9 Real Estate Myths Debunked
By Amy Newman
There’s a lot of information out there when it comes to buying or selling your home. Some of it is true. But some is outright false. Relying on these rumors and myths could steer you in the wrong direction – and might even kill the deal altogether. We’ve turned to the real estate pros to help us separate fact from fiction.
When selling your home, set the asking price high so you have room to negotiate.
Truth: “That’s the worst thing you can do,” says Chris Swires, a certified residential specialist with RE/MAX Dynamic Properties in Anchorage. “The first 30 days when your property is on the market, that is the most attention (it) is going to get.”
Potential buyers will pass on taking a look if the home is priced too high from the get-go, she says. Even worse, they won’t come back when you lower the price a few months later.
“Typically people know the market,” agrees Diane Stefan, a Realtor with RE/MAX Dynamic Properties. “(Buyers) know whether it’s priced right or not because they’ve done their homework.” Pricing the home too high may also unintentionally signal to buyers that you’re not willing to negotiate, she adds, because you priced it above similar homes on the market.
A home doesn't need to be prepared for sale.
Truth: This couldn’t be further from the truth, Chris says. Buyers must be able to visualize themselves in the home, but that won’t happen if they can’t get past the clutter, dirty carpets and mysterious odors. So give the entire house a deep clean, clear out the clutter and remove photos and other personal belongings from the walls and mantel to depersonalize it.
And don’t forget to take care of the porch – grimy windows, paint peeling from the front door and dirt and cobwebs is a turn-off.
“It’s practically like going on a first date with someone,” Chris says. “You can’t undo that first impression.”
Sellers who don't use an agent save money.
Truth: While going it alone or using an FSBO-service will cut down on the cost of agent commissions – a shared 6 percent for the buyer and seller’s agent versus 3 percent for a listing-only service, Diane says – you’ll likely lose money in the long-run. Why? Failure to negotiate.
“The regular lay-person on the street feels so good that they’re saving a certain amount of money (paying a smaller commission), they usually end up giving that away in the price,” usually in the form of a lower sales price or paying closing costs, Chris explains.
Unfinished repairs are not going to significantly affect the sales price of your home.
Truth: “That’s a loaded question,” Diane says. “It greatly depends on what the repairs are.”
Major repairs, like a new roof or foundation issues, should be completed prior to listing, or the sales price adjusted to reflect the work that needs to be done. But too many smaller repairs on the inspection report, like installing handrails or adding face plates to electrical outlets, can cause a buyer to walk as well, she says.
So it makes sense to fix the obvious problems before the inspection begins.
“Try to do as much as you can so the list isn’t going to be so long,” Diane says. And make sure to have major appliances, like your hot water heater, furnace and septic systems, serviced and cleaned before listing.
Real estate agents get kickbacks from mortgage lenders, appraisers and title companies.
Truth: “Are there people who believe that really happens?” asks Mark Masley, president of the Anchorage Board of Realtors. “It doesn’t happen. It’s prohibited under (federal and state) laws. We’re not allowed to receive kickbacks from anybody.”
Professionals who violate these laws face serious repercussions, including fines, loss of license, and possible imprisonment, he adds.
Open houses sell houses.
Truth: Open houses account for only 1 or 2 percent of all home sales, our experts say. If asked, agents will host one as a courtesy to the seller, though fewer homeowners request them due to security concerns. A broker’s open house, where the listing agent invites other real estate professionals to view the home, is much more likely to result in a sale, Diane says.
The appraiser is always right.
Truth: The appraiser’s role in a real estate transaction “is to verify to the bank that the sales price is a fair price for the house,” Chris says. “Not more, not less.” Most of the time, Diane says, the appraisal comes within 5 percent of the sales price, but “appraisers are human and thus make mistakes.”
Springtime is always the best time to sell.
Truth: A good time, yes. The best time? Not necessarily, says Chris. Because Alaska is a transient state and people are moving year-round, any time is a good time to sell. The fourth quarter has seen an uptick in sales in recent years, she adds, because many homebuyers get prequalified in anticipation of receiving their PFD.
But the best predictor of whether it’s the right time to sell is the home itself.
“If it’s unique and stands out, it’s not going to matter,” Diane says. “If it’s nice, clean and updated, it will sell fast no matter what.”
You have to have a 20-percent down payment to buy a house.
Truth: Once the standard in home buying, a 20-percent down payment is no longer required to purchase a home. Depending on the loan program, you can put as little as 3.5 percent down and still qualify for a home loan, Diane says.
A 20-percent down payment is only required if you want to avoid private mortgage insurance (PMI), an extra insurance that protects the lender in the event you default on the mortgage, or if you want to have lower monthly payments, Chris says.
But even that can vary among loan programs, with some letting you avoid PMI with as little as a 10-percent down payment, Diane adds.
The only exception to the 20-percent down rule? That vacation house you’ve been pining after for warm winter getaways will require a 20-percent down payment, Chris says.