Friday, May 17, 2013 / by Rachel Green
At the first mention of wanting to buy a home, your friends, family, co-workers, acquaintances and even the dog walker (of your neighbor’s poodle) will have plenty of advice for you. Here is your guide to sorting the myths from the truths.
Myth: Start Low and Leave Room to Negotiate
Truth: There is no rule that will work every time when making an offer. Every home sale is different and offers are considered differently depending on the type of sale (regular sale, foreclosure, short sale, bank owned, etc), the seller, and more. So how do you know where to start your offer? Your Realtor will help you find the value of the home, using comparables, to determine if the home is priced right, overpriced, or underpriced. Furthermore, your Realtor will guide you through the process of making and selecting offers depending on the type of sale. In our current market, inventory is low, but this could change at any moment. If a home is priced well or below market value, it will attract many buyers and possibly multiple offers. In many cases, homes are selling for more than list price. Making an offer that is lower than list on these homes can serve to only frustrate you and leave you in that old, muggy, apartment rental. Ask your realtor about the market, the value of the home, and the type of sale before deciding what strategy to use when making an offer.
Myth: If the home has been lived in, I don’t need an inspection, because the owner would know if there were problems.
Truth: While most homeowners are honest and forthcoming, even the most honest homeowner doesn’t know what is going on with every element of their home. Many homeowners make repairs or updates that were not done with a licensed contractor. Getting a home inspection is the only way to find troubles before assuming responsibility of the home and all its problems. Furthermore, an inspection is so much more than looking for problems. A good Inspector will educate you about the home, give you a guide for maintenance and repairs, and having the inspection helps you negotiate repairs with the seller.
Myth: If you want to sell your home, get an appraisal first.
Truth: An appraisal is simply a formal opinion of the value of your home. Appraisals should be used to give lenders confidence in the value of the home the lender is about to lend money for. What most don’t realize is that by getting an appraisal before finding the buyer, you limit your potential for the strongest offer. Depending on the loan program the buyer chooses, the
Myth: Buying a foreclosure or short sale will save you money.
Truth: While this certainly is true in many situations, it is absolutely not always true. Short sales and foreclosures can be priced well, saving the buyer some money on the purchase price, but they are not always priced well. Because so many buyers are looking for short sales and foreclosures, banks have taken note of the trend and some are pricing these homes higher, because they realized the demand for the type of sale, regardless of the price. Furthermore, these homes often have more damage or deferred maintenance than regular homes, causing the buyer to spend money out of their pocket for repairs. The important thing to remember is always ask your Realtor for comparables and make your offer accordingly. Don’t limit the type of home sales you look at if you are looking for a good deal.