, it's imperative for a potential buyer to know even if it makes sense financially for them to buy a home in the first place. Surprises can sometimes pop up on a buyer’s credit report that need to be addressed before they obtain a mortgage, or qualify for the best rates. Down payment, tax reserves, insurance, closing costs, inspections, are all additional expenses when it comes to actually purchasing a home. Knowing what their financial picture looks like, the best answer could be to wait and save, or move forward with purchasing a home.
- Determining the home price range is also important. Banks sometimes approve you for more money than you would actually feel comfortable spending on a home. Make sure the homes that you are looking at don't match that total amount or exceed it. Especially in competitive markets, you want to make sure you have a bit of a cushion to increase your offer (in a multi-offer situation) or still have money for the rest of your expenses after you pay your mortgage.
- Without a preapproval, you are going to miss out…big time. Especially in a competitive market, having all of your ducks, or in this case, bucks in a row is of utmost importance. Home contracts sometimes happen within hours of a home going on the market. Especially, if you are searching in a highly competitive area – this is definitely the case. Nothing hurts worse than absolutely falling in love with a home and being unable to move forward with an offer, all because you don't have a preapproval in hand. Home contracts are competitive as they are, so having all of the leg work done in advance indicates to a seller that you are serious about the offer. Don't let being unprepared stand in the way of you and a home you love.
- In most cases, you can't even get in the door to see a home without a preapproval letter. With more buyers than ever, sellers can afford to be more selective on who they let cross their threshold. Sellers don't want to waste time. Only potential pre-approved buyers who can pull the trigger on a contract get through the door. People just testing the waters find themselves out of luck and out of an appointment.
The Ask Cathy agents want you to love where you live. When our client finds “the one” we do everything in our power to get under contract on that home. Simply put, we like to win. That is why we make sure that our prospective buyers are ready, prepared, and informed in the entire buying process, from pre-approval and beyond. That is just one of the reasons that set us apart from other agents.
The Myth: It's too expensive to get into the market now
It's true that people put off buying a home because they feel the market is too expensive. They feel like if they wait a bit, they will be able to get in for a better price. If these last few years have taught us anything, it shows us that waiting doesn't necessarily pay off. Homes that might have seemed expensive a year ago, have only increased in value. Meanwhile, local rents have gone up too. Buyers who didn't jump into the market, are looking at today's market with regret. Not only that, but interest rates have slowly risen. This means that your home spending dollar doesn't go as far this year. What the future holds is anyone's guess, but it doesn't look like the home prices will be dipping any time soon. It is important to look at real estate as a long-term investment. If a buyer sees themselves in a stable position financially, career-wise, and doesn't foresee moving within 5 years, it is worth taking the big step towards homeownership to start building towards their financial future.
The Myth: It is cheaper and/or better to rent than to buy
Though homeownership does come with added expenses of upkeep and maintenance, the equity you will be building for yourself is a benefit you would not get if you continue to rent. Unless you have an adjustable-rate mortgage, your mortgage payment does not increase as your rent would. Every month you pay rent to your landlord, you are paying their mortgage, into their investment. Wouldn't it be better to pay that into your own mortgage? By owning a home you are able to build wealth over time as rent is money you never get back. There are also added tax benefits to owning a home as well. If you are even remotely thinking about buying a home, it is definitely worth running the numbers at least to see if it is financially better for you to buy a home versus renting.
Another thing that owning a home versus renting does is to give you the stability of knowing where you will live on a more permanent basis. You won't have the uncertainty of your landlord suddenly deciding to sell the place you are renting, or not renewing your lease, leaving you scrambling to find another place.
Owning a home gives you aesthetic freedom too. There is no landlord to ask if you want to make improvements, or paint the walls your favorite color. Making your living space comfortable and appealing to you leads to a happier home life which can be reflected in other areas of your life as well. When you rent, you may not feel settled, as it will always feel temporary. For some, that is a very uncomfortable feeling. Nothing beats the feeling of walking through the door and feeling that you are home.
