Consumers can have a lot of assumptions about the housing market. Some of those beliefs may cause them to miss out on a great house. HouseLogic.com recently featured some of the biggest misconceptions that buyers have, including:
1. Assuming you need 20 percent for a down payment. Buyers who may be waiting to save 20 percent for a down payment on their home purchase may end up missing out. About 60 percent of home buyers actually put down less than 6 percent on their home purchase. If buyers have less than 20 percent, a lender may require a monthly fee called private mortgage insurance, or PMI. But home shoppers will be able to start building home equity sooner, and likely will be able to snag a lower mortgage rate now, rather than waiting months or years.
2. An online home value estimator is always accurate. Several real estate websites offer a home value estimator to see what a home is worth—but consider this a ballpark on value, not a fact. For example, the online estimator may not take into account the seller’s recent renovations or the condition of the home. A real estate professional will take the actual home and the current market into account to give consumers a more accurate number of what the home is worth.
3. Refusing to consider homes that don’t have everything on your list. A list of everything a buyer wants in a home is a starting point, but compromising is likely for some features. Help your clients distinguish the must-haves from nice-to-haves. For example, a home with laminate countertops can easily be switched out for quartz, but the home’s location cannot be changed.
4. Judging a house on price alone. Buyers might find an appealing home that’s way under budget. But if the home is in need of some major TLC, you’ll need to factor in the fix-up costs to show your client whether it’s still that great a deal. Calculate beyond the mortgage payment to include costs such as utilities, homeowner or condo fees, and any remodeling ideas.
5. Fixating on a few grand. Maybe your buyer offers $198,000, but the seller won’t budge from $200,000. Advise your client to consider the big picture: Is it worth it to lose the house over $2,000? On a big purchase like a home, the additional $2,000 could add just $8 a month to the mortgage payment. Your client may want to consider trimming something out of their monthly budget to avoid missing out.