Buying or selling a home can be a complex undertaking, made even more challenging by receiving unsolicited or uninformed advice. Whether it’s well-intentioned friends sharing past experiences or social media accounts offering the latest “tips and tricks,” the guidance isn’t always up-to-date or applicable to your specific situation.
To help make the process more seamless and less stressful, let’s take a closer look at some of the top misconceptions I’ve encountered during my more than two decades in real estate.
Misconception: A 20% down payment is necessary.
Many loan programs offer the opportunity to purchase a home with a smaller down payment, or even no down payment. However, it is essential to note that when a borrower makes a down payment of less than 20% on a conventional mortgage, lenders typically require private mortgage insurance (PMI), a separate monthly fee, until the individual pays 20% of the mortgage principal. In some cases, PMI can provide homebuyers with access to a lower interest rate, which can save money over the life of the loan. If helpful, a real estate agent can provide recommendations for a loan specialist who can walk you through the various financing options.
Misconception: Renovations always increase value.
Sellers are often told they need to renovate before putting their home on the market, and while some improvements are worthwhile, it’s important to be strategic. A real estate agent can offer advice on when, where and how to invest. In general, cosmetic updates such as replacing fixtures or painting are cost-effective ways to add value, whereas larger projects can be time-consuming and expensive. By focusing on necessary repairs and functional upgrades, sellers are more likely to recoup their investment and avoid overspending.
Misconception: There’s a perfect time to buy or sell.
We’ve heard it before: “Prices will go down in the winter,” or “More houses will hit the market in spring.” The truth is that good deals happen throughout the year, and holding out for a significant change in housing stock or a drastically lower interest rate can lead to missing out on excellent opportunities. In short, the ideal time to buy or sell depends on your financial situation, personal goals and current market conditions, rather than a particular season.
Misconception: Overpricing is a good strategy.
It can be tempting to leave room for negotiation, but an artificially inflated price tag can mean your home sits on the market longer than a comparable, competitively priced property. When a listing is around for an extended period, it can leave potential buyers hesitant and lead to price reductions greater than what you originally had in mind. Accurate pricing, determined with the help of a real estate agent, is the best practice.
For most of us, buying and selling a home is one of life’s biggest financial decisions. With greater awareness and support from a dedicated, knowledgeable real estate agent, we can make more informed decisions and navigate the housing market confidently and with greater success.
Carolyn Cobb is an executive broker at Coldwell Banker RPM Group with more than 20 years of experience in the real estate industry. She is the past president of the Arkansas Realtors Association and the Little Rock Realtors Association.