The Myth: It is safe to skip the inspection if the house looks good
Even if you are purchasing a home in “as is” condition, it is still a good idea to get a home inspection. It may not change your purchase price, but you will be moving into your new home with your eyes wide open. The expression “lipstick on a pig” comes to mind. Some home sellers pull out all the stops when it comes to making their homes presentable with beautiful decor and fresh paint, highlighting their home's enticing features versus what could be problematic ones. Others leave everything where it is, with boxes stacked, 80's decor, and a carpet that looks unkempt. Both homes appear dramatically different, but both homes can hide years of neglect or hidden problems, or they could be just fine with only minor things that are easily fixed. Even newer construction can have its issues. You just never know. The few hundred dollars it will cost for a reputable home inspection will put your mind at ease, or uncover some issues that you may not want to take on, or better yet, give you the comfort in knowing that everything is ok. The alternative is buying a home and discovering costly issues after the fact. A home inspection is worth peace of mind at the very least.
The Myth: Working with the listing agent on a property will get you a better deal
This is such a common misconception. Their client isn't you, it is the people selling the home. They are first and foremost looking to get the most money for the sellers. The listing agent has a fiduciary duty to the sellers because of a signed contract. Having your own Buyer's Agent on your side puts you at the biggest advantage. They can negotiate on your behalf and look out for you, just as the listing realtor is looking out for their clients. It won't save you any money, and in fact, could cost you more in the long run.
The Myth: You don't need a real estate agent, at all
We've all had that crazy dream where you walk into a classroom and realize within seconds that there is a huge test and realize you haven't studied. You may wake up in a panic or a cold sweat and are thankful that it was only a dream. Buying a home WITHOUT a reputable and experienced agent by your side is exactly like that, except that you are awake and it is indeed real and something you really want (a home) is on the line.
According to the National Association of Realtors, there are at least 184 distinct steps performed in order to close on a single real estate transaction. Let me repeat that, one hundred and eight four. That is a lot of steps to wade through on your own, one false step and your contract can fall apart. You can guarantee that the person selling the home you want to buy has someone in their corner, looking out for them, protecting them, crossing every “T” and dotting every “I”. They are making sure that their client ends up with every advantage. Having a buyer’s agent throughout the entire transaction protects the homebuyer. Can you imagine if the Karate Kid didn't have Mr. Miyagi to guide him along the way? Daniel would have gotten his patootie kicked, many times over and there wouldn't have been the amazing crane kick that resulted in the triumphant win at the end ( I digress). When you put an offer in on a home, you are indicating to the seller that you want to win. Do you know who else wants to win? The Ask Cathy Team. We LOVE winning. You absolutely want someone in your corner, not just anyone, but the best one. We know that's us – our track record of happy homeowners proves it. There is nothing we love better than to see our clients in homes they love. Let us be your Mr. Miyagi.
The Myth: Don't buy until you find your dream home
When it comes to buying a home, we all have a picture in our minds of the ideal home that we are looking for. A dream home means different things to every person buying (sometimes even in the people purchasing one together). No matter what your vision for your dream home is, it is always good to take a good look at priorities when it comes to purchasing a home. Always start with a list of what is a “need” and what is a “want”. Even what someone sees as a “need” can end up moving into the “want” column.
Some people can afford what they picture as their “dream home” right out of the gate. For most of us, however, there are a few steps to possibly one day achieving that ultimate goal. Also for some, the idea of a dream home is so big it is unobtainable, or it changes constantly – depending on situational or lifestyle change. Sometimes, the path to your dream home is moving into the home you can afford right now in order to build the equity and wealth to purchase your dream home in the future. Your dream home could be just being able to afford a home at all.
A dream home doesn't have to be about all the bells and whistles. A dream home can be about being able to live your life the way you want to. Some people want to live modestly and use extra funds for travel. Some buyers just want to get a roof over their heads. Don't let the idea of “dream home” actually get in the way of you and homeownership if it is within your reach.
The Real Truth: “Lie becomes truth only if person wanna believe it.” -Mr. Miyagi
Don't buy into the lies that these home buying myths want you to believe. Though there may be some reasons for someone to not jump into the home buying pond, there are many, many more reasons why it is a fantastic idea. The Ask Cathy Marketing Group is always here to dispel any lies or myths that you come across when it comes to buying a home. We can help clarify for you the path to homeownership, set your goals, and we can help you get there. Whether you want to buy a home this year, or five years from now, we are here for you. We want our clients to live their best lives in great houses. This may look different to each person, but the end game is the same. Make a smart investment by using all of the expertise and experience the Ask Cathy Team has to offer. Our experts will be there every step of the way and guide you in making a smart investment for your present and your future. Connect with us to have us in your corner.