A generation ago, buyers didn’t have the luxury of the internet to research and investigate real estate.

Today, of course, many enter the real estate market with statistics and information gathered online. Despite all this data, many people, have only a cursory understanding of how to be a successful buyer, how to negotiate, and how to approach the home-buying process. And they often develop pre-conceived notions about buying real estate, either from what they’ve read online or seen on TV, what their friends and family have told them, or all of the above.

It’s important that real estate myths be debunked about the home buying process. If myths go unchecked, buyers may hold back from negotiations or even the home purchase altogether because of things they think are true—but aren’t.

Some buyers prefer to learn these myths on their own—to experience a “lesson learned” in essence—than to learn the reality from others that have gone before and have already experienced these things with an agent that has the experience and wisdom of hundreds of transactions.

Here are seven myths many homebuyers bring with them to the process.


1. Working directly with the listing agent will get the buyer a better deal.

Many people today figure that with real estate listings published online, the buyer’s agent’s role is irrelevant.

By searching and researching independently, buyers going directly to the listing agent assume they can negotiate a better deal by cutting out the middleman—the buyer’s agent. The role of the buyer’s agent was never solely about accessing listings. A good buyer’s agent has always had their feet on the street and keeps a finger on the market’s pulse. They know the comps and the other agents, so they can add an incredible amount of value simply through sharing their experience and knowledge.

The value of a good buyer’s agent is primarily during the transaction proses. Some of the most terminated transaction profiles at escrow companies are those with no realtors. Since a veteran realtor has solutions, not commonly known to the general public, they can access outside the box solutions that can keep a deal moving forward for all to win rather than a failed deal.

Buyers, left to their own devices, “don’t know what they don’t know.” A good buyer’s agent can track the buyer’s process and help uncover some of the unknowns about a particular house, an agent, or the market in general. A good agent has years of market and transaction experience in their head and can prevent many pitfalls by knowing what to look for and red flags, buyers 99% of the time don’t know. There are over a hundred things that send transactions off the rails and knowing what they are upfront aid in the smoothest deal possible.

The most irritating event ever is after a buyer has paid a thousand dollars of inspections and appraisal, it’s discovered that on the appraisal (1-2 weeks before closing) there is a “deal-killing” problem. 90+% of the time that item would be caught ahead of time by a veteran buyer’s agent.

Additionally, the seller is going to pay the commission whether or not there’s a buyer’s agent. For the buyer, there’s rarely any savings by going without an agent. Instead, the listing agent simply makes double the commission. There are no savings to the seller, either, when the buyer doesn’t have an agent.

Also, by having a listing agreement with the seller, the listing agent is obligated and needs to look out for the seller’s interests. By working with an agent (at no cost to you), the buyer gets their own advisor/advocate/representation working to represent their best interests. Letting the buyer know of any reasons it may not be a good property to buy.


2. Buyers should never offer full price.

That can be true as long as the buyer doesn’t mind not getting the house. In some cases, the full price is the best deal a buyer can make. Buyers learn this after losing out on many houses they really wanted. We see it over and over again. For some buyers, this learning curve needs to be longer than for others by making offers and losing out time after time.

It’s impossible to have an across-the-board strategy for pricing and negotiating real estate. For starters, every real estate market is different, as is every seller’s approach to pricing. In many parts of the country, for instance, it’s a red-hot sellers’ market. Many times, sellers will purposely price their property right at or just below market value to get multiple buyers interested. When buyers try to offer, say, 5% under market value while others are offering full price or more, they end up looking for a home for months.

Also, if a listing is brand new, the seller may expect not a penny under the asking price. The first two weeks to a month are when the seller sees the strongest activity. When a buyer offers too far under asking out of the gates, they’re likely to lose out. That may be ok as long as you don’t really really want that house.

In slower markets, it’s not uncommon for a seller to price a home well over the market value and wait it out. If a buyer offers 5 percent off a home that is overpriced by 10 percent, the buyer risks overpaying. And you discover this after you have spent a thousand dollars on inspections and appraisal. This is why it’s important that buyers work with an experienced local agent and never take a one-size-fits-all approach to price and negotiating. That rarely works out.


3. Spring and fall are the best times to buy

Many years ago, real estate markets revolved around school cycles and summer. People wanted to move during summer so their kids could be settled in and start school by September. For this reason, spring & summer have always been seen as the main selling season.

Some buyers (and sellers) still organize their activities around this ancient myth. They pull away in the summer as well as during winter. With so much information online today, however, markets move much faster and a buyer can look at real estate 24/7 from a mobile device on their couch. As a result, serious buyers are in the market all the time. (The not-so-serious buyers come and go when it’s convenient for them.) Homes listed in November or January could be listings of highly motivated sellers. Some buyers have their hands in a real estate transaction all the way up to Christmas, and a seller who has a home listed then must be pretty serious about selling.

The bottom line: Shopping in the dead of winter or the middle of summer can present great opportunities for you. With less competition in a market dominated by serious sellers, an aggressive buyer can snag a great deal in summer or winter.


4. Always leave room for negotiation after inspections

It’s common to think that the seller has left room on the table for future price negotiations after the property has been inspected. Therefore, as the myth would have it, a buyer should also leave room to negotiate after the property is inspected. Every buyer goes through this thought process when negotiating the home purchase. But when they follow this approach, they’re bound to get burned.

Many of today’s sellers go through the motions of getting their home in top shape before going on the market.

This includes fixing the leaky water heater, replacing or repairing the roof, or completing a list of “fix-it” items prior to listing.

