Homeownership is one of the ultimate American dreams. Most homeowners you ask love owning their own place. After all, it belongs to you! But that’s not the only perk of homeownership. It also helps YOU build wealth.
Just like any substantial purchase, you want to do research. We are comforted by asking questions from friends and family and even social media. You know… all the “experts”.
But… do these “experts” truly know more than the professional?
No, not always.
Experience = knowledge.
With the television and internet educating us, who needs a professional… right?
Let’s be honest, the true professional expert would be the real estate agent.
There are soooooo many misconceptions about real estate that many walk into it thinking it’s simple and they can purchase without a realtor.
Well, yes, you could but why would you want to?! I mean, do you perform surgery on yourself or go to a professional? How about representing yourself in a major court case?
No. You rely on a professional who is licensed, trained, and educated – one who has the knowledge to help. So why take a chance on the most expensive purchase you would make and by-pass a professional who does this for a living? So much can go wrong, which could cost you hundreds, even thousands, of dollars.
Now, don’t misunderstand what I mean. Do educate yourself or ask questions. It is STRONGLY encourage you gain understanding of purchasing a home!
Realtors are your advocate who know and understand the market to help you maneuver around the obstacles that come with purchasing a home. It is their fiduciary duty to look out for your best interest.
A realtor is trained on how to negotiate, what is negotiable, how to complete all legal documentation pertaining to the sale, the process of the purchase, what third parties need to be included. This is their profession. When the clients follow the lead and instructions of the realtor, often times headaches and unnecessary stress to an already stressful time is avoided.
Also, the market is constantly evolving and regulations changing. The person you ask I’m sure has good intensions but are likely not up to date on the market because they purchased 7 years ago or 10 years ago – it has shifted since then.
Let’s take a look at some common misunderstandings of purchasing a home:
1. HOW MUCH WILL A REALTOR COST ME?
$0. Yes, $0. As a buyer, realtor services are free! When a seller lists their home with a licensed agent, the seller agrees to pay both their realtor and the buyer’s realtor commissions.
2. I WILL CONTACT THE LENDER ONCE I FIND THE HOME I WANT
This is the biggest mistake you could make as a buyer. Get preapproved!!! A realtor can give you mortgage lenders to contact. This will put buying power in your hands, especially if the market is a competitive market and you encounter multiple offer situations. There are also expenses for buyers throughout the purchasing process and if you do not know if you qualify for the price range you are looking in, then you could lose money. You need to eventually get approved so start the process up front and be wise so you are not wasting your time and money. It doesn’t take long and helps you to avoid headache (and heartache) moving forward.
3. I DON’T HAVE 20% TO PUT DOWN
Whaaaaat?! Did you know that you don’t need 20% to put down on a single-family home? Some people have put down as little as 2.5% and depending on your criteria and the type of loan – some put $0!!! There are many different options and programs out there. Speak with a mortgage lender on what would be available and suitable for you as each family/individual is unique.
4. MY CREDIT IS NOT PERFECT, SO I WOULDN’T QUALIFY FOR A LOAN
Wrong! Does it help to have 700-800+ credit score? Yes, of course. The higher the score, the more likely you would get the better interest rate, less money down, etc. However, you do not have to have perfect credit. Some loans are approved with low 600 credit scores. Let a mortgage lender review your details and they can let you know if you qualify or if there would be any additional requirements to qualify – shouldn’t cost you anything.
5. I CAN GET A BETTER DEAL IF I USE THE LISTING AGENT
No, you do not. In many states, the listing agent represents the seller ONLY! This means they are looking out for what is best for their client. If you decide to use them when purchasing the property they listed, they still represent the seller. Unless you are completely familiar with the buying process and completely up to speed on current regulations, I cannot emphasize enough to hire a realtor. Remember, they cost you $0 😊
6. I’M NOT BUYING THE HOME UNLESS IT HAS EVERYTHING I WANT!
Hold that thought! There is no such thing as the perfect home unless you are building a custom home from the beginning. If you have high expectations on existing homes having every single item, you will grow frustrated and fatigued. You must be realistic as you will likely be compromising on some things. Put together a checklist of your needs and wants. What items/features are most important? The home that checks off the most items, or those “top items”, wins!
7. LET’S OFFER WAY UNDER THE LIST PRICE SO WE HAVE ROOM TO NEGOTIATE
This is a mistake. A majority of the time, this offends the seller and they walk away from the negotiating table, refusing to entertain any further dealings with that buyer. Unless the low-ball offer is truly justified, you need to be sensible on your offer upfront. Otherwise, the buyer loses. What is justifiable? Your realtor pulling similar properties that have recently sold only to discover the house is overpriced.
8. DID THE HOUSE PASS INSPECTION?
When you hire a licensed inspector, they will give you an itemized review of the home’s overall condition at that time and whether things are functioning as intended. The house does not pass or fail. If there is additional attention needed to a specific item, the inspector will suggest you contact someone in that trade to inspect it’s functionality.
9. THE SELLER HAS TO FIX EVERY SINGLE ITEM ON THE INSPECTION REPORT
Whoa there, friend! It is an inspector’s job to itemize what they find but it is not always major ticket items that need attention. There will ALWAYS be something on the list.
Does the home need a new roof or is it just a screw missing from an outlet that needs to be secured? You want to always focus on the “bones” of the home: roof, foundation, electrical, plumbing, insect infestation, HVAC system, water damage. Negotiate those repair items if it effects the integrity of it’s functioning purpose. Leave the minor items and add it to your honey do list for later.
No house is perfect – even new builds have flaws. If your inspector has a blank inspection report, hire a new inspector!
10. YOU SHOULD ASK YOUR BOSS FOR A RAISE!
Happy clients! What many do not know is 99% of the realtors in the industry are 100% commission only. If no one is at the closing table with the ink drying on your closing documents, the realtor is not getting paid.
When you do close and the realtor receives payment, it is not a full 3%. All realtors must pay their brokers and the fees associated with that broker out of that 3% commission. That split can range from 20% of the commission to 50%. Each brokerage sets their own fee system in which agents are contractually obligated to pay.
There are many other myths we could discuss but these seem to be the most common. Ultimately, find an experienced realtor you can partner with to walk you through the process. Allow them to help you. After all, they are on your side.