The majority of home buyers and sellers turn to the Internet for information, yet this isn’t always the wisest decision, especially if that’s your only source of information. Don’t get sucked into everything you read on the web — check out some of the biggest real estate myths so you know how to properly proceed when buying or selling a home.
Myth #1: ‘Real estate agents are too expensive; I can save by selling the house myself.’
Statistics show that selling your home without a realtor costs you more money in the end. Sellers who don’t list with a realtor sell their home for an average of about 18 percent less than they could have sold it for, according to data released from the National Association of Realtors.
According to that same study, FSBOs (for sale by owners) accounted for 9 percent of home sales in 2012. The typical FSBO home sold for $174,900, compared to $215,000 for agent-assisted home sales. That’s a difference of roughly $40,000, which is a good amount use towards remodeling a section of the house, paying off debt or investing.
Myth #2: ‘I can’t afford to pay for a realtor in addition to the down payment.’
Many people are concerned about the costs associated with purchasing a home besides the down payment. One misconception people make is they believe they will have to pay a substantial fee to their realtor, but this is not always the case.
Home buyers don’t pay anything to their agent, the agent makes money from splitting the commission with the selling agent on the property being purchased. This commission is taken out of the seller’s pocket, and is agreed upon when the property is listed with a realtor. In the event there is no selling agent, the buyer’s agent will usually negotiate a commission to be paid out of the seller’s pocket for bringing a buyer to the table.
Myth #3: The agent with the most listings is the best agent to call.
Justin Davis, a realtor and author of Consumer Guide To Choosing The Right Real Estate Agent, shared his insight on what he has found to be one of the biggest misconceptions people make when thinking about real estate.
Davis says, “Think about that. If an agent has that many listings to deal with, how much time do they have for buyers, especially buyers who might want to look at properties other than theirs? Many top agents are turning to team systems, so time might not be an issue, but it’s something to ask about when you interview an agent. A brand new (competent) agent can be every bit as effective as a seasoned pro. Someone working with fewer clients will have your needs in mind constantly. Hire the person, not a lineup of listings.”
Myth #4: ‘I’ll be fine as long as I have homeowners insurance.’
You may be shocked when you hear what your homeowners insurance may or may not cover. Learn about the following five subjects and the myths surrounding them regarding real estate:
- Replacement cost: Most homeowners believe that when an item in their home is damaged or stolen, they will receive compensation based on the value of the item at the time of initial purchase. For instance, if a TV that you bought for $2,000 five years ago was stolen from you home, you may expect to receive $2,000, but your insurance company would most likely compensate you based on the value of the TV at the time of your claim. Therefore, if the television you bought five years ago is now valued at $750, that’s probably the amount you should expect to receive. It’s best to review your homeowners policy in detail to understand how much you should expect to be compensated for a claim.
- Loss-of-use coverage: Many homeowners assume that their insurance company will pay for their hotel and food in the event their home is uninhabitable for a brief period of time. Not all policies provide this loss-of-use coverage. If your policy does cover hotel and food, find out the maximum amount they will cover.
- Flood coverage: A homeowners policy does not typically cover flood damage. Look into coverage that specializes in flood coverage if you are concerned a hurricane or another natural disaster may cause damage to your home.
- Valuation of loss: If your home is damaged, an appraiser will come out to assess the damage and provide you an estimate as to how much you will be compensated for repairing your home. Most people think the estimate given is final, but this is not always the case. If you can show proof that the value of repairs is higher than what the appraiser originally estimated, you may be able to receive a higher compensation from your insurance company.
- Termites: The majority of home owners assume that damage caused by termites is covered in their homeowners insurance. There are actually few policies that cover damage from termites. Try to find a policy that does provide this type of coverage, if you cannot then it is best to have your house checked, and if necessary, sprayed regularly.