Sellers want a sure thing with their buyers. A good agent will work with them to make sure the home is foolproof prior to listing. If the buyer leaves $15K on the table with hopes to negotiate afterward and the inspection comes out flawless, they lose that opportunity to negotiate again. A seller with a solid home and a clean inspection isn’t likely to negotiate with that buyer again. In a strong market, a buyer who tries to renegotiate won’t be taken seriously.

Buyers should be happy with the final price offered to the seller. It may happen that there are issues after the inspection and some credits come the buyer’s way. But counting on those credits will only waste everyone’s time if the inspection comes back clean.


5. A buyer must put down 20% to get a loan

Traditionally, a buyer got a 30-year-fixed loan and put 20 percent down. But times have changed.

With higher home values have come creative loan products. These aren’t necessarily the types of loan products that got people into trouble a few years ago, however. Today, there are government-backed loans such as those from the FHA that allows for as little as 3.5% percent down.

These loans are a little more difficult to obtain and require a few extra layers of approval. But they’re available to borrowers with strong credit and income. With interest rates still at 20-year-lows, a smart buyer today will leverage the bank’s money to work for them.

Of course, buyers should never sign up for a loan they can’t afford. And they should always double- and triple-check their rate and payment schedule. It’s important not to get caught up in a small down payment scenario where the interest payment is low at first but then increases unless the buyer can plan for it. If a buyer is serious about living in a location for at least seven years and wants to put down roots, then explore the available loan options. A five-minute call with a mortgage broker or banker can be quite revealing.

And in some situations, 100% financing could be available to you. Ask me about this option of VA or USDA and even FHA.


6. A buyer with a loan can’t compete with a cash buyer

With all the recent talk of cash buyers and big investors swooping in and buying real estate, a lot of first-time buyers assume that if they have to get a loan, they can’t compete. Many times this thinking keeps a would-be buyer on the sidelines.

But it’s important that buyers know that cash is not always king. For starters, cash buyers expect a discount because, by paying cash, they’re eliminating some of the risk of loan approval for the seller.

A smart buyer can counter a cash buyer simply by making their offer as airtight as possible, such as being fully approved before making an offer. This means having a “GOOD” mortgage professional fully vet your finances so there won’t be any surprises. Not all mortgage professionals are created equal, so make sure you have a referral and don’t just use one on the internet. Those often come with real problems.

Buyers can take it a step further. Before making an offer, vet the property of RED FLAGS, have the mortgage pro get as much information about the property. If the lender feels strongly about your finances and the property doesn’t seem to have any obvious red flags, you will have much less chance of your inspection/appraisal money wasted and the deal failing.

Also, because cash buyers expect a discount, buyers can counter their offer by paying more. Though this may sound crazy, paying more doesn’t necessarily mean “overpaying.” It may simply mean paying market value, or full price which a cash buyer may not pay.

Finally, many home sellers, particularly long-term homeowners, like to know that someone will be living in the home and that there’s a real “person” behind the offer. When a seller is faced with two similar offers—one from a cash investor and the other from a person who really wants to live in the house and makes that known—a buyer with a clean, solid offer may beat out the all-cash investor. Draft a letter with a photo of family, pets, etc., to include with your offer. We find this often makes the difference.


7. Buying real estate guarantees appreciation

For a few years during the last decade, homes in all parts of the country were appreciating upwards of 10-15 percent year-over-year. We all know that the housing market came to a halt when the credit crisis happened a few years later. Even though the real estate market is back in many parts of the country, things are different today. A generation ago, a buyer would purchase a home and plan to live there for 30 years and pay off their mortgage. Over time, this home did appreciate and it was a great investment for that buyer.

Today’s buyers are different and the world is different. With access to information, technology, and the global economy, people are not staying put for as long as they used to. Also, people aren’t marrying and settling down as early and therefore may own one or two homes before settling down.

Real estate was still always meant to be a long-term investment. A generation ago, a homeowner couldn’t follow their Zestimate® home value or check their neighbor’s listings online. There was simply less knowledge and less tracking of your home’s value. If a homeowner looks at their home’s value weekly or monthly, much like stock investments, they will be in for a big surprise. Their home may appreciate a small amount.

The value may stay flat for a few years. Or it may even go down. You should not buy a home only because you think it’s a good investment. It’s a home first and an investment second.

Knowledge and experience can truly differentiate a real estate agent. A seasoned agent who has helped hundreds of buyers and sellers in all types of markets (up, down, and in-between) has a lot to offer. There is so much to know about the real estate process that it’s most useful for a buyer to take it in as we go. Much is best disseminated along the way as needed. Since it won’t be applicable to discuss wells, septics, wood stoves, timber values, water rights from creeks or rivers, etc if your property doesn’t have these features.


8. Foreclosures are the best deal

Back in the 80’s this was true and is why this myth exists today. The banks realized how much money they left on the table in their haste to liquidate these headaches. This time around they are smarter and have in-house formulas they follow. For example, they do small price reductions every 30-60 days until it sells. This strategy removes the opportunity for a buyer to lowball them since they would rather reduce by $5k every 30 days rather than take a $20k low offer. This usually works out in their favor.

Also if you can’t close on time, they will charge you a daily fee to stay in the deal.


9. Working with For Sale By Owners

The real estate process is full of surprises. So I thought we would start out with a surprise #9.

This is a conversation I can have with you. But some key things to consider with FSBOs.

I love to share my knowledge and experience with you every step of the way. This helps you realistically understand the challenges you face, the problems to avoid, the different options to navigate and what is customary in today’s market place and how to put it all together to your benefit.